Pipeline decision puts Trudeau in political peril

For more than five years, the Trans Mountain pipeline project has divided Canadians, igniting widespread protests, an interprovincial feud and a major political headache for Prime Minister Justin Trudeau.

Now comes decision time: Trudeau's Liberal government is expected Tuesday to announce whether it will proceed with the proposal.

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The $5.5 billion expansion would nearly triple the amount of Canadian crude oil the pipeline transports each day from Edmonton, Alberta, to the port in Burnaby, British Columbia, to be loaded onto tankers bound for Asia and other lucrative markets.

Landlocked Alberta churns out four-fifths of Canadian crude. Boosters say the project will ease a pipeline shortage that keeps most Alberta crude trapped there, where it trades at a discount to global oil benchmarks.

But environmentalists, some indigenous groups and the eco-friendly government of British Columbia oppose the project over concerns about oil spills and rising greenhouse-gas emissions from the processing of the Alberta oil sands.

Trudeau, who has tried to present himself as a steward of both the environment and the economy, has been here before.

He gave the project the go-ahead in 2016, but it immediately faced a barrage of legal challenges and renewed protests, particularly in British Columbia, where hundreds of people - including two members of the Canadian Parliament - were arrested. John Horgan, the province's premier, promised to use every tool available to block the project.

That enraged many in neighboring Alberta, which temporarily blocked wine imports from British Columbia and threatened to turn off the taps of oil and gas if the opposition continued.

Trudeau, caught in the crossfire, tried to broker peace and failed.

With legal and political uncertainty threatening to derail the project, the Trudeau government took the unusual step of buying the pipeline from Texas-based Kinder Morgan for $3.4 billion last year, declaring it a "vital interest" for the country.

Months later, the project faced another setback. A federal appeals court annulled regulatory approval of the project, citing shortcomings in the government's duty under Canadian law to "dialogue meaningfully" with indigenous people about the expansion and a failure to consider the effect of increased tanker traffic on Pacific waters.

Rather than appeal, the government ordered the country's energy regulator to conduct a second review of the project and said it would continue consultations with indigenous people.

The regulator endorsed the project in February, saying its "considerable benefits" outweighed its risks.

The decision on whether to approve the project comes at a difficult time for Trudeau. His approval ratings have fallen this year amid criticism of his government's handling of the prosecution of a construction firm in his home province of Quebec. Conservatives, meanwhile, have won a run of provincial elections, in part, by campaigning against his policies to fight climate change.

Jason Kenney, the leader of the United Conservative Party, was elected premier of Alberta in April after tapping into a sense of grievance since global oil prices crashed in 2015, plunging the province into a recession from which recovery has been slow. He has vowed to set up a "war room" to hit back at pipeline critics in real time.

Canada's difficulties getting major energy projects built has fueled some of the alienation. Limited pipeline capacity last year sent prices for Canadian crude to record lows, prompting the Alberta government to impose mandatory production cuts to bolster prices. It also began moving more oil by rail.

Chris Bloomer, chief executive of the Canadian Energy Pipeline Association, called the expansion "critical" for getting Canadian crude to offshore markets.

"Not approving Trans Mountain would be a very serious blow to the perception of our industry and send a very negative message about the ability to get things done in Canada," he said.

"We don't argue against climate change, but we see that if we are environmentally responsible and we are environmentally competitive, and we have a resource that the world wants, then we should supply that."

The Bank of Nova Scotia estimates that limited pipeline capacity costs Canada $11.6 billion each year, or 0.75 percent of economic output.

The project has proven a tough test for Trudeau. He insists that fighting climate change, defending Canada's oil industry and mending the country's strained relationship with its indigenous groups "go hand-in-hand."

Not everyone agrees.

"You can't be a climate leader and buy and build pipelines," said Keith Stewart, an energy strategist with Greenpeace Canada, which opposes the project. "The Trudeau government has been really good at the politics of symbolism, but you actually have to follow it up with actions to be taken seriously."

Either decision, analysts say, risks alienating some voters.

"Trudeau is really stuck between a rock and a hard place on this one," said pollster Shachi Kurl, the executive director of the Angus Reid Institute.

If Trudeau approves the project, she said, Conservative pipeline supporters in Western Canada are unlikely to switch their vote. But young voters and voters in some parts of Vancouver, B.C. - groups that played a critical role in propelling him to victory in 2015 - could look elsewhere.

Mark Worthing, a conservation and climate campaigner with the Sierra Club in British Columbia, said Trudeau's support would be "a dealbreaker."

"People on this side of the Rockies feel kind of betrayed," he said.

But blocking the project, Kurl said, risks turbocharging Western Canada's rising resentment toward the rest of the country, galvanizing those voters to show up at the ballot box and defeat the Liberals in the fall.

"The stakes are high," Kurl said. "And no matter what happens, the downside seems to be more fertile than the upside."

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