Thursday, April 11, 2019

Trudeau's Dodgy Ten Billion Dollar Bet


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.

... 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.
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.

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.

16 comments:

Anonymous said...

Has Justin Trudeau bought said pipe line so it cannot be used?? Just asking.

Lorne said...

That pipeline purchase was the final nail in the coffin of my support for Trudeau, Mound. With each passing day, the Green Party looks more and more likely as the recipient of my next federal vote.

Anonymous said...

Nope.

margaret beresford said...

And can we now clarify the asinine visions that caught our 'sugar plum arses' on Trudeau when in fact all sat on their stone slabs, while tailing ponds fumed and no one of you idiots said bo-bo to Harper or the idiots that have always plagued the Conservative party...???? So darn fed up with arses --a pipeline ----really ???When you idiots can't even devise a contract that includes actual real --reclaimed form of any plan according to the very contract promised to all the taxpayers (who were naturally refused viewing of either the contract or the provision that were not concrete as far as the tailing ponds) ......And now you jerks are demanding what ??? of those arses in the East to what pay up because of your stupidity of again for the multi-time of taking what ever the big obese bigwig from the US of A tells us as gospel and thus reality flies out ...Well figure this one out on your own ---you have name-called and denigrated all those that are supposed to be fellow citizens for the last time....Show us how we are the loosers.......?

margaret beresford said...

By the by I am referring to the least acknowledged and the least admitted to 264 billion dollar cost of cleaning up the tailing ponds in the Tar Sands ---WHICH were supposed to be part and parcel of the contract with Suncor and the Koch Bros to make 'as reclaimed land'...as though there never was any tailing ponds ....Yeah only Albertans are that stupid or afraid to demand straight answers from a party that has drained their Heritage Trust Fund to get re-elected for 44 years....and thus remain bent on their knees and full of their hatred of any one from the East as always ready to dump their screw-ups on any one else ...Its called a 'failure to mature/take/responsibility and boy don't Albertans do that in spades.

Anonymous said...

What is the CO2 footprint of bitumen that is not burned but used to pave roads?

Troy said...

Been reading nonsense lately on news comments site, taking issue with these sorts of numbers: "Because Canada doesn't have the capacity to sell China oil, that's why Canada doesn't sell to full capacity!"

Eh, exsqueeze me? How does that work, exactly?

So, if we built the pipeline, it'll somehow magically will demand into existence?

It's a sucker bet. Canada might as well have just piled a tonne of money, and the set it alight, ala the Joker in The Dark Knight.

Hugh said...

Remind me, why have we been paying carbon taxes since 2008?

The Mound of Sound said...

Hello, all.

Sorry, been away for a while. Thanks for your comments and questions. We all seem to be at a loss to make sense of this. Did JT shell out 4.5 billion to make sure the pipeline would never be built? What might make you imagine that?

The Mound of Sound said...

@ Maggie - many of us share your skepticism and, at times, disbelief. There is a Mardi Gras mentality that permeates Alberta's energy policy. After all this time, three major boom & bust cycles and nothing left over to show for it but a government running up deficits, a quarter-trillion dollar (by the Alta government's own figures) liability to clean up the tailing ponds, and now, a fierce determination to ignore all that and double-down on the bitumen gamble, what else can you call it? Peter Lougheed told them, in detail, how to extract the advantage out of that resource and, instead, they went at it hammer and tong like a bunch of drunken sailors.

Jason Kenney knows reality but he also knows how he can turn this fantasy into an effective election dog whistle.

The Mound of Sound said...

Troy, my man, yes it is indeed a sucker bet. Few remember how, overnight, Big Oil walked out on the Tar Sands when Alaska discovered conventional crude oil in Prudhoe Bay. Overnight, literally overnight. There was an invaluable lesson in that. Peter Lougheed learned it. Every buffoon since Ralph Klein ignored it. Now they're spitting furious with everyone else for their own childishness.

The Mound of Sound said...

@ Hugh. Good question. Don't hold your breath waiting for an answer but, damn, I don't have one.

Anonymous said...

Exactly the same as pavement.

The problem is that a key component of the Tar Sands is not sand, or gravel, but instead, petcoke, which is soft.

Alberta could reduce costs by well over 75%, by refining inhouse. No need to ship dilbit which is 50% assorted, expensive, explosive solvents, non-reclaimable. No need to ship petcoke, which is 25% of the dilbit content, and sells at a big loss.

Instead, Alberta would just be shipping refined oil products at market prices, not dilbitband Heavy Crude at below global prices.

Anonymous said...

“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.

“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.

Ha this is rich. They obviously are totally impartial and unbiased. A progressive academic and someone who works for an organization called Carbon Tracker.

I wonder how many foreign funded NGO's operate out of BC alone... Out here in Quebec we get our oil ethically... from Saudi Arabia.

Troy said...

To the anon, questioning the research is fine, but questioning the motivations of the researchers is not. If you wish to refute Jaccard's or Allan's statements, do the research (or fund it), and then present your findings.

Anonymous said...

What is the CO2 footprint of bitumen that is not burned but used to pave roads, compared with the CO2 footprint that is burned as fuel and in refinement to fuel?