"Canada's purchase of a tar sands pipeline and expansion project eviscerates any claim it has to climate leadership at a key moment - doubling down on the world's dirtiest oil, rather than closing the gap on the country's Paris climate commitments", said Anthony Swift, the Canada program director for the USA -based Natural Resources Defense Council, in a statement.
The Government of Canada has reached a deal with Kinder Morgan to buy the highly contested Trans Mountain Pipeline.
The purchase, for 4.5 billion Canadian dollars, ensures that the Trans Mountain pipeline, which carries oil from Alberta to a port in a suburb of Vancouver, British Columbia, will begin a planned expansion this summer.
Kinder Morgan's future is cloudy and it will be left cash-rich but prospect-poor from the deal to sell its existing 300,000-barrel-per-day pipeline and the delayed 590,000-bpd expansion project for $4.5 billion, analysts at CIBC said in a report. The finance minister says the move will "ensure" the oil sands pipeline expansion gets built.
In British Columbia, Premier John Horgan said his government will keep fighting the project in the courts.
Amid the feuding, the pipeline has become a barometer for foreign investments in Canada, with some warning of a spillover into other sectors of the economy.
Horgan told reporters in Victoria the federal government's takeover of the project changes the legal situation, but his contentious legal action isn't aimed at any specific project. He said that shareholders would receive a "fair price" for the assets. This banker said heavyweight US investors such as Berkshire Hathaway Inc., which already has significant stakes in Canadian utilities, and Blackstone Group LP would be potential bidders. "We do not believe that this outcome will instill investor confidence in Canada". The risk tolerance among its investors was threadbare.
"We are absolutely shocked and appalled that Canada is willingly investing taxpayers" money in such a highly controversial fossil fuel expansion project, ' said Grand Chief Stewart Philip, president of the Union of B.C. Indian Chiefs, in an emailed statement. The plan, similar to how Canada financed and managed shares in General Motors and Chrysler in 2009 during the financial crisis, will also include a new Crown corporation to manage the project.
Will George is a leader with the Tsleil-Waututh, which built a Watch House - traditionally used to monitor an enemy - atop Burnaby Mountain as part of their opposition to the pipeline. But over the past 30 years, the Canadian government has launched a major privatization effort, selling Air Canada, Canadian National Railway and Petro-Canada.
In return, Kinder Morgan will go ahead with its $7.4-billion plan to twin the pipeline carrying diluted bitumen from Alberta's oilsands to the B.C. coast and from there to overseas markets.
He said the pipeline purchase provided the federal jurisdiction needed to overcome British Columbia's opposition, but gave no details of how this would work.
"It's not the intention of the government of Canada to be a long-term owner of the project", Morneau said, adding that pension funds and indigenous groups have already expressed an interest in buying stakes in the project.