Parliamentary budget watchdog has found Canada’s controversial Trans Mountain pipeline no longer profitable, as an expansion project on the country’s west coast has faced years of delays, high costs and opposition from local communities.
In a report on Wednesday, the Parliamentary Budget Officer’s office said the Canadian government’s 2018 decision “to acquire, expand, operate and ultimately divest Trans Mountain’s assets will result in a net loss to the federal government.”
“Trans Mountain no longer continues to be a profitable venture,” she said.
The report also estimated the costs Canada could incur if construction were halted and the Trans Mountain expansion canceled indefinitely, saying that Ottawa could have to write off $11.1 billion in assets (C$14.4 billion).
The Trans Mountain expansion project has been turbulent from the start, with environmentalists and indigenous communities along the pipeline’s route raising the alarm about the harmful effects they said would have on the environment and their way of life.
Despite legal challenges seeking to prevent the plan from moving forward, Prime Minister Justin Trudeau has defended the project, insisting it will create jobs and generate money that can be used to help Canada transition toward greener energy.
The Trudeau government announced in 2018 that it had acquired the expansion from its then-owner Kinder Morgan for $3.5 billion (CAD 4.5 billion). The project was then approved in 2019, and construction continues.
The project “serves the national interest and will make Canada’s economy more sovereign and more resilient,” Adrien Vobchas, a spokeswoman for Deputy Prime Minister Chrystia Freeland, told AFP on Wednesday.
It cited independent analyzes from BMO Capital Markets and TD Securities that concluded that the project remains commercially viable at higher costs.
Faubschas added that the pipeline sale will only continue after further consultations with indigenous groups and the reduction of associated risks.
The expansion will triple the capacity of the pipeline, which has been in operation since the early 1950s, to allow it to ship up to 890,000 barrels of oil per day from the Alberta tar sands to the coast of British Columbia for export abroad.
Trans Mountain Corp said in February that it expected to complete the work in late 2023. It also said the cost had increased to $16.5 billion (CAD$21.4 billion), up from $9.75 billion (CAD$12.6 billion).
“The progress we’ve made over the past two years is remarkable when you consider the unexpected challenges we’ve faced including the global pandemic, wildfires and floods,” TMC President and CEO Ian Anderson said in a statement on February 18.
At the same time, the federal government said it would not spend additional public funds on expansion. She added, “TMC will instead secure the financing needed to complete the project with third-party financing, either in the public debt markets or with financial institutions.”
There will be no profits
But environmentalists and other stakeholders said the increased costs were another reason for the Canadian government to scrap the expansion altogether.
“It never made sense to build Trans Mountain during the climate crisis,” Emma Jackson, a senior Canadian organizer with environmental group 350.org, said in a statement in February.
“This is the moment to scrap this project completely and put all of our energy and political will into a just transition that leaves fossil fuels in the ground and supports people, communities and workers.”
On Wednesday, Julia Levine, director of the National Climate Program at Environmental Defense, reiterated that the project would cause “catastrophic climate and environmental impacts” and harm Canadians.
“There will be no profits, only financial losses for Canadians and more carbon emissions for the planet,” Levine said in a statement.
“With project costs continuing to inflate, the government should cut its losses and cancel construction of the expansion pipeline — before more of our dollars are wasted; public dollars that could instead be invested in developing sustainable energy systems.”