On June 22, the Parliamentary Budget Office (PBO) released an update on the TMX pipeline and its financial prospects. No surprise to even a casual observer, the 2018 decision to buy the Kinder Morgan Trans Mountain expansion project “will result in a net loss to the federal government.

So much for Prime Minister Justin Trudeau’s absurd claim that TMX profits will finance the transition to a green economy.

The PBO analysis, however, did not include recent financial information. In response to my written questions on the Order Paper, the government claims the project is “significantly de-risked.

No idea what they think that means. Obviously not de-risked in any sense of actual risk. Not climate risk. Not dilbit spill risk. Not risk that future climate events along the TMX route will once again, as happened in November, threaten the stability of the pipeline itself.

The flooding was along the pipeline route in B.C., shutting down the existing Trans Mountain pipeline. Infrastructure was destroyed by the atmospheric rivers in the very place they plan to continue construction.

Not even financial risk. The answers confirm that — after Finance Minister Chrystia Freeland promised in February there would be no further federal financial support for the pipeline, the government is providing an additional $10-billion loan guarantee. The reply says, “it (the loan guarantee) does not reflect any new public spending.”

I asked brilliant B.C. economist Robyn Allan about this claim. In an emailed response, she told me, “Minister Freeland promised that the government will spend no additional public money on the Trans Mountain expansion project. This commitment does not square with reality. The government faces ongoing interest costs on $14.6 billion in debt incurred by Trans Mountain Pipeline Finance (TMP Finance) for Trans Mountain. This means that $700 million a year in interest will continue to be charged but is not being paid because it is accounted for as ‘interest in kind’ and added to the loan balance. Interest in kind represents ongoing public financing.

“According to Canada Investment Development Corporation’s (CDEV) financial projections, by the end of this year, the debt burden to Canadians will have risen from $14.7 billion to $15.4 billion and by the end of 2023, the burden will reach $16.1 billion.”

In another answer, the government claims that BMO and TD have reviewed the project and find it “financially sound and commercially viable.” But do not expect to be able to review these claims: “These analyses are subject to commercial confidentiality.”

Opinion: TMX was always a financial loser. That’s why Kinder Morgan bailed. But now it is more than a financial basket case, writes @ElizabethMay. #CdnPoli #ActOnClimate #climate #energy #ClimateChange #emissions

But previous TD reviews of TMX were made public.

West Coast Environmental Law’s Eugene Kung, to whom we owe much, looked at these replies and emailed me:

“TD Securities did a fairness opinion around the 2018 purchase… Based on the 2018 analysis, a 10 per cent increase in project cost and one-year delay results in a decline in project net present value of 33 per cent. Based on TD Securities’ analysis, the expansion project ceased to be viable when project costs exceeded ~$11 billion. With a project cost of $21.4 billion and further delay, TD Securities’ 2018 analysis suggests a negative value for the project of $7 [billion to] $10 billion. So what changed between 2018 and 2022 to dramatically change [the] TD analysis?”

On June 16, I distilled the information into a 35-second question.

I asked, “Previous TD reports on TMX were public. Why hide them now? Is it entirely likely the government plans to write off financial risks and debt and leave us financially exposed? If it is so commercially viable, why can we not see the reports?”

The PBO managed without access to the TD and BMO reports to verify one key assumption — the pipeline was presumed to have a 100-year lifetime. PBO viewed this assumption as unsupportable, leading to its own conclusion that it was a financial loser for the people of Canada.

But let’s look at the second part of the PBO report. It finds that shutting down construction now would result in “writing off $14 billion in assets” and that the Crown corporation, Trans Mountain Corporation, would “no longer be a going concern.”

Here is a practical proposal. Take a page from Seth Klein’s book The Good War and convert the assets of the TMX pipeline project to a Crown corporation focused on adaptation and resilience.

The thousands of workers and millions of dollars in heavy equipment should be redirected to protecting critical infrastructure, creating fire breaks and generally doing the heavy lifting that could save lives before the next round of disasters of fires, floods and heat domes. Engage First Nations in this critical work.

TMX was always a financial loser. That’s why Kinder Morgan bailed. But now it is more than a financial basket case; as the climate emergency worsens, it is a climate killer. It is a clear and present danger. Shut down the pipeline expansion and convert its Crown corporation into a climate adaptation and emergency response agency. In one fell swoop, convert a white elephant into a workhorse.

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This seems a bit unfair.

Even if the pipeline is financially unviable and a climate disaster at least it is a net employer and increases GDP to improve the government’s performance numbers. Plus the reinforcing of climate ‘natural disasters’ allows all the repair of, say BC’s road system and incinerated towns to add to GDP.

I suggest that as our next job creation project we start carving giant stone torsos and moving them around.

What, no heads?
How about taking down the Rocky Mountains and moving them to Saskatchewan?

Is the pipeline a net employer? What about opportunity costs? Jobs that don't destabilize the climate.
"Making a less energy intensive Alberta can create many jobs. Out of 56 economic sectors, oil and natural gas extraction are dead last in job creation — a measly 3.5 jobs for every $1 million invested."
"Alberta needs a low-carbon plan" (Rabble)

How many permanent new jobs will TMX create directly? How many jobs will TMX and the fossil fuel industry destroy?
"Once the proposed Expansion Project is complete, operating and maintaining 1,150 kilometres of the twinned Trans Mountain Pipeline system will result in approximately 90 new operating positions: approximately 50 in British Columbia and 40 in Alberta."

Climate change and oil spills cause huge economic damage and imperil jobs in other industries -- from forestry to fisheries, from farms to wineries to ski-hills.

I'm not a financier, thank heavens, but May's analysis of TMX's economic viability is likely in the ball park, if not right on the money. Robyn Allan does her homework.

But even if this pipeline were economically viable....100 years of transporting dilbit (un-upgraded, unrefined bitumen diluted with carcinogenic light hydrocarbons) to our west coast for tanker trips to Louisiana, is a climate killer on steroids.

If we want to transition, we'd best get on it....and May's suggestion for employing the hardhats working now on a guaranteed climate killer.....to the real work we need to do to prepare for a warming world makes a lot of sense.

Which is why interests looking to pocket that government money will call it crazy.

“Once completed, Canadians will enjoy full price for our oil on the world market”. This is part of the response to Elizabeth May’s question by the Minister of Tourism in the video. This is thoroughly misleading - we already can get the world price because the existing Trans Mountain pipeline marine terminal in Burnaby can, and does, ship “our oil” overseas.
This terminal is underutilized. It currently loads about two or three tankers a month whereas its capacity is over ten tankers per month. For a detailed report ask me at [email protected].

This is why we must have mass mobilization for the Green Party at every level of society. Elizabeth is reporting realism and the kind of angle that reflects the priorities that a government should have if it wants to get serious about future floods, heat domes, and other aspects of a de-stabilized ecosystem. We have ways of going about this in a far more rational way. We could engage with www.rethinkx.com and challenge every region of the continent to reach clean renewable energy by 2030. This would make sense on multiple levels.

Given the current war in Ukraine and the leverage that other oil producers, especially Russia and Saudi Arabia have over Europe, leverage that is strangling NATO's response to Russian aggression, this analysis by Elizabeth May, while claiming to have a global perspective, is a very narrow balancing of the pros and cons of pipeline building. Would we have returned Russian gas-line turbines if there was a pipeline through Quebec to an LNG terminal on the East coast that could ship gas to Europe? Not likely, but thanks to narrow-sighted analysis by Green warriors, we don't have that strategic lever to pull. Ditto for boycotting oil from other ugly, repressive, definitely not Green regimes from which the East coast imports crude oil. One could argue that the outcome of the war is unimportant if we don't defeat climate change. One could equally claim that if we don't defeat tyrannical regimes, then life will not be worth living, period. Better Red than Dead? Not so much.