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After climate crackdown, TransCanada scraps major tar sands pipeline

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After the Canadian government decided to look closely at the potential climate impacts of the project, tar sands pipeline developer TransCanada scrapped plans to build a pipeline from the Alberta tar sands to the East Coast of Canada, where oil would have been loaded on tankers bound for refineries in the Gulf Coast.

In a press release Thursday, the company — which is also behind the controversial Keystone XL project — said the decision to cancel the Energy East project, a tar sands pipeline to New Brunswick, and the Eastern Mainline project, a natural gas pipeline along the northern side of Lake Ontario, came “after careful review of changed circumstances.”

The Canadian National Energy Board told the company in late August that the projects’ environmental reviews would look at the total lifecycle greenhouse gas (GHG) emissions associated with the projects — including from extracting, processing, transporting, refining, and eventually burning the fossil fuels.  

“The Board typically considers direct GHG emissions from construction and operations activities when assessing facilities applications,” the board wrote in a letter to TransCanada. “Given increasing public interest in GHG emissions, together with increasing governmental actions and commitments (including the federal government’s stated interest in assessing upstream GHG emissions associated with major pipelines), the Board is of the view that it should also consider indirect GHG emissions in its [National Energy Board] Act public interest determination for each of the Projects.”

Tar sands, also known as bitumen, is a heavy, sticky form of crude. Due to its more energy-intensive extraction, transportation, and processing requirements, bitumen is known as one of the dirtiest fuels — and a lifecycle analysis would likely prove the project to not be in Canada’s best interest.

“TransCanada knows that Energy East would never receive approval if all its climate pollution was taking into account,” Adam Scott, a senior campaigner with Oil Change International, a nonprofit research and advocacy group that looks at the impacts of fossil fuels, told ThinkProgress. According to analysis from the group, Energy East would have added 236 million tons of additional greenhouse gas emissions every year.

Two years ago, 100 Canadian and U.S. scientists called for a moratorium on tar sands development, saying it was “incompatible” with goals to limit global warming and avoid the most catastrophic effects of climate change.

Cancelling a pipeline project is a major win for environmental and climate advocates. Not having pipelines means less tar sands out of the ground.

“The pipeline changes the economics of the tar sands in a way that makes those [extraction] projects possible — and that’s why they’re responsible, ultimately, for such incredible increases in emissions,” Scott said. It’s more expensive — and difficult — to ship bitumen by rail. Rail cars need to be heated, and special equipment is required to unload the oil.

“Pipelines aren’t a substitute for anything,” Scott said. “If the pipeline isn’t built… there is no oil that needs to go anywhere, because the project that would have filled the pipeline never gets built. Investors realize it wouldn’t be profitable.”

The two projects cancelled Thursday were “inextricably linked,” because TransCanada would be converting some of its natural gas pipeline capacity during the construction of Energy East. Eastern Mainline would have allowed the company to divert its natural gas business to a new line.

While critical, Canada’s regulatory decision isn’t the only headwind facing TransCanada’s tar sands oil plans. After President Donald Trump made headlines for reversing the Obama administration’s decision not to permit the Keystone XL pipeline, the company suggested in July that it might not even go through with the project, which would bring tar sands oil south from Alberta through Montana, South Dakota, and Nebraska.

An executive with the company told investors that it was still assessing the “commercial support” of the project, which still needs regulatory approval from Nebraska to go forward.

Since Keystone XL was proposed, oil prices have plummeted. Companies are not eager to invest in expensive tar sands projects unless the price of oil comes back up. There are currently no new tar sands extraction projects planned in Canada.

“Some of those same forces that led to the cancellation of Energy East are very much threatening Keystone as well,” Scott said.

With this cancellation, there remains one more tar sands pipeline that has been proposed in Canada, taking oil to the West Coast. Kinder Morgan’s TransMountain pipeline has come under fire for inadequately consulting with indigenous communities along the route, and it had a “very bad” environmental review, Scott said.

The review process is over, but several legal challenges to the pipeline — including over whether the environmental review adequately considered climate impacts — have tied the project up in the courts. The Federal Court of Appeals in Vancouver is hearing arguments this week and next on a slew of consolidated challenges. It was not immediately clear whether the project’s opponents would be able to hold up Energy East as an example to the court.

“The public opposition has been growing and growing and growing, year after year,” Scott said.

 

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