Toby Heaps is the CEO of Corporate Knights

While it is uncharitable to describe the Prime Minister's strategy of building pipelines to fight climate change as a "crock" or Orwellian logic – as David Suzuki and economist Mark Jaccard respectively have – it's clearly not working. We have to get beyond pipelines to lay down a genuine foundation so places such as Alberta and Saskatchewan can win in a low-carbon economy.

It is time to accept that pipelines are not an economic panacea. Thanks to the accelerating energy transition and low-cost producers such as the Saudis protecting their market share by playing with the taps, we are now living in what Royal Dutch Shell chief executive Ben van Beurden describes as a "lower forever" oil price world. Today, even building 50 new pipelines would not spur major capital investment in the oil sands because the economics don't justify it. Just ask Suncor CEO Steve Williams, who said as much on a recent analyst call.

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While there is no doubt the current discount on Western Canadian Select (WCS) to West Texas intermediate (WTI) is hurting Canada to the benefit of U.S. refiners, most of any pipeline dividend would flow directly to foreign shareholders, who own 76.8 per cent of oil-sands companies on a market cap weighted basis, according to Bloomberg's shareholdings database (note: the actual foreign shareholdings may be slightly lower because of peculiarities in Bloomberg's methodology).

The highest estimates indicate relieving the current price squeeze on WCS with new pipelines could add up to $30-million a day to the Canadian economy, but these estimates do not fully account for producers using vertical integration with refineries, upgrading, long-term shipment contracts for pipelines, or the futures market to just to avoid getting hit by selling at a discount. Part of any recovered discount would end up in government coffers, but less than you might think owing to corporate tax loopholes and a 1-per-cent royalty rate for most oil sands producers when prices are low. Alberta collected just $827-million in royalties on oil-sands company sales of $120-billion in 2016 (note: the sales figure includes all up and downstream revenues). With rosy assumptions, a pipeline dividend might bring in a few billion dollars in annual corporate income tax and royalty revenues. A more realistic estimate would be half to quarter that figure.

New pipelines such as Trans Mountain probably wouldn't do much for new jobs either (beyond a few thousand during construction), since they will not spur significant new upstream investment at current crude oil prices.

The main environmental rationale for pipelines if you accept Justin Trudeau's assessment is that pipelines are the price we pay to get Alberta's support for the national carbon pricing plan. Alberta's United Conservative Party Leader, Jason (No Carbon Taxes – Ever!) Kenney sees things differently, which could be a problem if he wins the provincial election next year.

What Canada needs is a different Grand Bargain to create winning conditions for all parts of the country in a low-carbon world. This new bargain will include making the most of the hydrocarbon reserves in the Athabasca Basin, while building a bridge from the old-energy economy to the new-energy economy – a combination that could unite as much pan-Canadian support as John A. Macdonald's railway.

The good news is we have the ingredients to do it.

While the sun is setting on the "rip and ship" model of oil extraction in Fort McMurray, Alta., there could be a new dawn of prosperity if we can "pump and polish" or "mine and shine" our abundant oil and gas feedstocks. A silver lining of a lack of pipeline capacity is that it creates a greater itch for game-changing downstream innovation. Low prices are not good news for upstream energy producers, but they are a boon for the downstream energy sector, which can transform low-value feedstock into high-value products.

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This includes "bitumen beyond combustion" in forms such as ultralow carbon plastics, non-combusted petrochemicals and carbon fibres, demand for which is growing in Asia and other markets. We would create many good-paying jobs for Albertans in the process, as Alberta's Energy Diversification and Advisory Committee and the Pembina Institute have pointed out.

This opportunity is not going to just fall into our lap. It will require leadership on par with Peter Lougheed's Alberta Oil Sands Technology and Research Authority, which imagined the oil sands into the multibillion-dollar industry it is today.

Aside from leadership, the single most important obstacle to this is capital costs which are 10 per cent to 15 per cent higher in Alberta than in competing jurisdictions.

The obvious options are federal measures to help bring those costs down, and expedited approval for green power corridors from B.C. to Alberta and from Manitoba to Saskatchewan to decarbonize the electricity system, which would take more emissions out of the atmosphere than any new pipelines could create.

The federal government could also provide support to attract the investment capital needed to foster diversification and passed-over super-cluster themes in the most energy-transition-exposed provinces. Alberta Innovates and the Saskatchewan Research Council would be natural partners in this work.

The Prime Minister has often said the environment and the economy go together like paddles and canoes. The above measures might just get the entire country paddling in the same direction.

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