1. Navigating Political Risk: The Case of the Energy East Pipeline George Hoberg UBC Prepared for ONSEP April 21, 2016 0

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5. Harper government: “The regulatory system is broken” environmental and other radical groups threaten to hijack our regulatory system to achieve their radical ideological agenda funding from foreign special interest groups 4

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11. outline Analytical frameworkThe projectInstitutions, actorsDistribution of risks and benefitsIssue salience 10

12. Analytical Framework Veto points – Any institution with authority to block project Problem structure – distribution of costs and benefits – Are impacts concentrated or diffuse Concentrated: oil spills, industry profits Diffuse: climate impacts, tax revenues – Are environmental risks and economic benefits separated across veto points George Hoberg, “The Battle Over Oil Sands Access to Tidewater: A Political Risk Analysis of Pipeline Alternatives,” Canadian Public Policy, Volume 39, No. 3, September 2013, pp. 371-391. 11

13. Balance of power The relative power of project opponents is a function of four variables: 1.whether opposition groups have access to institutional veto points 2.whether the project can take advantage of existing infrastructure 3.the salience of place-based, concentrated environmental risks 4.the jurisdictional separation of risks and benefits George Hoberg, “The Battle Over Oil Sands Access to Tidewater: A Political Risk Analysis of Pipeline Alternatives,” Canadian Public Policy, Volume 39, No. 3, September 2013, pp. 371-391. 12

14. The Four Major Projects ProjectCompanyCapacity (bpd) LocationStatus Keystone XLTransCanada830,000Alberta to US Gulf Coast Rejected by President Northern Gateway Enbridge525,000Alberta to BC Coast Approved with conditions TransMountain Expansion Kinder Morgan 590,000Alberta to BC Coast Hearing concluded, awaiting new analysis and recommendation Energy EastTransCanada1,100,000Alberta to Atlantic Canada Hearings underway 13

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17. Institutions Projects assessed by NEB under the NEBAct and CEEACabinet decides on NEB recommendationOral hearings include “directly affected”Municipalities participate as interveners Provincial does not have legal authority to block a pipeline, but may be able to attach conditions 16

18. Trudeau government changes “to restore faith in EA process” 1.No project proponent will be asked to return to the starting line 2.Decisions will be based on science, traditional knowledge of Indigenous peoples and other relevant evidence; 3.The views of the public and affected communities will be sought and considered; 4.Indigenous peoples will be meaningfully consulted, and where appropriate, impacts on their rights and interests will be accommodated; and 5.Direct and upstream greenhouse gas emissions linked to the projects under review will be assessed. 17

19. Strategic Actors Pipeline companies Oil sands companies Refineries Environmentalists – Spill risks – climate Landowners Federal government Provincial governments Municipal governments Aboriginal groups 18

20. Pipeline capacity vs oil sands growth http://www.capp.ca/getdoc.aspx?DocId=247759 19

21. Revenue foregone https://ycharts.com/indicators/brent_wti_spre ad 20

22. “Blockadia” Roving transnational conflict zone Provoked by “extreme extractivism” Local resistance movements demanding local control Tied to carbon budget – “Keep it in the Ground” Strategic advantage: avoids (some) climate mobilization challenges 21

23. Distribution of Risks and Benefits From Environmental Defence 22

24. “We are against it because it still represents significant environmental threats and too few economic benefits for greater Montreal” 23

25. OEB conclusion 24

26. Ontario’s position “We appreciate that there is a need for a way to get Canadian oil, that is allowed under Alberta’s new emission cap, to overseas markets. And the people of Ontario care a great deal about the national economy and the potential jobs that this proposed pipeline project could create in our province and across the country,” said Wynne. 25 http://business.financialpost.com/news/economy/kathleen-wynne-gives-tentative-backing-to- energy-east-pipeline-as-rachel-notley-faces-criticism-over-project

27. Energy East jobs 26

28. Energy East – Construction Jobs 27

29. Energy East – Operations Jobs 28

30. National Public Opinion 29

31. Quebec public opinion 30 http://angusreid.org/wp-content/uploads/2016/03/2016.02.03- Pipelines.pdf Nov. 5 -16 by the polling firm SOM shows that 57 per cent opposedshows

32. Relative priority of local vs diffuse issues 31 Canadian Newstand

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34. Climate framing in pipeline disputes From Canadian Newstand - % stories mentioning pipeline and “climate” or “greenhouse” 33

35. Conclusion: Can Energy East Navigate the Risks? Confronting significant challenges on distribution of risk and benefits High salience of jobs, lower salience of spills and First Nations indicate lower risk So much hinges of Ontario and Quebec positions If either are opposed, could Trudeau approve the pipeline and survive? 34

36. Conclusion – Strategic Perils of Blockadia What happens when place-based risks don’t galvanize resistance? Energy system transformation requires rapid, massive building of new infrastructure Institutions (and norms) that give locals authority to block dirty energy give them authority to block clean energy Can we create processes that minimize placed-based resistance? 35

37. The New Politics of Energy in Canada: From Pipeline Resistance to the Sustainable Energy Transformation Part I the sustainable energy challenge Chapter 1: Analytical framework Part II The oil sands governance regime Chapter 2: Harper government efforts to facilitate oil sands expansion especially market access to tidewater Part III Pipeline Resistance Chapter 3: Keystone XL Chapter 4: Northern Gateway Pipeline Chapter 5: Trans Mountain Expansion Chapter 6: Energy East Part IV: The strategic risks of blockadia to the clean energy transformation Chapter 7: Site C Dam Chapter 8: Wind farm expansion in Ontario Chapter 9: High voltage transmission lines (BC, California) Part V Can innovative processes avoid paralysis? Chapter 10: Innovative processes Chapter 11: Conclusions 36

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39. ONSEP What did paper say about energy east Get chronology down (check energy law sites) Read more conference board or elsewhere to figure out where jobs are – e.g. why so many operational jobs in Ontario Gather all public opinion Get Mulcair quotes on energy east WCEL etc piece on not being needed any more Get oil change international piece Does Ontario have an equivalency agreement on EE? Do Ontario natural gas issues outweigh EE benefit 38