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Does Canada’s economy need Kinder Morgan?

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Much of the recent debate around Kinder Morgan’s pipeline and tanker project has centered around vigorous debate between the provinces of BC and Alberta and the question or whether the project is in the national interest. Ultimately, this depends on what kind of economy Canadians want to invest in, and what kind of economic future we want to create. 

There are also important questions about whether Canada’s economy is reliant on oil sands expansion, and whether the pipeline would create long-term jobs. Because of these key questions, we are updating and re-sharing some of our previous research around what’s fuelling Canada’s economy and where Kinder Morgan’s pipeline fits in. 

At the same time, over 700 businesses have joined together to raise concerns about investing taxpayer dollars in Kinder Morgan’s risky pipeline and tanker project at http://LetsMoveForward.ca

Where Does Canada’s Wealth Come From?

A diverse mosaic of industries forms our national economy, from tech start ups to winter sports to microbreweries. Although key industries vary significantly across regions, some clear national trends are also evident.

Real estate is by far Canada’s largest sector overall, contributing a full 13% of national GDP. Manufacturing and retail and wholesale trade are also significant, each bringing in some 11% of GDP (according to 2017 data by StatsCan). Construction and finance each generate another 7% of GDP.

Comparatively, in 2017, the oil and gas extraction sector was responsible for 6.5% of national GDP (again according to StatsCan). Although still significant, this economic contribution is less than most Canadians realize, as reported in a poll conducted by Environics.

Canada 2017 GDP by industry
Of this, the Alberta oil sands (what Statistics Canada calls “unconventional oil and gas extraction”) contributed just 2% of GDP – a number that has remained relatively consistent over the past several years.

Relative size of oil sands


Which Sectors Contribute the Most to Social Spending?

Another part of the ‘national interest’ conversation has focused on whether Kinder Morgan’s pipeline is necessary to pay for other public investments, like schools and hospitals. To answer this question, first it’s important to put the energy sector in context.

In 2014, the total the oil and gas sector––including oil and gas extraction and support activities––contributed 3.6% of all federal corporate tax revenue. This number is relatively low compared to financial and insurance services, which together contributed 23% of all federal corporate taxes, and construction, which contributed 7.6%. It is also notably lower than the manufacturing sector, which covered 14% of federal tax revenues in 2014.

Canada tax revenues breakdown
Read our full 2016 report for more details: WHAT’S FUELLING OUR ECONOMY: Is Kinder Morgan’s Proposed Pipeline Inconsistent with New Economic Trends and Realities?

 

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The Global Significance of a New Kinder Morgan Pipeline

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DOWNLOAD Analysis ‘The Global Significance of a New Kinder Morgan Pipeline’

Building the Kinder Morgan pipeline not only commits BC’s west coast to a specific economic development path, it also jeopardizes our international and national climate commitments. It will cost far more to deal with the impacts of climate change than it will to build a low-carbon economy.

 

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New Economic Trends and Realities, and Kinder Morgan

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DOWNLOAD ‘What’s Fuelling Our Economy: Is Kinder Morgan’s Proposed Pipeline Inconsistent with New Economic Trends and Realities?’

Which Industries Employ British Columbians?

BC is made up of thousands of small businesses, mainly in service-based sectors. We may think of BC as a resource-based province, but only 1.2% of British Columbians work in the oil and gas sector.

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What About the National Economy – Where Does Canada’s Wealth Come From?

Real estate is by far Canada’s largest sector overall, contributing a full 13% of national GDP. Manufacturing and retail and wholesale trade are also significant, each bringing in 11% of GDP. Although key industries vary across regions, some clear national trends are also evident.

Would the Kinder Morgan Oil Pipeline Create Jobs?

According to Kinder Morgan, building the pipeline would create 50 permanent jobs in BC and 40 permanent jobs in Alberta. It’s uncertain how many temporary jobs would be created, and if they would benefit otherwise unemployed workers.

Download our report to read more

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The Panel Report Is Out, and the Kinder Morgan Decision Looms…

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After an overwhelming number of people spoke, wrote, or presented their opinions on Kinder Morgan’s proposed oil pipeline, the Ministerial Panel has released their report to Cabinet.

The Ministerial Panel received the highest-ever response rate to a government of Canada questionnaire. 35,259 people responded to the questionnaire, and the panel’s online portal drew over 20,000 email submissions from people expressing their views on the proposed project. There were 2,500 people who took time out of their day to participate in person at a panel meeting in Alberta or BC.

The report includes verbatim comments and general themes heard during the public engagement period. It also identifies six high-level questions that the panel heard repeatedly and commends to the Government of Canada for serious consideration.

The six questions are as follows:

  1. Can construction of a new Trans Mountain Pipeline be reconciled with Canada’s climate change commitments?
  2. In the absence of a comprehensive national energy strategy, how can policy-makers effectively assess projects such as the Trans Mountain Pipeline?
  3. How might Cabinet square approval of the Trans Mountain Pipeline with its commitment to reconciliation with First Nations and to the UNDRIP principles of “free, prior, and informed consent?”
  4. Given the changed economic and political circumstances, the perceived flaws in the NEB process, and also the criticism of the Ministerial Panel’s own review, how can Canada be confident in its assessment of the project’s economic rewards and risks?
  5. If approved, what route would best serve aquifer, municipal, aquatic and marine safety?
  6. How does federal policy define the terms “social licence” and “Canadian public interest” and their inter-relationships?

CRED can answer some of these questions. No, it is not compatible to build the Kinder Morgan pipeline and still meet Canada’s climate commitments.

In addition, CRED finds that the pipeline would create few jobs, minimal tax revenues and would not impact energy security. The Kinder Morgan pipeline also comes with the additional concerns (and costs) of an oil spill. Beyond the direct cleanup costs, the indirect economic impacts would be long lasting, impacting sectors from tourism to agriculture.

Look for our specific findings to be published in the coming days.

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BC Government Rejects Trans Mountain Pipeline Expansion

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We walked to work on Monday morning with an extra spring in our step after we heard the announcement that the Government of British Columbia is formally opposing the Trans Mountain pipeline expansion. This was welcome news to CRED, our members, supporters and partner organizations! 

While the eleventh hour decision may be politically motivated rather than driven by concerns over inadequate bitumen spill response as indicated, the end result is what we all want: attention to the need for a review board that thoughtfully and transparently weighs the risks of economic activities against potential benefits.

Provincial opposition is just one step. We need the federal government to make a move and recognize that transformation of the National Energy Board isn’t enough. The transformation needs to happen before the Trans Mountain Expansion review is concluded under the current framework.

CRED is working to make this concern heard through an open letter to Prime Minister Trudeau. As many of you know, on top of generating fact-based research and stimulating dialogue around our economy, the CRED team advocates for responsible economic development at the municipal, provincial and federal levels.  We are partnering with like-minded business organizations in our efforts to engage policymakers in supporting industries that generate employment and benefits for society without degrading our land and water.

As part of this process, in the coming days, CRED will be active in the following:

  • We will publish an open letter to Prime Minister Trudeau from BC businesses to put a halt to the NEB process, and overhaul the NEB before pronouncing on the Trans Mountain expansion in May 2016. The timing will coincide with the upcoming NEB final hearings in Burnaby.
  • We are generating infographics to illustrate the worsening economics of the pipeline expansion project, as outlined in recently published research by SFU and the Living Oceans Society.

Please go to http://credbc.ca/neb-open-letter-trudeau/ to sign on to the Open Letter, and stay engaged with us as we continue to work towards a vibrant economy.

 

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Revamping the NEB Process – If Not Right Now… When?

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When Kinder Morgan first introduced a proposal to threefold expand the Trans Mountain pipeline in 2013, few would have predicted that the review process itself would be as controversial as the actual proposal.

Jump ahead to today. Two years into the review, and the cost has increased, oil markets are in a prolonged slump, opposition to the project grows, and new governments in Ottawa and Edmonton have taken the reins of energy policy. All this, framed by uncertainty around how Canada’s oil sands and LNG development plans will square with our newly minted commitments signed in Paris at the COP21.

The new Liberal government has promised to revamp the National Energy Board (NEB) process, and in this promise CRED sees opportunity for real change. In fact, meaningful change seems so close, and the impacts so significant, that we see it as imperative that the process not just be tweaked at some undefined moment in the future. CRED and our members want the current process halted, and a new process built starting now. If we as a nation are going to contemplate an overall energy strategy in accordance with our international commitments, let’s do that NOW, while there are projects under review that could significantly hamstring or even compromise our ability to meet those commitments. Let’s do it so we can have a fair and transparent review of the Trans Mountain expansion, a project that could impact our province for years to come.

Let’s not forget that the current process is the same one that prompted two environmental organizations and over 35 individuals to publicly withdraw from the hearings. Economist Robyn Allan called the process “rigged” when she pulled out in May. There is also legal action against the NEB: the Tsleil-Waututh Nation has asked the Federal Court of Appeal to stop the review due to flaws in the process itself, and legal errors made by the NEB. Landowners, business people, academics and environmental advocates launched a constitutional challenge against the NEB on the basis that it unfairly restricts public participation and refuses to hear concerns related to climate change or oil sands development.

CRED was one of 100 signatories to a letter to Prime Minister Trudeau, asking for a halt to the Trans Mountain expansion pipeline review prior to the historic Paris meetings. The government has stated that the two pipelines currently under review – the TMP and Energy East – will continue in a transitional review process, but it remains unclear what changes will be made, and when.

CRED wants to ensure that the federal government implements changes immediately to ensure that these pipelines are subject to a proper climate review, including both upstream and downstream impacts, and particularly taking into consideration the potential economic impacts to BC businesses.

We are crafting an open letter to Prime Minister Trudeau and his Cabinet to revise the NEB process now, so that the Trans Mountain expansion project will be reviewed under the new process. Look for our letter to be circulated; we value your thoughts and support.

Image via Flickr creative commons user rickz

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UBC study: a major spill in Burrard Inlet could cost the Vancouver economy $1.2 billion

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As the National Energy Board process gets further along for the Trans Mountain Expansion review, conversations are growing and research is building about the risks of the project. Since CRED first published the report ‘Assessing the risks of Kinder Morgan’s proposed new Trans Mountain Pipeline’ in 2013, more and more research has come to light about risks associated with this project. Reports around environmental, health, economic and reputational impacts have all shone a light on risks that weren’t immediately clear.

One of the latest reports comes from UBC Fisheries and Oceans and was led by CRED Advisor, Rashid Sumaila. The report ‘Potential economic impact of a tanker spill on ocean-dependent activities in Vancouver, British Columbia’ found that a major spill in Burrard Inlet could cost the Vancouver economy $1.2 billion. This estimate is alarming, and doesn’t include the cost of clean-up, response, or recovery. The report looked at the potential impact of an oil spill in Burrard Inlet on five key industries:

  1. Commercial fishing
  2. Port activities (shipping and cruises)
  3. Inner harbour transportation
  4. Tourism (on-water recreation, ocean-based and waterfront events, visiting beaches and seawall)
  5. Local use of the waterfront

Through the analyses of three potential spill scenarios: no spill, a spill in May and a spill in October, the study found that a 16,000 m3 oil spill in October would cost Vancouver’s economy just over $1 billion. If that same spill happened in May (when there is more ocean-dependent economic activity occuring) the economic cost goes up to over $1.2 billion.

The report concluded that an oil spill would result in closures of commercial fishing, floatplane activity and closure of the Vancouver port, and it could continue to impact ocean-dependent tourism for 8 years. Those are just some examples of the impact a spill would have on businesses and jobs dependent on a healthy marine environment. We’ve already seen that it doesn’t take much to close industries down. Crab and prawn fishing were shut down by the department of Fisheries and Oceans and the Musqueam Band in April after an oil spill leaked from a grain carrier in Burrard Inlet, and that was a minor spill in comparison to the potential scenario that this study is based on.

Kinder Morgan Canada’s spokesperson Ali Hounsell is quick to remind the public that “the Trans Mountain pipeline and oil tankers have been safely operating in this community and through this harbour for the past 60 years”. Even if this is the case, will this hold true when the number of tankers have increased fourfold?

This UBC study focuses on impacts to ocean-dependent economic activities within the City of Vancouver; however, several other communities such as the Tsleil-Waututh, Musqueam and Squamish First Nations peoples, who depend on the Burrard Inlet for food as well as social and ceremonial purposes would also be impacted. Those impacts need consideration, as do the other issues such as stranded assets, spills on land, and the impact on BC’s brand.

 

image courtesy of Jan Zescheky

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Kinder Morgan holds few benefits

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by Liz McDowell, December 16, 2014

It’s been a whirlwind couple of weeks up on Burnaby Mountain. In a high-stakes stand-off late last month, hundreds of protestors clashed daily with Kinder Morgan surveyors over the company’s right to test drill in a city park. The Burnaby RCMP arrested over 100 grandmothers, First Nations leaders, Clayoquot Sound veterans and other local residents for stepping over what turned out to be a fictitious line (somebody needs to check their darn GPS), and local politicians in Burnaby declared war on the proposed expansion of the Trans Mountain oil pipeline.

Now that Kinder Morgan surveyors have packed up their machinery and the hubbub has died down, it’s time to step back and look at the bigger picture. What, exactly, would this pipeline bring us that is worth all the controversy and conflict? As British Columbians, what are we really getting out of the project?

Earlier this month, a report from economists at the SFU Centre for Public Policy Research and the Goodman Group found that Kinder Morgan had over-estimated the number of jobs created by the project by threefold. This means that during the project’s construction, at most 4,000 short-term jobs would be created.

Compare this to the tens of thousands of jobs in tourism, retail and other marine-based sectors that would be impacted if there was a major oil spill in Burrard Inlet, and the project starts to feel like a real risk for our local economy. The same report also found that only 2 per cent of the project’s benefits would flow to BC, whereas tar sands operators would retain a whopping 68 per cent of revenues. The rest of the revenues would flow to Alberta and other provinces.

CRED’s own research has found that tax benefits would also be tiny. Burnaby, the municipality that stands to benefit the most, would be able to fund at most 1/12th of its parks and recreation budget from additional tax benefits. And that’s assuming no repeats of the 2007 spill on Inlet Drive, since a mishap like that could immediately wipe out all the municipal gains.

CRED_km tax revenue BC rev1-01

Provincially, the amount of benefit Kinder Morgan claims this project would bring would fund, at most, two-thirds of the running costs of just one of BC’s 99 hospitals. Now, that’s hardly a nation-building project. You can bet that Kinder Morgan’s announcement in late November that the company has quietly sold all its assets to its American counterpart certainly won’t increase the benefits to British Columbians, either.

A recent report came out claiming that there are now more Canadian jobs in clean energy than in the oil sands. Our own research has found that there are more jobs in the brewing and beer economy than in the whole of the oil sands. So why it is assumed that finding export markets for oil is a national priority but building clean energy jobs and, more importantly (sorry solar panels but a nice microbrew beats you any day), beer jobs isn’t?

Maybe what we really need is a beer pipeline.

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Kinder Morgan benefits overblown: independent study

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Earlier this week, an independent study released by the SFU Centre for Public Policy Research, in collaboration with California-based consultancy the Goodman Group, found that Kinder Morgan has substantively over-stated the benefits of its proposed Trans Mountain Pipeline Expansion in its submission to the National Energy Board.

The report echoes past research from CRED which has found that BC’s provincial and municipal coffers will only get a tiny benefit from the Trans Mountain expansion. Instead, oil sands producers, Alberta and, of course, Kinder Morgan will be the main beneficiaries.

Municipal benefits from the Trans Mountain pipeline expansionCRED_km tax revenue Municipalities rev1-01

According to our research, Kinder Morgan’s stated tax benefits (which, as this report highlights, maybe also be overblown) would only fund a small fraction of provincial and municipal services – 0.3% of the costs of running the province’s schools, for example, or just 1% of the Coquitlam police department. Even the biggest municipal beneficiary, the City of Burnaby, could fund less than 9% of its Parks, Recreation and Cultural budget with tax revenues from the Trans Mountain Expansion. And this is a best case scenario, assuming no increased costs for servicing the pipeline right-of-way or any incidents to respond to.

BC provincial benefits from the Trans Mountain expansionCRED_km tax revenue BC rev1-01

The SFU report also found that Kinder Morgan has significantly over-estimated the number of jobs the pipeline would create, and downplayed the cost of a major oil spill because the company failed to take into account the high population density of the Lower Mainland, underestimating the costs of a catastrophic oil spill by potentially billions of dollars.

Download the full report here, and read CRED’s reaction here.

 

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CRED reacts: must see real economic assessment before federal “pipeline push”

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On September 12th the federal government announced a new strategy to garner support in BC for the development of new oil pipelines.

In response, CRED is calling on the federal government to do a full assessment into the economic risks of new oil pipelines before pushing for their approval.

If the government is serious about protecting the long-term prosperity of Canadians, there needs to be a real consideration of whether new oil pipelines could hurt more jobs than they create. Over 80% of British Columbians work in the service sector – they need to know that their jobs aren’t at risk of similar impacts as seen after oil spills in the Gulf of Mexico and elsewhere across North America.

Meeru Dhalwala, co-owner of celebrated local restaurants Vij’s, Rangoli and Shanik and CRED advisor, says:

“Tourism is a key source of income for our BC economy, particularly in Vancouver. I’ve read much on both sides of the argument and I am not at all convinced that the relatively few permanent jobs created by new oil pipelines are worth the massive risks–the most important risk being a major and expensive oil spill that would devastate our waters, wildlife and economy.”

UBC economist and CRED advisor Dr Rashid Sumaila echoes the need for a robust, independent cost-benefit analysis:

“Any decision about whether to approve a new pipeline in BC needs to weigh economic costs against the benefits, especially for those of us who live and work along the pipeline and tanker routes.

How might a new pipeline impact the brand of Vancouver? How would it affect the price of gas in the lower mainland? If a significant spill were to occur, how many jobs would be lost? How much would an oil spill cost to clean up and who would pay? All of these questions need to be carefully considered before sending delegates to BC to campaign for approval.”