NEWS
10/05/2017 12:07 EDT | Updated 10/05/2017 13:23 EDT

Demise of Energy East exposes political divide between energy, environment

OTTAWA — TransCanada's decision to cancel the Energy East pipeline project exposed deep divisions across the political landscape Thursday, highlighting the ever-present clash between energy development and environmental protection.

The premiers of Alberta and New Brunswick expressed disappointment over the decision, while the Opposition Conservatives blasted Prime Minister Justin Trudeau's Liberal government for "disastrous" energy policies that they blame for lost jobs and investment.

Quebec politicians, along with Indigenous and environmental groups, welcomed the project's demise, branding it as a harbinger of the inevitable death of fossil fuels and a reminder of the need for further green energy development.

The political implications for the federal Liberals, who are trying to strike a difficult balance between energy and the environment, were mixed. Where charges of environmental negligence followed the approvals of the Trans Mountain and Line 3 projects, this time the government was savaged for being soft on jobs and economic growth.

The Liberals are defending jobs while protecting the environment, Trudeau insisted during question period, but "the market conditions have changed fundamentally" since the pipeline was proposed, including a steep drop in oil prices, he said.

Energy Minister Jim Carr defended the government by citing the green lights for Trans Mountain and Line 3, and insisting that the TransCanada decision was a "business decision" influenced by the state of commodity prices.

Trans Mountain and Line 3 together represent more than $11.6 billion in investment that will support "thousands" of jobs, Carr said. And he rejected the argument that the Liberals' changes to the regulatory framework played a role.

"Our government would have used the same process to evaluate the Energy East pipeline project," he said. "Nothing has changed in the government's decision-making process."

Deputy Tory leader Lisa Raitt blamed the decision on Carr's boss.

"Today is the result of the disastrous energy policies promoted by Justin Trudeau and his failure to champion the Canadian energy sector," said Raitt.

New Liberal regulations on Canadian energy projects have forced companies to adhere to standards not enforced in other countries, giving exporters in Venezuela, Saudi Arabia and Algeria a competitive advantage, she said.

"Justin Trudeau claims to support the middle class, but the truth is that the very people that the prime minister is claiming to help are the people most hurt by his misguided policies."

Carr shrugged off Raitt's criticism, saying there are signs of growth in the energy sector despite "market challenges" posed by sagging oil prices.

"Canada is open for business. We offer a stable and predictable investment climate, world-class energy reserves, proximity to global markets, a skilled workforce and enabling services and technology."

Supporters say Energy East was necessary to expand Alberta's markets and decrease its dependency on shipments to the United States. Detractors raised questions about the potential environmental impact.

Alberta Premier Rachel Notley acknowledged the decision was driven by a variety of factors, but she also said the result was bad news not only for her oil-rich province, but the country.

"We believe this nation-building project would have benefited all of Canada through new jobs, investment, energy security and the ability to displace oil being imported into Canada from overseas and the United States."

Calgary Mayor Naheed Nenshi also criticized the National Energy Board, saying it needs a process that is based on science and takes into account the energy industry and the environment.

"I think the federal government has erred there and I think it's incumbent on the Trudeau government to come clean on what they want the NEB to do so that we don't make this mistake in the future as well," Nenshi said.

New Brunswick Premier Brian Gallant didn't mask his disappointment. Energy East would have moved Alberta oilsands production to an Irving Oil operation in Saint John. He said his province wasn't banking on Energy East — but having certainly wouldn't have hurt.

"The economic benefits of the Energy East pipeline have never been added to our economic and fiscal projections," he said.

"But there is no doubt that with the Energy East pipeline project we would have been able to do even more to grow the economy, strengthen education and improve health care in our province."

The Trans Mountain approval happens to be under a legal microscope this week as Indigenous and environmental groups and British Columbia cities argue the process failed to take into account the impact the pipeline could have on everything from killer whales to waterways.

Grand Chief Serge Simon, of the Mohawk Council of Kanesatake, said the fight by Indigenous People against other pipeline projects will continue. He also took aim at the federal Conservatives for their strong support of pipelines.

"The Conservatives are very narrow-minded when it comes to the wealth that could be generated by going into a greener technology," he said in an interview.

"Moving away from fossil fuels will, by leaps and bounds, out-match the oil industry. If only they had the courage and the vision to go in that direction."

Calgary-based TransCanada (TSX:TRP) announced last month that it was suspending its efforts to get regulatory approval for the pipeline.

The company said Thursday it was abandoning the project after a "careful review of changed circumstances."

Quebec Environment Minister David Heurtel said TransCanada simply realized it didn't have much of a choice left but to abandon the project.

He says the project was never properly explained to Quebecers.

"Social acceptability is a key component of any project. You can't just come in say: 'OK, we're going to do this'," Heurtel said.