Alberta premier suggests Canada impose trade sanctions if U.S. refuses to discuss Keystone XL decision

Alberta Premier Jason Kenney said U.S. President Joe Biden’s decision to revoke the permit for Calgary-based TC Energy’s Keystone XL pipeline was a “gut punch,” characterizing it as a direct attack on the trade relationship between the two countries.

“Sadly, [this is] an insult directed at the United States’s most important ally and trading partner,” Kenney said during a press conference held Wednesday.

Kenney said he was calling on Prime Minister Justin Trudeau to sit down with the new administration, suggesting that the federal government impose trade and economic sanctions should those efforts be refused.

“Canada is part of the solution to the energy transition, but today’s decision was made without giving Canada the chance to make that case,” Kenney said.

WATCH | Alberta Premier Jason Kenney reacts to Keystone decision:

Premier Jason Kenney responds to U.S. President Joe Biden’s move to revoke the permit for the Keystone XL pipeline, calling it, “an insult directed at the United States’s most important ally and trading partner.” 1:55

Prior to Kenney’s comments, both Trudeau and Canadian Ambassador to the United States Kirsten Hillman indicated that while disappointed with the decision, they were resigned to live with it.

“While we welcome the president’s commitment to fight climate change, we are disappointed but acknowledge the president’s decision to fulfil his election campaign promise on Keystone XL,” Trudeau said in a statement.

Biden revoked the permit for the $8-billion pipeline via executive action a few hours after being sworn in as the 46th U.S. president Wednesday.

“I’m proud of today’s executive actions, and I’m going to start by keeping the promises I made to the American people,” Biden said from the Oval Office.

Biden’s revoking of the permit was part of a series of executive orders aimed at tackling climate change that also included re-entering the Paris climate accord. 

Biden’s 15 executive actions also introduced a national mask mandate and reversed outgoing president Donald Trump’s ban on travel from some Muslim-majority countries.

The Alberta government agreed last year to invest about $1.5 billion as equity in the project, plus billions more in loan guarantees. As a result, the Canadian leg of the project has been under construction for several months with about 1,000 workers in southeast Alberta. 

Trudeau pledges support for energy workers

In his statement, Trudeau said he had spoken directly with Biden about the project in November, and Hillman along with others in the government had made Canada’s case to high-level officials in the administration.

“Workers in Alberta, Saskatchewan and across Canada will always have our support,” he said. “Canada is the single-largest supplier of energy to the United States, contributing to U.S. energy security and economic competitiveness, and supporting thousands of jobs on both sides of the border.”

Trudeau said his government did welcome the new administration’s moves to rejoin the Paris Agreement and the World Health Organization, and to temporarily suspend oil and natural gas leasing in the Arctic National Wildlife Refuge.

Conservative Party Leader Erin O’Toole called the cancellation of the pipeline “devastating.”

“We need to get as many people back to work, in every part of Canada, in every sector, as quickly as possible. The loss of this important project only makes that harder,” O’Toole said in a statement.

“Justin Trudeau should have done more to stand up for our world-class energy sector and the men and women who depend on it to provide for their families.”

TC Energy says it’s considering its options

In a statement released Wednesday morning, TC Energy said it was disappointed in the move and warned it would lead to the layoffs of thousands of unionized workers.

“TC Energy will review the decision, assess its implications and consider its options,” the statement reads. “However, as a result of the expected revocation of the presidential permit, advancement of the project will be suspended.”

The company said the decision would “overturn an unprecedented, comprehensive regulatory process that lasted more than a decade.”

The company struck a deal with four labour unions to build the pipeline and has an agreement in place with five Indigenous tribes to take a roughly $785-million ownership stake.

The Progressive Contractors Association of Canada said in a news release it is disappointed that Biden is “putting politics before reason.” 

“We’re disappointed that the new president has lost sight of the huge economic and strategic advantages of this project,” said PCAC president Paul de Jong.

“Pulling the plug on a major project, hours after taking office, is a rocky starting point for re-setting Canada/U.S. relations.”

The association, whose member companies employ thousands of Alberta and B.C. construction workers, said the pipeline would have generated as many as 60,000 direct and indirect jobs in Canada and the United States.

If completed, the 1,897-kilometre pipeline, first announced in 2005, would carry 830,000 barrels of crude a day from the oilsands in Alberta to Nebraska. It would then connect with the original Keystone pipeline that runs to U.S. Gulf Coast refineries.

Canadian producers, who have struggled for years from low prices partly related to sometimes-congested pipelines, have long supported Keystone XL.

In a statement, Suncor Energy said it backed expanding market access to the U.S. through pipelines like KXL, which would provide responsibly sourced oil to U.S. refineries for the benefit of U.S. consumers.

(CBC News)

But a Canada Energy Regulator report in November said western Canadian crude exports are expected to remain below total pipeline capacity over the next 30 years if KXL and two other projects proceed, prompting environmental groups to question the need for all three.

Biden signalled plan for months

For months, Biden had said he intended to cancel the project if elected.

Trudeau said he raised the issue with Biden prior to the inauguration and reaffirmed Canada’s support for the project.

Hillman said she was disappointed but that Canada would accept the decision. 

“We respect that that’s the decision he’s made,” she said. “He had made a commitment during his campaign, and he lived up to that commitment, and I think we have to accept that and move forward.”

WATCH | Canadian Ambassador to the U.S. Kirsten Hillman reacts to Keystone decision:

Canada’s Ambassador to the United States Kirsten Hillman tells the CBC’s Adrienne Arsenault that she “respects” but is “disappointed” by U.S. President Joe Biden’s decision to cancel the Keystone XL pipeline permit. 0:47

Greg Anderson, a political scientist at the University of Alberta, says Canadians tend to look at narrow trade conflicts as a sort of barometer for the larger relationship with the U.S. but added “that just isn’t the case.”

He also says the province faces bigger challenges than the loss of one pipeline. 

“I think a lot of Albertans were hoping that maybe this could just kind of slide by and the pipeline would get built,” said Anderson. 

“But the Keystone pipeline is not the Alberta economy. You know, it’s not going to save Alberta or solve Alberta’s problems. It might have helped on the margins, but Alberta has bigger fish to fry.” 

The pipeline has become emblematic of the tensions between economic development and curbing the fossil fuel emissions that are causing climate change.

The Obama administration rejected it in 2015, prompting TC Energy in 2016 to launch a lawsuit and a multibillion-dollar North American Free Trade Agreement claim against the U.S. government.

The company changed course after Donald Trump revived it once he became president four years ago and gave it strong support. Construction has already started in the United States. 

TC Energy could now take similar action in order to prevent walking away from Keystone XL empty-handed after a dozen years of setbacks, billions of dollars spent and thousands of pages of filings.

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