Keystone, Prosperity and government negotiators

There are many interesting aspects of the decision to delay the Keystone pipeline. The Times Colonist has a useful editorial here.

One striking thing is how quickly the company moved from its position that the oilsands crude pipeline had to traverse a sensitive Nebraska aquifer. The routing was necessary for the project, the developer had maintained all through the approval process, despite major protests from the people and politicians of the state, including the Republican governor.

But as soon as the U.S. government put the approval process on hold, the company changed its tune. The pipeline would be rerouted to avoid the aquifer.

It's a process that should be familiar to British Columbians. The provincial government approved plans for Taseko's Prosperity Mine, and accepted the company's claim it needed to use a large, fish-bearing lake as a tailings dump, destroying it. The Liberal government gave approval.

But the federal government said no, the environmental damage and impact on First Nations outweighed the economic benefits. It blocked the mine.

And Taseko quickly came back with a new proposal that didn't require the destruction of Fish Lake. It would spend about $300 million more and manage the tailings in a less damaging way. (I wrote more about the province's lax approach here.)

Both cases are a reminder that companies want to do things as cheaply as governments will allow (while avoiding obvious liabilities from future problems). They want the low-cost tailings dump, or the shorter pipeline route, because they can make more money, which is their duty to shareholders.

Governments need to be knowledgeable, tough bargainers to avoid unnecessary environmental damage or other decisions not in the public interest. (Yes, there is such a thing as necessary environmental damage. We aren't living in tents in the trees, after all.)

It's not at all clear that governments are tough or skilled bargainers. The B.C. government was prepared to let Taseko destroy a lake unnecessarily; it also handed huge benefits to forest companies when it released land from tree farm licences without getting compensation for taxpayers.

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