Maybe I have had it wrong all along. Perhaps Premier Danielle Smith and Prime Minister Mark Carney are preparing to make a deal that will lead to a second pipeline to the West Coast. There are some positive signs, but forgive me if I remain a skeptic until the first pipe is in the ground, the first barrel of oil heads toward British Columbia, or the first tanker steams out of port.
Carbon Tax Talks Show Progress
Smith met with Carney last week and came away from their Ottawa meeting boasting about how close the federal government and Alberta are to agreeing to raise the price of industrial carbon to $130 per barrel — roughly six times its current level. Smith has made similar claims of a deal getting closer at least three times in the past year. A deal on a carbon tax is significant, as it is a prerequisite for Ottawa to approve another oil pipeline.
Reasons for Skepticism
However, two things stand out. First, Smith is the only one making these cheerful claims of progress; Carney never officially issues his own optimistic announcements. Second, how hard can it be to get Ottawa to agree to take more money out of the oilsands? The tougher job will be convincing potential international customers to pay a premium for Canadian oil because its environmental harm has been offset by carbon taxes. That will be an impossible sell, meaning either the province or oil companies will have to accept less revenue to make it happen.
Encouraging Regulatory Changes
There are other encouraging signs from Ottawa. The Carney government appears ready to circumvent the Trudeau-era No More Pipelines law. Authority for pipelines would transfer from the Impact Assessment Agency, created by Trudeau to make project approval nearly impossible, to the Canada Energy Regulator, the agency previously in charge of pipelines. The energy regulator was no pushover; approval of new pipelines was not guaranteed and often took years and billions of dollars. For instance, it effectively held up the Energy East pipeline until investors backed out. However, the switch back to an agency that understands the oil business and the need for pipelines is a positive move.
National Interest Designation
The feds have also hinted that they could declare another pipeline a "national interest project" in the coming months, something they refused to do since establishing their Major Projects Office. This is largely symbolic, but if Ottawa follows through on creating "federal economic zones" for highways, utilities, pipelines, and telecommunication networks, using its constitutional authority to push such projects through, my hard-shell skepticism might weaken a little.
