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Energy East is a pipe dream in a carbon-constrained world

Patrick DeRochie is the climate program manager, Environmental Defence

While pipeline proponents blame a more stringent regulatory process for TransCanada's request to suspend Energy East's review, the real reason is simple: The pipeline does not make economic sense when the tar sands won't be growing to produce enough oil to fill it.

Earlier this month, TransCanada requested a 30-day suspension in the National Energy Board review of its proposed Energy East pipeline. The company says it needs more time to examine the impact of changes to the NEB review process – including consideration of climate policies and greenhouse gas pollution – to the project's cost, timing and viability. TransCanada also suggested it was contemplating backing out of Energy East altogether.

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Queue the shock and outrage.

Suddenly the NEB, a federal body that has recommended the approval of every single crude oil pipeline it has reviewed, is subjecting Energy East to "regulatory overreach." Pipeline backers claim the federal government is using the NEB to create regulatory uncertainty and strangle Canada's oil industry. One critic went so far as to say Energy East shows that Canadian federalism itself is not working.

This is nonsense.

Yes, the NEB panel reviewing Energy East ruled that, for the first time, it would consider the upstream and downstream greenhouse gases associated with the pipeline and the impact of laws and policies to reduce pollution on the economic need for the pipeline. This assessment is within the NEB`s jurisdiction. It's a sensible move to ensure Energy East doesn't become a stranded asset in tomorrow's low-carbon economy. And it's something Canadians have demanded of pipeline reviews for years.

But let's not pretend this additional NEB requirement is what's leading pipeline giant TransCanada to reconsider Energy East. The company is simply seeing the writing on the wall and acknowledging that Energy East is a bad idea during a time of declining investment in the tar sands, North American pipeline overcapacity and unstoppable transition to renewable energy.

Investment in the tar sands is drying up and the big multinational oil players have already fled. As the world moves to tackle climate change, the dirtiest, most expensive, most difficult oils to extract and transport – such as the tar sands – can no longer compete for capital. Even pro-industry analysts acknowledge Energy East is too risky because there won't be enough oil production to fill the pipeline.

In fact, the need for already-approved pipelines is doubtful. TransCanada can't even find enough tar sands producers to fill Keystone XL. The "Asian markets" that supposedly justify Kinder Morgan's pipeline expansion to Canada's West Coast remain elusive. Just this week, the Minnesota Department of Commerce found that Enbridge's Line 3 to bring more tar sands oil to the United States is not needed.

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At the same time, massive oil markets, such as France, Britain, Germany, China and India have announced or are considering a ban on the internal combustion engine, which will slash global demand for oil. Pipeline projects such as Energy East will become stranded assets in a world of declining demand for oil.

Energy East is a bad idea for a lot of reasons. It would put the drinking water of Canadians across six provinces at risk of an oil spill. It would fail to respect Indigenous rights and title. It would put the Bay of Fundy at greater risk of a tanker spill. It faces massive opposition from Canadians along the pipeline route. And it is incompatible with Canada's targets to reduce GHG emissions and the Alberta emissions cap. Canadians deserve credit for raising their voices on these issues.

But the cold, hard reality is that there's no economic need for Energy East in a world that's moving away from oil and rapidly transitioning to a clean economy.

TransCanada should do us all a favour – including its own shareholders – and pull the plug on Energy East.

Video: B.C. looks to join legal challenges to Kinder Morgan pipeline (The Canadian Press)
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