This case study was written by Tara Houska (Honor the Earth) and Jason Disterhoft (RAN) for our latest bank report card, Banking on Climate Change: Fossil Fuel Finance Report Card 2019.

Pipeline Victories in 2018

In 2018, Indigenous-led opposition to each of the three major proposed tar sands oil pipelines in North America continued to spotlight the outcomes of failing to secure free, prior and informed consent, alongside the pipelines’ threats to the climate and broader environment. The Trans Mountain pipeline saw the most spectacular setbacks, with Canada’s Federal Court of Appeal quashing the project’s approvals and permits, ruling that both the federal government’s consultation with First Nations communities and its environmental assessments were inadequate. As former sponsor Kinder Morgan exited the project, Ottawa finalized its extraordinary purchase of the pipeline for C$4.5 billion.

In August, a federal judge ordered the U.S. State Department to conduct a new environmental review of the route for TransCanada’s Keystone XL (KXL) pipeline, in response to a lawsuit by the Indigenous Environmental Network and allies. The same judge later blocked KXL’s construction pending that reassessment — even as TransCanada was shipping pipe to the route in Montana.



2019 will be another year that Enbridge’s Line 3 pipeline isn’t complete — it was originally projected to be in service in 2017. The project received its certificate of need and route approval from the Minnesota Public Utilities Commission in June 2018. However, the resistance in Minnesota is fierce, resulting in the political players in the administration of Minnesota taking legal action against the state: the state’s Department of Commerce has appealed the decision by the Public Utility Commission to approve Line 3. In other words, the state is suing itself.

In March of 2019, Enbridge announced it will delay its in-service projection to late 2020, due to an extended review period of water crossing permits by the state of Minnesota. Three tribes along the proposed route remain explicitly opposed, as do a myriad of non-profit organizations, youth climate intervenors, landowners, and concerned citizens who are engaged in filing numerous lawsuits on the adequacy of the environmental impact statement, the route selected, and other matters.



In the absence of project-level finance for either Line 3 or KXL, banks like JPMorgan Chase and Bank of Montreal that back Enbridge and/or TransCanada — see the following chart for a fuller list — risk contributing to clear abuse of free, prior and informed consent if these projects proceed. And Canada’s purchase of Trans Mountain does not absolve banks that provided the initial project finance of the Indigenous rights abuses and climate destruction they endorsed.



Extraction: A Mixed Picture

2018 showed that stopping the expansion of tar sands infrastructure stops the expansion of extraction. The exodus from the tar sands of the supermajor oil and gas companies continued, with Total selling its Joslyn extraction project to Canadian Natural Resources for C$225 million. The Alberta government moved to create new rail and refining capacity to move tar sands oil out of Alberta and ease the strain of the pipeline bottleneck. In December, Alberta Premier Rachel Notley announced mandatory temporary tar sands production cuts, citing insufficient transportation capacity.

Significant resistance to new infrastructure projects, particularly by tribal nations, has resulted in a provincial government reducing its tar sands production.

These economic lessons about lack of consent by tribal nations should not be taken lightly.

Alarmingly, two extraction companies — backed by banks like JPMorgan Chase and Bank of America — bucked the trend by doubling down. Imperial Oil made a final investment decision to move forward with its Aspen project, the first new tar sands project sanctioned since 2013. In March 2019 it delayed this project due to “the uncertainty in the current business environment,” given pipeline constraints and production caps. Meanwhile, Teck Resources continued to push its huge Frontier mine: a project that is widely seen as economically unviable.At C$20.6 billion it would be the most expensive mine in the sector’s history, and with a projected lifespan of 41 years it would last well beyond when world emissions must reach net zero.



Looking Ahead

Another year of pipeline delays and setbacks will further lock in constraints on tar sands extraction. Industry was counting on Line 3, in particular, to be in service by the end of 2019, when Alberta’s production cuts were scheduled to be lifted. Enbridge’s recent in-service date postponement was a major financial blow to the tar sands, and yet another example of the outcomes of failing to secure free, prior, and informed consent. If Line 3 moves forward, any bank backing Enbridge is supporting abuse of Indigenous rights, threatening the Great Lakes and numerous wetlands, rivers, and watersheds along the pipeline, while putting 1.5°C further out of reach as an achievable goal. Global banks should recognize that risk, and, if Enbridge won’t drop Line 3, the banks should drop Enbridge. If banks do not follow human rights laws and climate science, the Indigenous-led, grassroots opposition will hold them accountable, as it has in other failed North American infrastructure projects.

Who’s Banking Expansion in the Tar Sands?

These are the leading bankers since the Paris Agreement was signed of at least three of the four key companies expanding tar sands production.

