Abandoning the Energy East project would be a serious mistake
September 10, 2017
The obstacles to the Energy East pipeline project set up by different levels of government and by interest groups, as well as the dithering of the National Energy Board (NEB), could doom an economic project with the potential to generate billions of dollars of investments and create many jobs, says the MEI.
"We're talking about some $16 billion of investments without any public debt or risks of cost overruns for taxpayers. It would be a real shame if we were to deprive ourselves of this, as this kind of project doesn't come along every day," says Germain Belzile, Senior Associate Researcher at the MEI.
Recall that yesterday, TransCanada announced that it had asked the National Energy Board for a 30-day suspension of its review of the Energy East and Eastern Mainline projects, due to the NEB's recently announced changes regarding the list of the environmental issues and aspects of projects. After its analysis, the company could well decide to abandon the project.
Yet pipelines are a very safe way of transporting oil over long distances. And even in a scenario where absolutely no new pipelines are built, oil production in the country will increase significantly from now until 2040, as the NEB itself pointed out in a report published last year.
"The systematic opposition to the construction of pipelines will not reduce our production, nor our consumption, of oil in the coming years, as certain commentators imply," says Germain Belzile. "Remember that Quebecers consume no less than 600,000 barrels a day."
Moreover, a poll carried out by Leger on behalf of the MEI this past May showed that two thirds of Quebecers (65%) prefer that the oil consumed in Quebec come from Western Canada rather than from abroad. Also, 68% of all Canadians are of the same opinion, according to an Ipsos survey.
"At the start of its mandate, the federal government seemed much more favourable to the development of energy resources, a sector of activity that has created a great deal of wealth. But the current climate discourages companies from investing in Canada, and encourages them to look south of the border," says Michel Kelly-Gagnon, President and CEO of the MEI. "Rather than dragging the country further into debt, tens of billions of dollars at a time, with infrastructure spending that in the best of cases will have mixed results, Ottawa should instead simply allow companies to invest," concludes Mr. Kelly-Gagnon.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
Montreal Economic Institute