Dmitriy Frolovskiy is a political analyst and consultant on policy and strategy.<\/p>\n
This essay is part of the Prosperity\u2019s Path<\/a> series. In a time of geopolitical instability and a shifting world order, the challenges facing Canada’s economy have only gotten more visible, numerous and intense. This series brings solutions.<\/p>\n Ottawa has finally agreed, in principle, to a new oil pipeline to the Pacific coast. Alberta is due to formally submit its proposal for it by July 1.<\/p>\n It\u2019s a breakthrough energy advocates waited far too long for \u2013 and one that may have come a little too late. Private-sector interest has waned over the years, and no company yet has said it\u2019s interested in the pipeline. Maybe Alberta has been working hard on securing a private sector proponent and would produce one in its proposal. But if that doesn\u2019t happen, no one can blame the private sector for its lack of enthusiasm.<\/p>\n Two major pipeline projects have failed in Canada. Former prime minister Justin Trudeau, who had overchampioned climate policies, had talked about \u201cphasing out\u201d the oil sands. Despite preventing a third pipeline from failing, Mr. Trudeau\u2019s government brought in carbon taxes, an oil tanker ban, an emissions cap and harsher fuel standards and project assessments. A string of foreign oil majors exited the oil sands. <\/p>\n Years of neglecting the industry\u2019s voices and wrapping the sector in ever more layers of red tape, applied with the zeal of the Peronists in Argentina almost a century ago, came with a cost. And investor trust does not come back on the strength of a single good decision. Just like everything, it must be earned.<\/p>\n Ottawa must step up and and fix what it broke.<\/p>\n<\/p>\n It is no secret that Canada sells almost all its crude to a single buyer to the south \u2013 the same buyer that now threatens to annex it. The new line to the coast is designed to give producers a second market, much-needed economic diversification and some insurance if the current West Coast Trans Mountain system fills up again. (The pipeline reached full capacity for the first time this month).<\/p>\n But building a pipeline is a business that always carries some risk \u2013 in this case, that includes the the possibility that a project costing billions may never deliver what it pledged.<\/p>\n These fears are grounded not only in worry that Canada has decided to enter Asian markets a little too late, but also in the record of past pipeline ventures. Businesses remember Northern Gateway, approved and then cancelled, with $373-million in Enbridge development spending gone. They remember the ill-fated Energy East, on which TC Energy Corp. wasted $1-billion. And they remember the Trans Mountain expansion, from which Kinder Morgan walked away rather than carry the construction risk. Ottawa paid $4.5-billion in 2018 to keep it alive, its total cost having rose from an estimate of $5.4-billion to about $34-billion.<\/p>\n Because of that, it is hard to blame private investors for hesitating on the new West Coast pipeline. And no wonder there are plenty of analysts who think it will never get built.<\/p>\n