It’s still not entirely clear what led Teck Resources to withdraw its proposed Frontier oilsands mine, nor is it clear why that decision came just days before we were to learn whether Ottawa would approve the project.
There’s not likely a single explanation to all of this, but the company’s deliberately vague announcement left the door open for others to fill in those blanks with their own spin — including, unfortunately, the prime minister himself.
The one clear implication of Teck’s decision is that it lets the prime minister off the hook.
Justin Trudeau was spared the difficult decision of saying “yes” or “no” and then facing the controversy that would have ensued. He was spared the need to articulate a vision for how or whether this project fit into the Canada of the next 20 years, and was spared the need to explain to those disappointed in his decision how their concerns would still be addressed.
That hasn’t stopped Trudeau from speaking about the matter, though. In the House of Commons this week, Trudeau boasted of how Teck’s letter expressed support for strong action on climate change and, more specifically, Ottawa’s carbon pricing approach.
But if the prime minister was intending to reject this application from Teck, it’s extremely disingenuous to be using the company’s letter to extract some sort of political gain. If Trudeau believes that these are the sorts of forward-thinking philosophies we need from leaders in the energy sector, then it is rather counterproductive to be slamming the door on what it is they actually intend to do.
However, if Trudeau was prepared to approve this project (perhaps even with some additional conditions) and therefore might be inclined to approve something similar to it in the future, it would be very helpful to have him articulate that. If we want energy companies to accept and adjust to the need for meaningful climate policies, then it’s reasonable for them to expect that doing so means moving forward on new projects.
Should the next company with aims on a project similar to Frontier simply not even bother?
Teck’s Frontier project faced challenges separate from whatever political controversy and uncertainty was swirling around it. Given that there are a number of approved but stalled oilsands projects on the books in Alberta, it’s clear that the economics of such mega-projects are not ideal at the moment.
But still, we should be wary about further scaring away investment, especially from companies that take seriously the issues we expect them to take seriously.
Not only is Teck, as the prime minister concedes, prepared to embrace the importance of meaningful climate policy, it has also been a leader in meaningful Indigenous engagement and participation. The company had benefits agreements in place with the 14 First Nations, many of which are now loudly lamenting the lost opportunities that Frontier would have created.
There was concern expressed by the federal government about the emissions implications from a project as large as Frontier, which is why the Alberta government was signalling a willingness to maintain its predecessors’ 100-megatonne oilsands emissions cap.
However, given that global oil demand is still going to rise over the next two decades, what is the prime minister’s view on how Canada fits into that? What does he see as reasonable growth in Canada’s oil production and does that include any large new oilsands projects?
In the short term, issues around new supply are rather secondary to our need for capacity to move our existing supply. Alberta, of course, recently enacted a policy of curtailment in order to boost oil prices, and the government recently gave companies incentives to get around that curtailment if they took steps to add more oil-by-rail capacity. Pipelines are a much more immediate priority.
We’re used to Trudeau’s platitudes about “balancing the environment and the economy” and “developing our resources responsibly,” but those don’t provide answers to these big questions. We need vision and investors need clarity and certainty. All three are in short supply these days.