Letting B.C. charge tolls on new Alberta pipeline is trade barriers ‘on steroids,’ say critics

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The Canada-B.C. deal also sets a precedent for provinces and even smaller jurisdictions to engage in more parochial behaviour at a time when the country is under threat from the United States and separatists in Alberta and Quebec, said Heather Exner-Pirot, director of natural resources, energy and the environment at the Macdonald-Laurier Institute think tank.

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Other provinces are going to see this Canada-B.C. deal and insist on their own “pound of flesh” any time the federal government wants to advance a project that is in the national interest, or perhaps for commercial traffic, she said.

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“We are on a slippery slope,” she said. “This B.C. deal slipped us a bit more.”

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The deal also comes at a time when the federal government has called to reduce or even eliminate interprovincial trade barriers, with mixed co-operation from the provinces. Economists say those barriers, which raise prices on a wide range of goods and services and make it more difficult for businesses to grow, cost the Canadian economy dearly, perhaps as much as five per cent of its annual gross domestic product.

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Mintz called the proposed payments to B.C. a tariff and “a step backward” for the Canadian economy.

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The pipeline proposal, which will still require federal approval, calls for Ottawa, Alberta and a consortium of Crown corporations to own the project, with a minority stake held by Pembina Pipelines, an Alberta energy company, and another stake reserved for Aboriginal participants. The project is expected to cost between $35 and $44 billion.

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The southern route was not Alberta’s first choice, as the province had preferred an outlet on the northwest coast closer to Asian export markets, which would require adjusting a 2019 moratorium on oil tankers on the northwest coast, something Carney had said he would consider doing.

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The B.C. government was against the idea of a new pipeline, but Carney was evidently able to use federal incentives to negotiate a compromise.

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In exchange for not opposing the deal, B.C. gets a promise to keep the tanker ban and billions of dollars in federal investments for a range of projects, including a new eight-lane tunnel, an expanded electrical transmission line, an expanded mine, LNG projects, and a port expansion. The deal also includes federal money for whale protection and child care.

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While many technical and financial details are still to be ironed out, B.C. may also be able to renegotiate the existing revenue-sharing deal from 2017 so that it also extracts royalty payments from Trans Mountain, which was purchased by the federal government in 2018.

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The federal government is expected to provide quick approval of the new pipeline proposal and help to reduce the environmental impact.