Justin Trudeau bet the farm on bitumen when he bought the Trans Mountain pipeline. Cutting a treasury cheque for $4.5 billion to the former owner, Kinder Morgan, and facing another $7 billion to complete the pipeline expansion, the Trans Mountain is a 40-60 year proposition for breaking even.
Visions of sugarplums were dancing through Trudeau and Morneau's heads as they decided to grossly overpay for an aging pipeline the boys from Texas were ready to write off and shut down. It seems the Liberals contracted Oil Fever from their predecessor who famously imagined Canada as an "energy superpower."
Only it's looking as though Trudeau and his finance minister made a bad bet. Meanwhile Rachel and Jason are also doubling down.
Getting Alberta’s economy running on all its fossil-fuel-powered cylinders is at the heart of the province’s election campaign.
But some of Canada’s top energy thinkers — as well as international experts — warn there’s no pedal any premier can stomp to make that engine rev like it used to.
“No policy of any Alberta government can change things,” said Mark Jaccard, an energy economist at B.C.’s Simon Fraser University, who has advised governments on climate policy and helps write reports for the Intergovernmental Panel on Climate Change.
The University of Manitoba’s Vaclav Smil, one of Canada’s most widely quoted energy analysts, said any move to renewable energy will take decades, not years. The transition, however, may be felt sooner.
“All energy transitions are slow,” he said. “Oil will be with us for decades to come — but not necessarily with high annual growth rates.”
The world has changed, said Andrew Grant of the London-based research group Carbon Tracker.
Solar and wind power provide three per cent of global energy demand, the report said. But between them they account for a quarter of all new generation.
It said that by early next decade, power from solar and wind is expected to be as cheap or cheaper than fossil fuels anywhere in the world. Since 2012, more new power generation has come from renewables than fossil fuels.
High-cost fossil fuels will become less attractive investments, Grant said. Even without carbon pricing, his group expects fossil fuel demand to peak early next decade.The reality is that solar and wind power have been cheaper than fossil energy since 2017 and they've opened the gap much wider over the past year. At the same time there's been a big drop in cost for battery storage.
... Jaccard has run the numbers.
In a paper published last year, he concluded that if the world honours its pledge to keep global warming under two degrees Celsius, there’s less than a five per cent chance that new oilsands investment — including pipelines — will be profitable over the next 30 years.
Does bitumen have the forty to sixty years remaining it will need to make the Justin Trudeau Memorial Pipeline a sound investment? Well, they've already tried to flog it and no takers.