With the increased concern regarding greenhouse gas emissions, the review process for pipeline projects will now consider their upstream emissions impacts. This is a departure from a more traditional approach of focusing only on the project and its direct impacts. Economists have for years looked at direct, indirect and induced impacts associated with many different projects in different sectors. It seems therefore, that the review of greenhouse gas emissions of a pipeline follow this same perspective. However, it is not clear if we are capturing all the impacts associated with infrastructure reviews.
It can be more difficult to conduct these reviews, but do we need a conversation around which upstream or for that matter downstream impacts should or should not be included. What, for example, are the downstream impacts of the Energy East project. Oil from this project would substitute for overseas oil. Should we consider the difference in greenhouse gas emissions of western Canadian oil to a specific point such as Saint John with those of oil sourced from Nigeria?
We could go even further to evaluate the change in the average price received by upstream producers compared with the price discount of selling oil into the U.S. market. Should this economic and government revenue impact be included in a pipeline assessment?
One option to address this situation is to sit stakeholders around a table and have that discussion. We should ensure we are agreed on the scope of the analysis and we include all economic, environmental and social benefits or costs within that scope. Discussions of this type have occurred with respect to the benefits and cost of energy efficiency programs, in particular as they can avoid other energy investments, or if a program should be granted the benefit of free riders.
How much of a specific impact should be allocated to a specific project? A number of questions arise with this change in perspective, and it is important to understand the perspective used to assess a project. To do otherwise is to make decisions on these projects without all the facts.