The premier of Alberta is condemning Joe Biden‘s plan to scrap the Keystone XL pipeline expansion on his first day as U.S. president.
Biden’s plan is outlined in transition documents seen by The Canadian Press.
The documents suggest that despite its best efforts, Canada has failed to convince the incoming administration of the virtues of importing fossil-fuel energy from a friendly ally and trading partner with similar climate change goals.
Jason Kenney says halting construction on the controversial project will be disastrous for both the Canadian and U.S. economies and their relationship.
“That would be, in our view, an economic and strategic error that would set back Canada-U.S. relations with the United States’ most important trading partner and strategic ally: Canada,” Kenney said on Monday morning.
According to Kenney, Biden’s transition team is not communicating with foreign governments “given events over recent years.” But Alberta’s premier is urging the team to change that policy in this case because of the relationship between the two countries.
“All we ask at this point is that president-elect Biden show Canada respect to actually sit down and hear our case about how we can be partners in prosperity, partners in combating climate change, partners in energy security.”
Kenney says his government — which announced a $1.5-billion investment in the expansion last year — is prepared to “use all legal avenues available to protect its interest in the project.”
He said the province has hired lawyers in both Canada and the U.S. and believes they have a “very strong” case for any legal recourse.
“This is, I believe, without precedent for an American administration retroactively to seek to cancel a piece of infrastructure that already exists.
“Costs have been incurred and if the project is effectively killed by a presidential veto of this nature – a retroactive veto – we believe that under the Canada-United States-Mexico trade agreement and other international trade agreements that there would be a solid legal basis to, at the very least, seek damages.”
Prime Minister Justin Trudeau has so far been silent on the issue, but his ambassador to the U.S., Kirsten Hillman, is defending the pipeline, saying it fits into Canada’s climate plan and promises good jobs.
In a statement to Global News, federal Minister of Natural Resources Seamus O’Regan said Canada is looking forward to working with the incoming U.S. administration, but said it will continue to make the case for Canadian oil.
“Canadian oil is produced under strong environmental and climate policy frameworks, and this project will not only strengthen the vital Canada-U.S. energy relationship, but create thousands of good jobs for workers on both sides of the border.
“Workers in Alberta and across Canada will always have our government’s support.”
In a statement, MP for Calgary Nose Hill Michelle Rempel Garner, said the cancelation of the project would have “significant” negative impacts for workers on both sides of the border.
“This project stands to create thousands of jobs and is a project of national significance,” she said.
“At a time when we should be strengthening the bilateral relationship between our countries, looking for ways to take energy off of rail cars and into safer transport methods and reducing our dependence on energy produced in countries with far less rigorous environmental standards then our own, the cancellation of this project should not happen.”
In a statement, the Canadian Association of Petroleum producers said it was “concerned” by the reports the pipeline will be cancelled.
“Cancelling Keystone XL would immediately kill thousands of U.S. and Canadian jobs, harm energy security and integration in North America, and have a negative effective on the economic recovery in both countries,” president and CEO Tim McMillan said.
“This pipeline would supply the U.S. market with sustainably produced, high-demand heavy oil. Without it, the U.S. will have to import more oil, from places such as Venezuela, who do not share their concern for the environment or climate change.”
According to McMillan, CAPP will work with all involved parties — including government, unions and Indigenous communities — to try and find a way to complete the pipeline.
Calgary Mayor Naheed Nenshi also expressed his concerns about the possible cancellation.
“It’s very problematic for Alberta because we believe that this makes sense within Canada’s action plan. I know that the prime minister feels that way as well and will continue to advocate for this,” he said.
That being said, Nenshi said he wasn’t surprised with the news and is holding out hope TC Energy Corp. — the company behind the pipeline — and provincial and federal governments have been doing work in preparation to protect the taxpayers’ investment.
“My expectation would be that the provincial and the federal governments have been working very, very hard, not just on lobbying (Biden) to change his mind, but also on various contingencies and protecting the Alberta taxpayer from the downside risk of this project being canceled. That’s my expectation, and I hope that we will learn more about that in the days to come.”
If the permit is pulled, Kenney said he will sit down with TC Energy and the government of Canada to determine next steps.
Richard Masson, an executive fellow with the University of Calgary School of Public Policy, is concerned about what the cancellation could mean for future projects, especially after the federal government also was unable to get the Trans Mountain pipeline completed after buying it from Kinder Morgan.
“So if this pipeline doesn’t go, it’s really difficult to see who’s going to be the next pipeline developer who’s going to want to take on such a high level of risk. So it could really pose a challenge for the future development of the oilsands and for Canada’s resources,” he said.
“Once companies decide about the investments they want to make, they’re not going to build new projects if they don’t know they’ve got a secure way to get to markets.”
Opposition Leader Rachel Notley said the UCP needs to change its attitude on climate change for Keystone XL, or other pipeline projects, to be successful.
“If this project – or any other pipeline for that matter – has any chance of success, the UCP needs to get out of the business of denying climate change, they need to board up the ridiculous failure that is the so-called war room and they need to stop using taxpayer dollars to legitimize junk science as we’ve seen from the Steve Allan inquiry,” she said.
She’s also calling on the province to release just how much money Albertans have invested in this pipeline.
The immediate loss to taxpayers if the permit is cancelled is about $1 billion, Kenney said.
Province has no legal recourse: expert
Despite Kenney’s claims, an associate professor at the University of Calgary’s Faculty of Law says the province has no viable path to legal action.
Kristen van de Biezenbos said TC Energy has a few options though. They could first refile a lawsuit they filed in 2015 in U.S. federal court claiming a president does not have the authority to permit or stop a pipeline border crossing. That lawsuit was removed when President Trump was elected because he promised to permit the crossing.
Second, the company could file an arbitration claim with the Canada-United States-Mexico agreement, or the new NAFTA. But van de Biezenbos said the U.S. has never lost an arbitration case within NAFTA.
Finally, TC Energy could file a takings claim in U.S. federal court to cover its losses.
The only option that could see the permit reinstated though is refiling the 2015 lawsuit.
“None of them are particularly good,” she said.
The only way she sees Alberta recouping the investment it made in the pipeline is if there was something in the loan guarantee that said TC Energy would have to compensate the province if it wasn’t able to complete the project.
“But if you’re talking about damages from the U.S. government, I don’t see how,” she said.
“It’s difficult to argue reasonable reliance when you know that the permit has been issued via presidential permit.”
The reason that argument is difficult is because a presidential permit is a “risky endeavor” she said. Whenever a president give a project the go ahead in that way, it can be revoked whenever a president feels like it.
“President Trump could have revoked Keystone XL’s permit if he just got upset with Prime Minister Trudeau, with Canada, he could have done it at any time. So similarly, once he becomes the president, Biden can also revoke it at any time.”
Van de Biezenbos added she can’t remember a time when the Alberta government lost this much money on a single investment.
“I also don’t know if the province has ever put its money on such a risky endeavor. It was so much money to put on a project that – it was entirely foreseeable that it would be cancelled. It’s one of the things Vice President Biden campaigned on.”
– With files from the Canadian Press