Construction of the Trans Mountain pipeline is seen underway in Kamloops, B.C., Tuesday, Sept. 1, 2020. A new report from the parliamentary budget officer says the federal government could end up losing money on the Trans Mountain pipeline if it further tightens its climate policy. THE CANADIAN PRESS/Jonathan Hayward

Construction of the Trans Mountain pipeline is seen underway in Kamloops, B.C., Tuesday, Sept. 1, 2020. A new report from the parliamentary budget officer says the federal government could end up losing money on the Trans Mountain pipeline if it further tightens its climate policy. THE CANADIAN PRESS/Jonathan Hayward

Future value of Trans Mountain pipeline rests on Liberals’ climate plans, PBO says

The increased capacity wouldn’t come on line until the end of 2022

The federal government could end up losing money on the Trans Mountain pipeline if it further tightens its climate policy and decreasing demand for Canadian oil, the parliamentary budget officer says.

The federal government bought the pipeline, and the unfinished work to increase its capacity by twinning it, in August 2018 for $4.4 billion.

The Liberals haven’t been able to find a buyer for the pipeline from Alberta to the West Coast. They are instead paying for its expansion, which the most recent estimate says will cost $12.6 billion.

The increased capacity wouldn’t come on line until the end of 2022.

The budget officer said the pipeline remains profitable based on expected cash flows, estimating the government could make $600 million above its purchase price.

But Yves Giroux warned in his report Tuesday that everything could change based on circumstances both beyond and within the government’s control, including changes to climate policy that would reduce demand for the petroleum products the pipeline moves.

Giroux also provided a scenario for the Liberals’ promise to reach net-zero emissions by 2050, estimating that doing so could lead to a $1.5-billion loss on Trans Mountain.

And that estimate led environmental groups to argue the government should spend less on the pipeline and more on tackling climate change.

“This pipeline is only profitable in a worst-case climate scenario, where the world takes no new action on climate change,” said Keith Stewart with Greenpeace Canada. “That is not a future that we should be betting over $12 billion of public money on.”

The report Tuesday was an update on the PBO’s report from early 2019 that pegged the cost of the pipeline and planned expansion project at between $3.6 billion and $4.6 billion, meaning the government might have overpaid for the project two years ago.

READ MORE: Canada Energy Regulator projects there may be no need for Trans Mountain expansion

The Liberals have argued the costs were worth it to save a project that looked doomed when Kinder Morgan and its investors got cold feet in the face of legal opposition and political uncertainty.

Despite a series of legal wins to the pipeline’s construction, and government money going into it, a sale hasn’t happened.

It’s unlikely the Liberals will ever find a buyer because the PBO report adds to arguments that Trans Mountain isn’t economically viable, said NDP finance critic Peter Julian.

He called on the Liberals to shift spending from the pipeline to climate change projects like green energy infrastructure.

“It was a mistake for Mr. Trudeau in 24 hours to come up with ($4.4 billion) and throw that at the company,” he said during a virtual press conference.

“It would be a bigger mistake to … keep pouring money — taxpayers’ money — into this project, even though it is almost in all the scenarios that are realistic, it is going to be a money-loser.”

Giroux’s report last year estimated the government would lose upwards of $2.5 billion if the expansion didn’t go ahead.

In his report Tuesday, Giroux estimated that a one-year delay in getting the expansion online would translate into a $400 million loss. A 10 per cent drop in construction costs would put the profit margin at $1 billion, or $200 million if costs rise.

In a statement, Giroux said the precarity of the outlook lay with federal policy.

“The profitability of the assets is highly contingent on the climate policy stance of the federal government and on the future utilization rate of the pipeline,” he said.

Amara Possian, Canada campaign director for 350.org (named for a “safe” level of carbon dioxide in the atmosphere) said the PBO report makes clear the government now faces a clear choice.

“Acting on climate change and Trans Mountain don’t mix and we all need to be asking the prime minister what’s more important: saving this pipeline or tackling the climate crisis?”

Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Climate changeLiberalsTrans Mountain pipeline

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

CSWM is planning to increase the space for loading bays at the Comox Valley Waste Management Centre. Record file photo
CSWM plans increase to number of Comox Valley landfill bays

The expansion prompted in part by COVID-19 spacing requirements

Cumberland is demanding a major clean-up at a Derwent Avenue property. Photo by Mike Chouinard
Cumberland orders massive clean-up at downtown house

Uninsured vehicles, illegal structures have been subject of multiple complaints

Andrea Cupelli of the Comox Valley Coalition to End Homelessness told council the coalition’s needs assessment for non-market housing continues to grow throughout the region, as well as within Comox. . File photo
Coalition to end homelessness asking for additional funding from Comox

The coalition’s needs assessment for non-market housing continues to grow

Work on the first phase of renovations at the Village of Cumberland office is nearing completion. Record file photo
Cumberland office close to re-opening after reno

First phase with COVID measures should be done this month

Cumberland has long gone its own way when it comes to parks. Record file photo
Cumberland hesitant about regional park service

Community was left out of area park plan back fifty years ago

Keith the curious kitten is seen on Nov. 4, 2020 at the Chilliwack SPCA. Friday, Jan. 22, 2021 is Answer Your Cat’s Questions Day. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of Jan. 17 to 23

Answer Your Cat’s Questions Day, Pie Day and International Sweatpants Day are all coming up this week

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

(Phil McLachlan - Capital News)
‘Targeted’ shooting in Coquitlam leaves woman in hospital

The woman suffered non-life threatening injuries in what police believe to be a targeted shooting Saturday morning

JaHyung Lee, “Canada’s oldest senior” at 110 years old, received his first dose of the COVID-19 vaccine on Thursday, Jan. 14, 2021. He lives at Amenida Seniors Community in Newton. (Submitted photo: Amenida Seniors Community)
A unique-looking deer has been visiting a Nanoose Bay property with its mother. (Frieda Van der Ree photo)
A deer with 3 ears? Unique animal routinely visits B.C. property

Experts say interesting look may be result of an injury rather than an odd birth defect

Standardized foundation skills assessment tests in B.C. schools will be going ahead later than usual, from Feb. 16 to March 12 for students in Grades 4 and 7. (Black Press Media file photo)
B.C. teachers say COVID-affected school year perfect time to end standardized tests

Foundational skills testing of Grade 4 and 7 students planned for February ad March

Sooke’s Jim Bottomley is among a handful of futurists based in Canada. “I want to help people understand the future of humanity.” (Aaron Guillen - Sooke News Mirror)
No crystal ball: B.C. man reveals how he makes his living predicting the future

63-year-old has worked analytical magic for politicians, car brands, and cosmetic companies

Terry David Mulligan. (Submitted photo)
Podcast: Interview with longtime actor/broadcaster and B.C. resident Terry David Mulligan

Podcast: Talk includes TDM’s RCMP career, radio, TV, wine, Janis Joplin and much more

Seasonal influenza vaccine is administered starting each fall in B.C. and around the world. (Langley Advance Times)
After 30,000 tests, influenza virtually nowhere to be found in B.C.

COVID-19 precautions have eliminated seasonal infection

Most Read