Canada’s uneasy relationship between climate change and fossil fuel development was illustrated in November 2021 when seven atmospheric rivers hit southern B.C. The “big one” starting on Nov. 13 led to massive flooding and landslides that crippled infrastructure and isolated the south coast from the rest of Canada.

Among the shutdowns was the Trans Mountain pipeline that delivers Alberta crude and other refined petroleum products to B.C. The pipeline was taken offline for three weeks, followed by reduced capacity for more than five weeks, prompting restrictions on gas and diesel supplies.

Construction of the pipeline’s much larger twin, the Trans Mountain expansion project (TMX), was delayed by the floods and landslides.

In 2018, the federal government bought Trans Mountain from Kinder Morgan for $4.5 billion and committed to deliver on TMX at an estimated further cost of $7.4 billion. The TMX project was billed as “in the national interest” — despite substantial environmental impacts and opposition by many First Nations along its route — because it would reduce Canada’s dependence on exporting to the U.S. in favour of Asian markets.

Over four years later, TMX has been plagued by delays and cost overruns. When purchased in 2018, total construction costs rose from an original $5.4-billion estimate in 2013 to $7.4 billion. It increased to $12.6 billion in 2020 and an astonishing $21.4 billion in 2022.

Only a small portion ($1.4 billion) of this massive increase is attributed to 2021’s extreme weather (November flooding and landslides, summer wildfires and extreme heat) and two years of COVID-19 measures. The remaining cost overruns include “project enhancements,” “schedule pressures” and higher financing costs.

Trans Mountain says only 20 per cent of the cost increases will be passed on to the pipeline’s customers — oil companies. The other 80 per cent will be absorbed by Canadians. Robyn Allan, an economist who has closely tracked TMX’s progress, estimates that some $17 billion in TMX debt to Canadians will be written off by the federal government to make the pipeline appear commercially viable — another huge subsidy to the oil and gas industry.

Even worse, higher prices are unlikely to be found in Asia due to higher transportation costs and lower prices for the heavy oil produced from Alberta due to differences in refining capacity. Earth scientist David Hughes has also pointed out these factors will “lead to a reduction in netbacks for Canadian producers, compared to the U.S., of US$4 to US$6 per barrel or more.”

TMX is scheduled to be completed by year’s end and will open as a project that could not be more ill-suited to this moment in history.

The type of extreme weather disasters B.C. experienced in November 2021 is increasingly common around the world. Governments are responding with new climate actions. In the U.S., passage of the Inflation Reduction Act is a game-changer in terms of driving new clean energy investment.

TMX is scheduled to be completed by year’s end and will open as a project that could not be more ill-suited to this moment in history, writes Marc Lee @MarcLeeCCPA #ClimateEmergency #cdnenergy #TMX

Our recent research estimated the economic costs of B.C.’s three 2021 extreme weather disasters (heat dome, wildfires and floods/landslides) at $11 billion to $17 billion. Our estimate counts all damages (insured and uninsured), government emergency response costs, cleanup and infrastructure repairs, and workers’ lost income.

If TMX successfully expands Alberta’s oil production, it will spur additional carbon emissions that will cause future damages. Economists call this the “social cost of carbon” — a fancy term for calculating damages associated with carbon emissions — with estimated costs of $200 per tonne of CO2 or higher.

TMX would facilitate about 84 million tonnes (Mt) per year of CO2 emissions (upstream and exported). At $200 per tonne, that’s $16.8 billion annually in future damages, meaning every year TMX is in service, it could deliver a blow roughly equivalent to the $17 billion in damages B.C. experienced in 2021 due to extreme weather.

That 84 Mt is substantially larger than B.C.’s current GHG emissions and equivalent to 11 per cent of Canada’s annual emissions. The catch? Most of those emissions will be in other countries, not counted in Canada’s GHG inventory.

Also not counted above is the potential damage to land and water from a pipeline or tanker spill. Such a spill would impose huge cleanup costs, affect employment and devastate ecosystems. More extreme weather ups the ante for future spill risks.

TMX symbolizes the contradictions in Canada’s climate policy. Never have Canadian politicians spent so much for so little, and at the wrong time.

Marc Lee is a senior economist with the Canadian Centre for Policy Alternatives’ B.C. office. On Jan. 26, he will address the costs and absence of necessity of the Trans Mountain pipeline expansion project on a panel examining the hidden costs of major Canadian fossil energy projects.

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"The Mortality Cost of Carbon" in Nature Communications puts the social cost of carbon at $258/t, but more importantly, they've calculated that for every Mt of carbon released, 226 people will die this century from excess heat. 84 Mt x 226 deaths = 18,984 extra deaths this century for each year of the TMX expansion operation - if it has facilitated the expansion of oil production and burning. There's a bit of nuance here in terms of impacts on global supply and demand and some important assumptions in the article, but even if the 52 deaths locked in per day were out by an order of magnitude, it's stunning. It's a massive incendiary device that must be stopped.

One way or another, Ottawa was going to give the oilsands industry at least one new export pipeline. If not TMX, then Northern Gateway, Energy East, or Keystone XL (each with its own political challenges).

Marc Lee: "TMX would facilitate about 84 million tonnes (Mt) per year of CO2 emissions (upstream and exported). At $200 per tonne, that’s $16.8 billion annually in future damages, meaning every year TMX is in service, it could deliver a blow roughly equivalent to the $17 billion in damages B.C. experienced in 2021 due to extreme weather."

This calculation assumes that the customers/consumers (in Asia or California) would not find an alternative source for the oil from TMX. A doubtful proposition.
In reality, Asian and U.S. refineries would obtain these barrels from other producers and the same number of barrels would still go up in smoke.
Given the high carbon-intensity of Alberta dilbit per barrel, one could subtract the difference if the replacement crude was of lower carbon-intensity. Otherwise, the emissions would be the same, no matter where Asian refineries get their oil.
To the extent that a large volume of cheap(er) crude from Alberta depresses the price at the pump and boosts fossil fuel demand while delaying a switch to alternatives (public transit, EVs), one could also attribute higher emissions to TMX.

More tangibly, new export pipelines boost oilsands profits and enable oilsands expansion, locking in fossil fuel use for decades and blowing Canada's emissions targets out of the water. As well as the plethora of environmental issues around oil tankers, marine noise, whales (etc.) and pipeline spills.

Great article.

Adding in the original purchase price, the project's total cost is $26B. And it's not completed yet, so with a few more cost overruns call it a skinny 30 billion buck package carried by the Canadian public. Wow. Just wow.

Andrew Coyne recently directed a full-throated fusilade against the fed's procurement abilities in a Globe op-ed, using military shipbuilding and fighter jets as feedstock for his fiscally conservative wrath. He should have included TMX which is literally on the same scale of waste, incompetence and shaky base assumptions.

Gawd knows why Trudeau et al aren't hammering Danielle Smith over her hubris about federalism despite the largesse of TMX. This public project is a gift to the majority foreign-owned private oil industry, which is as active as ever in Alberta, busily raking it in and buying out both senior governments at the same time.

Trudeau is playing with one foot in each of the carbon and climate action camps. He seems ignorant of how dumb that is, especially with both camps visibly moving apart, causing him to do some embarrassing splits. One day he will fall down because of this naive duplicity.

TMX is certainly not a gift for BC, which won't benefit with more than a couple handfuls of new jobs while being forced to assume the majority of the risk, especially to the coastal marine ecosystem and economy. Multibillion dollar bonding posted for potential environmental and economic damages would be very quickly exceeded by an international lawsuit if just a third of the contents of an Aframax tanker are spilled in Boundary Pass after a grounding on a tight corner, or a collision with another ship that lost its power or rudder. To my knowledge, no professional level independent risk assessment has been conducted specifically for BC's south coast where 3.5 million people live, fully half solidly opposed to this project.

Just think what would be possible if $30B of federal money was put into the fast emerging and highly competitive renewable power projects in Alberta's Crowsnest Corridor.* I am convinced that the fossil industry sock puppets in the Alberta government will form a choir and call that investment "anti-Alberta" while ignoring the investment in TMX.

* I don't believe wind and solar -- especially on the Prairies -- require any subsidies. But still, the feds could catalyze the transition with generous subsidies or as a public contribution via new HVDC transmission infrastructure connected to continental markets, couching it strictly as a job creation policy for Albertans while avoiding any rhetoric about climate. Ditto with Newfoundland and its phenomenal wind potential, and Saskatchewan WRT solar and regenerative agriculture. Vocal resistance from said provincial governments would look like they are against job creation.

Environmentally irresponsible. And unconscionable that the Liberal government has hung this albatross around the neck (i.e. wallets) of Canadian taxpayers. It is already known that TMX will never make a profit and furthermore is quite likely fated to become a stranded asset within 15 years of less (rather than a more normal 50-60 year lifetime) as the shift away from fossil fuels accelerates. Wait until there is a landslide (due to clearcutting combined with a climate change generated storm) and major spill, or a tanker spill in Burrard Inlet. It's only a matter of time.

The Trans Mountain Westridge terminal, in Burnaby, where tankers are loaded for export has loaded close to two tankers a month for the past three years; the average for the past 12 years is 2.5 per month. It is capable of loading ten per month of the Aframax-sized tankers, more for the Panamax-sized tankers. There is no need for more export capacity when the existing capacity is largely unused.

By far the majority of tankers deliver their oil to California. If a higher price for the oil was available in Asia all the tankers would have gone there, thus demonstrating that a higher price is not generally available in Asia. When tankers have gone to Asia it happened when the price of Western Canada Select temporarily dropped (