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‘Reckless, Spiteful’ Pipeline Project May Stumble on Failing Gas Markets
The Coastal GasLink pipeline is trampling Indigenous communities, destroying ecosystems, running over budget, and violating provincial permits. What happens when natural gas demand starts to collapse?
The Coastal GasLink pipeline in northeastern British Columbia is quickly sealing its reputation as a rogue construction project, with one provincial politician citing a “reckless, spiteful, and dangerous attitude” that makes it a poster child for trampling communities and ecosystems.
How will CGL and its parent company, Calgary-based TC Energy, justify the senseless devastation on unceded Wet’suwet’en territory, even to their own investors, if it turns out there’s no future export market for the fracked gas the pipeline is meant to carry?
It will likely be years before the fossil executives who touted the project and the banks that financed it see its business case evaporate before their eyes. And it may not happen—the world will need some natural gas as countries decarbonize, though not nearly as much as the industry hopes.
But CGL is one of a handful of B.C. pipeline builders still pushing through their projects, come hell or high water, essentially betting that efforts to drive down carbon pollution will fail—and that smart, practical, stunningly affordable renewable energy and energy efficiency alternatives will somehow fail.
If CGL ends up an empty husk with no gas to carry—what the financial community calls a stranded asset—it will be cold comfort for members of the Wet’suwet’en community who’ve been fighting the project for years, facing down an extensive and dangerously militarized police presence funded lavishly at taxpayers’ expense. But with all the pushback and controversy the project is generating today, how much worse will it all be in hindsight if it turns out that the trauma, suffering, and long-term damage were all for naught?
Unpaid Bills and a 70% Cost Increase
Just over a year ago, the government of then-premier John Horgan faced a mini-revolt within the New Democratic Party over its avid support for CGL and liquefied natural gas (LNG) development, with analysts predicting the unfinished business would come back to haunt the province in 2022.
Give CGL credit where it’s due: Promise made, promise kept.
In August, TC Energy CEO François Poirier admitted the cost of the pipeline had skyrocketed 70%, to C$11.2 billion.
In October, The Tyee reported that four Indigenous businesses were suing Coastal GasLink, along with a former prime contractor with alleged links to organized crime, for $10 million in unpaid bills.
Just over a month later, TC Energy told investors the project was in line for another “material increase” in cost.
And that’s just the business side of a project that keeps on racking up regulatory infractions and fines as it violates provincial permits and releases sediment into salmon-bearing rivers.
“Even with other massive construction projects under way in British Columbia, including the Site C dam and the Trans Mountain oil pipeline expansion, the CGL pipeline has absorbed most of the [B.C. Environmental Assessment Office’s] regulatory attention,” the Globe and Mail reported earlier this month.
Late last week, CGL landed another $213,600 fine from the EAO for "continued deficiencies with erosion and sediment control measures" along a section of the route near Kitimat last February. That prompted B.C. Greens leader Sonia Furtsenau to scorch the company’s construction practices and demand the government of newly-installed premier David Eby issue a stop order for the project.
"These are not isolated incidents," she said in a statement. "CGL has demonstrated a reckless, spiteful, and dangerous attitude towards laws and regulations. They simply absorb the costs of relatively small fines and continue to destroy ecosystems."
A Pipeline to Failure
The horrible irony is that Coastal GasLink is cutting corners, distracting regulators, destroying sites the community considers sacred, and barring Wet’suwet’en clan chiefs from their traditional territory for a project that may not run long enough to pay off its investors. Particularly as its costs keep rising.
In the year since Vladimir Putin’s war in Ukraine delivered a shock to the global energy system, it’s become conventional wisdom to push Canadian LNG as a secure source of supply. It may be conventional. But it isn’t particularly wise.
Putin’s decision to cut off pipeline flows to Europe triggered a short-term dash for gas, and even coal, to prevent Europeans from freezing in the dark. Climate hawks hated that, and rightly so, at a time when we need immediate, deep emission cuts. But really—do we really think countries will be able to confront the climate emergency if an energy shortage drives Germany into chaos?
But that short-term rush of demand doesn’t mean countries are standing still. The European Union is speeding up its transition to renewables, after Putin taught EU decision-makers they must never, ever again be that dependent on anyone for imported energy. The Biden administration pushed its US$369-billion Inflation Reduction Act through Congress, ushering in a weird and wonderful moment when countries like Canada are scrambling to stay competitive with their renewable energy subsidies.
And clean energy options, already ridiculously affordable and ready for prime time, keep on getting better: a new multi-day, iron-oxide storage battery for power grids will go into production next year, bringing 750 jobs to an impoverished corner of West Virginia, and U.S. utility Xcel Energy has already ordered two units for installations in Minnesota and Colorado. Every time that happens, it becomes less likely that grid operators will need new gas plants to back up the renewable power that is surging onto their systems—even if the Doug Ford government in Ontario still hasn’t got the memo from its own consultants.
The net result? Global renewable energy investment catapulted past the $1-trillion mark and equalled the money pouring into fossil fuels for the first time last year, according to BloombergNEF. Bloomberg News headlined that milestone as the “record that’s bound to be broken”.
The End of Gas?
So it’s no wonder the Institute for Energy Economics and Financial Analysis (IEEFA) saw Asian demand for LNG stalling out in 2022, as rising prices and a deeply uncertain market prompted a different kind of dash for more secure energy supplies. “2022 showed clearly that volatility in international fossil fuel markets can have extremely destabilizing impacts on energy security and economic growth, IEEFA writes. “While no one can predict exactly how LNG prices will fluctuate, countries can limit their exposure to uncertain fuel prices by boosting renewables and energy storage technologies.”
University of Alberta energy and environmental economist Andrew Leach drew a parallel conclusion in his weekly Energy Charts newsletter. He’d just spotted a graph from the International Energy Agency’s 2022 World Energy Outlook that presented a “stark” outlook for future LNG demand.
“The long-run business case for new Canadian LNG in a world acting aggressively on climate change is far from certain,” he wrote. “It is possible that the world will follow a gas-based decarbonization, at least in the medium term. But, it’s also plausible that the combination of local supplies and gas alternatives mean that there is a limited role for LNG in a climate-constrained world.”
It’s still true that Japanese Prime Minister Kishida Fumio was looking for LNG contracts when he visited Ottawa earlier this month, prompting snide pushback when PM Justin Trudeau responded with a pitch for green energy. “We know that being a reliable supplier of energy is important,” Trudeau said during a media availability with Kishida. “But even as we do talk about things like LNG and other traditional sources of energy, we know the world is moving aggressively and meaningfully towards decarbonizing.”
That’s smart talk for many reasons, not least because short-term gas demand won’t continue for the 20 or 30 years it takes to justify a major pipeline megaproject. Not if the IEA is right. Not unless countries turn their backs on the climate emergency, and—likely more persuasively for most national governments—on a path that delivers more jobs and a chance at real energy security at less cost.
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Mitchell Beer traces his background in renewable energy and energy efficiency back to 1977, in climate change to 1997. Now he scans 1,200 news headlines a week to pull together The Energy Mix and The Energy Mix Weekender.
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