Ottawa Mulls Alberta ‘Aid Package’ as Province Angles for Teck Mine Approval
With an end-of-month deadline looming for a cabinet decision on Teck Resources’ proposed Frontier tar sands/oil sands mine, Ottawa was preparing an “aid package” to cushion the blow for Alberta if it rejects the company’s plan, Alberta said it wasn’t interested in a federal “handout”, and Teck itself was facing stiff financial headwinds that were entirely unrelated to the C$20.6-billion megaproject.
“Options being considered in the aid package, to be featured in the upcoming budget, include a cash injection to help clean up thousands of inactive oil and gas wells abandoned by bankrupt companies,” Reuters reports, citing five sources with knowledge of the situation. “The move would help create jobs. But it would also require Alberta’s government ‘to close the loopholes’ that have allowed companies to shed their responsibilities for the cleanup, one of the sources said.”
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The aid package could also include an expansion in federal-provincial “fiscal stabilization” that has been on Premier Jason Kenney’s wish list, as well as funding for local infrastructure projects.
“There will be a big fight inside cabinet over this,” an unidentified source told Reuters, in a story republished by the Globe and Mail. “Rejecting Teck without providing Alberta something in return would be political suicide.”
All five sources told the news agency that Prime Minister Justin Trudeau is concerned about national unity, but has not made his position known on the project. Deputy Prime Minister Chrystia Freeland and Natural Resources Minister Seamus O’Regan are both believed to support project approval.
While Alberta is insisting the project is essential to create jobs and sustain economic growth, Reuters notes that 20 other tar sands/oil sands projects “currently sit dormant despite receiving approval,” and Teck CEO Don Lindsay has admitted the company might never build the project, even if it receives permission to do so.
But that hasn’t stopped Alberta from going all-in with its demands that Ottawa get on with the approval. “The Frontier mine is not a political gift,” Environment Minister Jason Nixon told media Friday, adding that the mega-mine “deserves to be approved on its own merits” and not leveraged for tougher provincial climate action.
Nixon added that the aid package elements identified in the Reuters story “have nothing to do with the Frontier mine, which a joint federal-provincial panel decided this summer should go ahead despite its environmental impacts,” National Newswatch writes.
“Albertans are not looking for a Justin Trudeau handout. We’re not interested in that,” Nixon said. “We want Justin Trudeau and the federal government to get out of Albertans’ way, let hardworking Albertans do what they do best, which is create prosperity for this province and create prosperity for this country.”
But despite the “significant adverse project and cumulative effects” identified in a federal assessment report that nevertheless recommended approval, Alberta is still treating the Teck project as what the Toronto Star calls the “canary in the oilsands mine”. Jack Mintz, president’s fellow at the University of Calgary’s fossil-infused School of Public Policy, declared the province will be “apoplectic” if the mine isn’t approved.
“Leaving aside the economics of it,” he said, “if it’s turned down, that is a major signal that…maybe any future oilsands project will not be possible.”
“I’ve been very clear to the prime minister,” Kenney said last month. “If they say no to this project, then they are signalling his earlier statement—that he wants to phase out the oilsands.”
Mount Royal University policy studies professor Lori Williams said that comment, and the underlying PR strategy it represents, might come back to haunt the Alberta premier if Ottawa rejects the project. “If you see it as having been too demanding or too obstreperous, and that that actually alienated rather than increased support, that could come back,” she told the Star. “But much depends on whether the economy improves by the next election.”
Star economics columnist Heather Scoffield takes a similar tack, contending that “intransigent positioning” on all sides of the issue means “the loss of rational debate” on crucial economic and environmental concerns.
“Yes, the Frontier project could lead to 7,000 jobs—but not for years, and only if Teck finds a partner, and only if oil prices are much higher than they are right now, and only if more than a dozen other already-approved, more-efficient oilsands projects sitting on the shelf waiting for the right conditions are in full swing,” Scoffield writes.
“There’s no doubt that Alberta’s economy could use a boost right about now, especially when it comes to jobs for the thousands who have been left unemployed by the past few years of low oil prices and lack of investment in the oilpatch,” she adds. “And yes, the federal government should be doing what it can to work with the province and hash out solutions.”
But “this has been made into a political football,” said University of Alberta energy and environmental economist Andrew Leach, and the Teck Mine “isn’t going to solve their problem”.
“By turning the Frontier project into a high-stakes test of national unity, Alberta politicians may well be shooting themselves in the foot,” Scoffield adds, citing Leach. “If you’re the next company on the list to pitch a major natural resources project in Alberta, you’d be wondering whether it’s all worth it, he says. ‘Your worry is, am I going to become the next political football?’”
Veteran Star columnist Chantal Hébert has a different take, arguing that the Teck decision is a classic lose-lose for Trudeau, whichever way it goes. “If the government rejects the project, Deputy Prime Minister Chrystia Freeland’s bridge-building mission will be, if not sabotaged, at least greatly compromised. Alberta Premier Jason Kenney has made it clear he would treat a federal refusal as a declaration of war on his province’s economy,” she writes.
“But if the cabinet green-lights the mine, the credibility of the government on climate change stands to be damaged beyond repair. Going forward, it would be hard for the likes of Environment Minister Jonathan Wilkinson, his predecessor Catherine McKenna, or Quebec environmentalist Steven Guilbeault to maintain with a straight face that their government is serious about reaching its emission targets.”
Rejecting Teck would also make it politically difficult for Trudeau to subsequently approve a liquefied natural gas pipeline between Alberta and the Saguenay region that has the approval of Premier François Legault. “If Teck Frontier fits in Canada’s current climate change strategy, many are bound to wonder what fossil fuel development would not,” Hébert says. “But if the cabinet refuses to approve the mine, it may be hard-pressed going forward to say yes to other major projects currently in the political pipeline.”
While the politics around the cabinet decision heat up, the economic case for the project remains as weak as ever, and Teck itself may not be in much better shape. “With two weeks until it releases quarterly earnings, Teck Resources Ltd. can’t seem to catch a break,” Bloomberg reports, with its sales of metallurgical coal threatened by severe weather, its costs for a new shipping terminal in British Columbia running over budget, and its trade in base metals facing a threat from China’s coronavirus crisis that has not yet been fully quantified.