Construction of the Trans Mountain pipeline is seen underway in Kamloops, B.C., Tuesday, Sept. 1, 2020. A new report from the parliamentary budget officer says the federal government could end up losing money on the Trans Mountain pipeline if it further tightens its climate policy. THE CANADIAN PRESS/Jonathan Hayward

Construction of the Trans Mountain pipeline is seen underway in Kamloops, B.C., Tuesday, Sept. 1, 2020. A new report from the parliamentary budget officer says the federal government could end up losing money on the Trans Mountain pipeline if it further tightens its climate policy. THE CANADIAN PRESS/Jonathan Hayward

Future value of Trans Mountain pipeline rests on Liberals’ climate plans, PBO says

The increased capacity wouldn’t come on line until the end of 2022

The federal government could end up losing money on the Trans Mountain pipeline if it further tightens its climate policy and decreasing demand for Canadian oil, the parliamentary budget officer says.

The federal government bought the pipeline, and the unfinished work to increase its capacity by twinning it, in August 2018 for $4.4 billion.

The Liberals haven’t been able to find a buyer for the pipeline from Alberta to the West Coast. They are instead paying for its expansion, which the most recent estimate says will cost $12.6 billion.

The increased capacity wouldn’t come on line until the end of 2022.

The budget officer said the pipeline remains profitable based on expected cash flows, estimating the government could make $600 million above its purchase price.

But Yves Giroux warned in his report Tuesday that everything could change based on circumstances both beyond and within the government’s control, including changes to climate policy that would reduce demand for the petroleum products the pipeline moves.

Giroux also provided a scenario for the Liberals’ promise to reach net-zero emissions by 2050, estimating that doing so could lead to a $1.5-billion loss on Trans Mountain.

And that estimate led environmental groups to argue the government should spend less on the pipeline and more on tackling climate change.

“This pipeline is only profitable in a worst-case climate scenario, where the world takes no new action on climate change,” said Keith Stewart with Greenpeace Canada. “That is not a future that we should be betting over $12 billion of public money on.”

The report Tuesday was an update on the PBO’s report from early 2019 that pegged the cost of the pipeline and planned expansion project at between $3.6 billion and $4.6 billion, meaning the government might have overpaid for the project two years ago.

READ MORE: Canada Energy Regulator projects there may be no need for Trans Mountain expansion

The Liberals have argued the costs were worth it to save a project that looked doomed when Kinder Morgan and its investors got cold feet in the face of legal opposition and political uncertainty.

Despite a series of legal wins to the pipeline’s construction, and government money going into it, a sale hasn’t happened.

It’s unlikely the Liberals will ever find a buyer because the PBO report adds to arguments that Trans Mountain isn’t economically viable, said NDP finance critic Peter Julian.

He called on the Liberals to shift spending from the pipeline to climate change projects like green energy infrastructure.

“It was a mistake for Mr. Trudeau in 24 hours to come up with ($4.4 billion) and throw that at the company,” he said during a virtual press conference.

“It would be a bigger mistake to … keep pouring money — taxpayers’ money — into this project, even though it is almost in all the scenarios that are realistic, it is going to be a money-loser.”

Giroux’s report last year estimated the government would lose upwards of $2.5 billion if the expansion didn’t go ahead.

In his report Tuesday, Giroux estimated that a one-year delay in getting the expansion online would translate into a $400 million loss. A 10 per cent drop in construction costs would put the profit margin at $1 billion, or $200 million if costs rise.

In a statement, Giroux said the precarity of the outlook lay with federal policy.

“The profitability of the assets is highly contingent on the climate policy stance of the federal government and on the future utilization rate of the pipeline,” he said.

Amara Possian, Canada campaign director for 350.org (named for a “safe” level of carbon dioxide in the atmosphere) said the PBO report makes clear the government now faces a clear choice.

“Acting on climate change and Trans Mountain don’t mix and we all need to be asking the prime minister what’s more important: saving this pipeline or tackling the climate crisis?”

Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Climate changeLiberalsTrans Mountain pipeline

Just Posted

The Sam Lindsay Aquatic Centre will be closed from June 28 until September 13 for annual facility maintenance as well as teach pool and decking repairs. (Black Press photo)
Sam Lindsay Aquatic Centre closed: June 28 – September 13

The aquatic centre will be closed for annual facility maintenance

Shoes are being left at the viewpoint on Haisla Blvd in response to the 215 bodies discovered at the Kamloops Residential School. (Jacob Lubberts photo)
Haisla Nation responds to 215 Indigenous children found buried at the site of Kamloops Indian Residential School

“Many Haisla children were sent far away, to places such as Port Alberni, and to Coqualeetza”

Susan Jay hosted a plant and garage sale on May 25 and donated all of her proceeds to the Kitimat General Hospital Foundation to help with the purchase of a new bus for residents at Mountain View Lodge, Delta King and the new Kitimat Valley Housing Society dementia home. (Barbara Campbell photo)
KGHF thanks Susan Jay for her help to purchase a new bus for seniors in multi-level care

Susan donated all proceeds to KGHF, her efforts netted the hospital foundation a total of $1,760

An example of what a mural would look like on the back wall on Ron’s Bait and Tackle Store which faces the courtyard and sidewall. The mural photos shown here are mock-ups of existing artwork on walls of interest in the downtown core to build anticipation within the community about the concept of murals. The KPAA will not necessarily be using these locations or this artwork for the actual murals. (KPAA photo)
Kitimat Public Art Alliance mural funding request denied

D’Andrea suggested she will come back to the council at a later date with a more concrete plan

L-R: Vanessa Couto, Montana Murray, Connor Best, Dawn Best, Natalia Lopez, Thomas Walton, and Charlotte Collier partaking in the clean-up Kitimat campaign on May 28. (Katie Peacock photo)
Kitimat’s MStar Hotel brings out staff’s competitive clean-up side

The hotel staff circulated the Big Spruce Trailhead and picked up as much garbage as they could

People watch a car burn during a riot following game 7 of the NHL Stanley Cup final in downtown Vancouver, B.C., in this June 15, 2011 photo. THE CANADIAN PRESS/Geoff Howe
10 years ago: Where were you during the 2011 Vancouver Stanley Cup Riots?

Smashed-in storefronts, looting, garbage can fires and overturned cars some of the damage remembered today

(Black Press Media file)
Dirty money: Canadian currency the most germ-filled in the world, survey suggests

Canadian plastic currency was found to contain 209 bacterial cultures

(pixabay file shot)
B.C. ombudsperson labels youth confinement in jail ‘unsafe,’ calls for changes

Review states a maximum of 22 hours for youth, aged 12 from to 17, to be placed in solitary

Eleonore Alamillo-Laberge, 6, reads a book in Ottawa on Monday, June 12, 2017. THE CANADIAN PRESS/Sean Kilpatrick
Parents will need to fight ‘COVID learning slump’ over summer: B.C. literacy experts

Parents who play an active role in educating their children this summer can reverse the slump by nearly 80%, says Janet Mort

The border crossing on Highway 11 in Abbotsford heading south (file)
Western premiers call for clarity, timelines on international travel, reopening rules

Trudeau has called Thursday meeting, premiers say they expect to leave that meeting with a plan

The B.C. government’s vaccine booking website is busy processing second-dose appointments, with more than 76 per cent of adults having received a first dose. THE CANADIAN PRESS/Jonathan Hayward
B.C.’s COVID-19 infections, hospitalizations stable for Tuesday

108 new confirmed cases, 139 in hospital, 39 in intensive care

A worker, at left, tends to a customer at a cosmetics shop amid the COVID-19 pandemic Thursday, May 20, 2021, in Los Angeles. (AP Photo/Marcio Jose Sanchez)
Half of cosmetics sold in Canada, U.S. contain toxic chemicals: study

Researchers found that 56% of foundations and eye products contain high levels of fluorine

White Rock’s Marine Drive has been converted to one-way traffic to allow more patio space for waterfront restaurants. (Peace Arch News)
Province promotes permanent pub patios in B.C. post-pandemic plan

More than 2,000 temporary expansions from COVID-19 rules

Most Read