Mining company Teck Resources has withdrawn its application for the contentious Frontier oilsands project.
The project, a significant expansion of Alberta’s oilsands, has become a flashpoint of the climate debate in Canada. Though the company attributed its decision to the need for climate action in a press release late Sunday, the project also faced significant roadblocks and may not have been economically viable.
“The growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved,” said company president and CEO Don Lindsay in a letter to federal Minister of Environment and Climate Change Jonathan Wilkinson, posted online Sunday night.
“In that context, it is now evident that there is no constructive path forward for the project.”
The federal government was supposed to announce whether it would approve or reject the project this week. In a joint statement, Wilkinson and Natural Resources Minister Seamus O'Regan confirmed that Ottawa will no longer make a decision.
"We appreciate that Teck has made a difficult decision," the statement said.
If built, Teck Frontier was projected to produce four million tonnes of greenhouse gas emissions per year, running for 40 years. The company said the mine would have created thousands of jobs, and for many in Alberta, the project has become a stand-in for the economic future of the oilsands.
But even had it been finished, Frontier would’ve faced reduced oil prices and a lack of pipeline capacity, both significant stumbling blocks. The company also posted lacklustre fourth-quarter results last week, saying it would have to take a $1.13-billion hit if the federal government didn’t give the project the greenlight.
The federal government was expected to announce this week whether it would approve or reject the $20.6-billion, 260,000-barrel-per-day mine.
Supporters of the pipeline pointed to the thousands of jobs it was expected to create. Alberta Premier Jason Kenney has pushed for its approval, positioning it as an issue of national unity amid increasing discussion about Western alienation.
Teck Resources has withdrawn its application for the contentious Frontier oilsands project.
Those who oppose the project see it as a test of how committed the federal government is to climate action, a central tenet of its campaign in last fall’s election.
“This was a phantom project that didn't make economic or climate sense,” said Keith Stewart, a senior energy Strategist at Greenpeace Canada.
Now that it's off the table, hopefully we can focus on projects that will create real jobs solving the climate crisis,"
In his letter to Wilkinson, Lindsay said the company had worked to “confirm” that the project was economically viable. Lindsay also praised Teck’s environmental commitments — in December, it announced plans to be carbon-neutral by 2050 — and work to secure agreements with nearby First Nations.
In a press release, Kenney blamed Teck’s decision to pull the application on the Liberal government’s “lack” of “courage” in defending the “interests of Canadians in the face of a militant minority” — a statement that contrasts with Teck’s public explanation.
In his letter, Lindsay said investors and customers are now demanding government policies that reconcile the need for urgent climate action with resource development, something that "does not yet exist" in Canada, the letter said.
Lindsay’s letter said Teck supports stricter climate policy, including a carbon tax and a cap on oilsands emissions, two measures Kenney has pushed back against. (Alberta’s previous government passed an emissions cap on the oilsands, it hasn’t yet been implemented.)
"The promise of Canada’s potential will not be realized until governments can reach agreement around how climate policy considerations will be addressed in the context of future responsible energy sector development," the letter said.
"Without clarity on this critical question, the situation that has faced Frontier will be faced by future projects and it will be very difficult to attract future investment, either domestic or foreign."
O'Regan and Wilkinson's statement said the federal government agrees with Teck on the need for climate action and sustainable resource development.
"All orders of government need a real plan for climate action now and to reach a net zero economy by 2050," the statement said.
Lindsay also said the company isn’t shelving Frontier because of the controversy around the project.
"The nature of our business dictates that a vocal minority will almost inevitably oppose specific developments,” the letter said.
"Frontier, however, has surfaced a broader debate over climate change and Canada’s role in addressing it. It is our hope that withdrawing from the process will allow Canadians to shift to a larger and more positive discussion about the path forward."