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

Grade 12 LSS student Catherine Sampson, Grade 8 LSS student Cianna Vincent, and LSS Aboriginal Education teacher Brenda Kohlruss led the LSS ceremony honouring missing and murdered Indigenous women, girls and two-spirit people. (Cole Schisler photo)
Ladysmith Secondary ceremony honours missing and murdered Indigenous women and girls

A small ceremony was held in the LSS foyer on the National Day of Awareness for MMIWG

Peter and Wayne Richmond and 49th Parallel Grocery won the award for Business Achievement 20+ Employees at the Duncan Cowichan Chamber of Commerce’s 22nd Black Tie Awards on Tuesday, May 4, 2021. (Submitted)
Ladysmith businesses recognized at Black Tie Awards

Black Tie Awards are given annually by the Duncan Cowichan Chamber of Commerce

Ladysmith’s Town Council met on May 4 and set a 0.52 percent increase for 2021 property taxes. (Town of Ladysmith/YouTube)
Town of Ladysmith adopts 0.52 percent tax increase for 2021

Mayor Aaron Stone praises the increase as among the ‘lowest in the province’

The CVRD introduces new app to contact residents during emergencies. (CVRD photo)
CVRD launches new app to spread information during emergencies

Cowichan Alert is a free app that can be downloaded onto smartphones, computers

RCMP. (Phil McLachlan/Black Press)
Unlawful entry triggers heart condition for Ladysmith woman

An intoxicated man entered the Lavines’ apartment in the middle of the afternoon

Protesters attempt to stop clear-cutting of old-growth trees in Fairy Creek near Port Renfrew. (Will O���Connell photo)
VIDEO: Workers, activists clash at site of Vancouver Island logging operation

Forest license holders asking for independent investigation into incident

Vivian Hermansen, Snuneymuxw First Nation, initiator of petition e-3281. Photo by Karen Evans.
Status card wait times an example of systemic racism, says Campbell River woman

Snuneymuxw woman launches petition as people waiting up to two years, as passports take three weeks

Flow Academy is located at 1511 Sutherland Avenue in Kelowna. (Michael Rodriguez/Capital News)
Interior Health locks out Kelowna martial arts gym following COVID violations

Actions were taken after all other steps to gain compliance were exhausted, says health authority

A man who allegedly spat at and yelled racial slurs at an Asian family was arrested for hate-motivated assault Tuesday. (Black Press Media file photo)
Arrest made after man spits, yells anti-Asian racial slurs at Victoria mom and kids

The man was arrested for hate-motivated assault near Quadra Elementary School Tuesday

A lady wears a vaccinated sticker after receiving a COVID-19 vaccine at a vaccination clinic run by Vancouver Coastal Health, in Richmond, B.C., Saturday, April 10, 2021. THE CANADIAN PRESS/Jonathan Hayward
Canada may find it challenging to reach herd immunity from COVID-19, experts say

Level of immunity among the population changes with the variants, especially the more transmissible strains

B.C.’s provincial health officer, Dr. Bonnie Henry. THE CANADIAN PRESS/Jonathan Hayward
Dip in COVID-19 cases with 572 newly announced in B.C.

No new deaths have been reported but hospitalized patients are up to 481, with 161 being treated in intensive care

The courthouse in Nanaimo, B.C. (News Bulletin file)
Island man sentenced in Nanaimo after causing a dog unnecessary pain and suffering

Kiefer Tyson Giroux, 26, of Nanoose Bay, given six-month sentence

Following a one-year pause due to the pandemic, the Snowbirds were back in the skies over the Comox Valley Wednesday (May 5) morning. Photo by Erin Haluschak
Video: Snowbirds hold first training session in Comox Valley in more than 2 years

The team will conduct their training from May 4 to 26 in the area

Solar panels on a parking garage at the University of B.C. will be used to separate water into oxygen and hydrogen, the latter captured to supply a vehicle filling station. (UBC video)
UBC parkade project to use solar energy for hydrogen vehicles

Demonstration project gets $5.6M in low-carbon fuel credits

Most Read