TD Report Casts Doubt on West Coast Pipeline's Economic Benefits

A new oil pipeline to the West Coast of Canada is expected to boost the country's gross domestic product, but not as much as initially thought. According to a report from TD Economics, the project would lift Canada's economy by 0.6% by the 2040s and Alberta's by 3.5%. However, economists Marc Ercolao and Likeleli Seitlheko argue that these figures are likely optimistic, citing proposal-stage estimates with a clear interest in advancing development.

Using more conservative assumptions, the economists believe the increase could be around 0.3% nationally and 2% provincially. Despite this, they still consider the project to represent a 'meaningful contribution to growth' when combined with improving market access and export diversification.

The pipeline would be developed, built, and operated by Crown-owned Trans Mountain Corp., with an estimated cost ranging from $35 billion to $44 billion. The federal and provincial governments are expected to shoulder 90% of the costs, while Pembina Pipeline Corp. holds an initial 10% stake.

The TD report also notes that Asia's willingness to absorb Canadian barrels reflects a longer-run diversification strategy aimed at securing stable supply from non-Middle Eastern sources. However, they caution that Chinese demand is expected to flatten over time as electric vehicle adoption and cleaner energy usage increase.