Plans to raise issue over Northern Gateway revenues at Council of the Federation
By Jonathan Fowlie, Vancouver Sun July 25, 2012
VICTORIA — An escalating war of words between two of Canada’s Western premiers has pushed into serious doubt the future of Enbridge’s proposed $6-billion Northern Gateway pipeline.
On Tuesday, Premier Christy Clark said the pipeline will die if Alberta doesn’t negotiate with British Columbia over the sharing of economic benefits.
“If Alberta doesn’t decide they want to sit down and engage, the project stops. It’s as simple as that,” Clark said in an interview from Halifax.
“So the ball is in Alberta’s court today to decide whether or not they want to sit down.”
But Alberta Premier Alison Redford was holding equally firm.
“We will not share royalties, and I see nothing else proposed and would not be prepared to consider anything else,” Redford said Tuesday morning.
“From my perspective, I’m not going to sit back and wait for the conversation to continue to be defined without ensuring that Albertans and Canadians understand what Alberta’s position is, and that is we will continue to protect the jurisdiction we have over our energy resources.”
The high-stakes showdown comes a day after Victoria laid out the five elements it needs to see before it will consider supporting the massive pipeline project.
Among the requirements was that B.C. needs to reduce any environmental risks through a world-class marine- and land-based spill response network. The province has also made clear it must get a greater share of the economic benefits.
The comments by Clark and Redford also come on the eve of the Council of the Federation, where provincial and territorial leaders are set to meet in Halifax from today until Friday.
The pipeline is expected to be a significant topic of those meetings.
In explaining her opposition, Redford said that Clark’s request to share revenues suggests a redrawing of the rules of Confederation, which gives each province jurisdiction over natural resources and the right to retain revenue from their sale.
Alberta is not prepared to cede any of its royalty income, Redford said, indicating she believes other premiers will agree with her position.
On Tuesday, Clark called this reaction “silly.”
“I think it’s a little unreasonable to suggest that I’m trying to destroy Confederation. I’m only trying to get B.C.’s fair share out of this project and make sure we’re protecting our environment. It’s as simple as that,” said Clark, adding B.C. is taking on significant risk from the pipeline and expects to receive a commensurate benefit.
“It doesn’t have to be some massive project to reopen the Constitution, for heaven’s sake. That’s just silly,” she added.
“We need to sit down as provinces, and with the federal government, and have a discussion and a negotiation about how B.C. is going to get its fair share. It doesn’t mean some rebalancing of the country, for goodness sake.”
Clark said she had not spoken with Redford since last Thursday when she flew to Alberta to tell Redford about the five demands she was getting set to publicly release on the pipeline.
Clark described that meeting last Thursday as being “pretty chilly.”
Clark also spoke to Prime Minister Stephen Harper about the five demands last Thursday, and said he was notably more receptive.
“His response was he understood that this project has big challenges in B.C. He listened very respectfully to my comments and I think they are prepared to engage,” she said.
“On the spill response side we have been engaging with them for two months already, just talking about what needs to be done and how we can increase our capacity.”
A technical report released Monday by the B.C. government shows the Northern Gateway pipeline is expected to generate $81 billion in additional taxation revenue over 30 years for governments across Canada.
Alberta is set to get the biggest single portion of those revenues, taking in an estimated $32 billion. B.C., which shoulders much of the risk on the pipeline, will be left with $6.7 billion, estimates show.
Resource royalties are not included in this estimate and would be collected by Alberta only.
With both premiers fighting over economic benefits, energy experts said any realistic compensation will likely
flow through fiscal back channels.
“Royalties cannot be on the table. It would be so destructive to Canadian federalism to set this type of precedent,” said Michael Percy, an energy policy economist and former dean of the University of Alberta business school.
“The options available to B.C. run the gamut from using their own powers of taxation, to working with the federal government, which may have to come up with some fiscal plan that compensates B.C. for the risks that it bears,” he said.
Observers have also suggested Alberta might help finance the construction of a bitumen upgrader in Kitimat in an effort to persuade British Columbians they, too, will benefit from the oil exports.
Clark would not say exactly what her next move would be, but suggested she is prepared to make the pipeline an issue of national importance.
“For me this is a fight we’re going to have on the national stage. I think what British Columbians are looking to me for is a principled response,” she said.
“There is a lot of money in this that is going to be generated by this project. British Columbia needs to see some of it and I don’t mean just money, we need to see jobs and we need to see economic growth.”
When asked what powers B.C. has to block the proposed pipeline, Clark said the province needs to issue about 60 permits for it to go ahead, and BC Hydro needs to provide power for the pumping stations.