The Economic Costs and Benefits of the Proposed Northern Gateway Pipeline
A new study reviews the economic case for the Enbridge Northern Gateway Pipeline (NGP) and casts serious doubt on claims that the pipeline will lead to substantial job creation and other economic benefits.
Enbridge claims that the NGP will create 63,000 person years of employment during the construction of the pipeline, and 1,146 full-time jobs once it’s completed.
“That sounds like a lot of employment, until you start breaking down the numbers,” says Marc Lee, senior economist at the Canadian Centre for Policy Alternatives’ BC Office, and author of Enbridge Pipe Dreams and Nightmares: The Economic Costs and Benefits of the Proposed Northern Gateway Pipeline.
The study finds that Enbridge’s job creation estimates are based on flawed modeling and questionable assumptions. Estimates assume that workers would otherwise be unemployed, and a large share of the estimated jobs come from induced employment, i.e. the economic impact of expenditures by Enbridge workers and governments. These “induced” impacts are particularly difficult to estimate and notoriously easy to overstate.
“It makes more sense to focus on direct employment,” says Lee. “According to Enbridge’s own estimates, the pipeline will only create about 1,850 construction jobs per year for three years. Even adding in upstream employment from pipe manufacture – if that were to occur in Canada – gives us no more than 3,000 jobs per year for three years.”
While the NGP would certainly create massive profits for Enbridge shareholders, workers will see only a small share of these. A comparative public investment in green jobs and industry, which could be funded through a relatively modest carbon tax, would produce at least three times as many jobs, without risking Canada’s energy security or entrenching our role as an exporter of raw commodities. And, of course, it would diversify our economy away from fossil fuels.
The study reveals other problems with framing the NGP as an economic boon:
- Canada will lose out on job creation opportunities from upgrading and refining, because oil sands bitumen will be exported to China after only minimal processing.
- Enbridge ignores the costs of the environmental risks of the pipeline – including disruption to existing employment, potential job losses due to oil spills.
- The pipeline further locks BC and Alberta’s economies into carbon-intensive development that is causing climate change.
- The calculations assume economic benefits to communities along the pipeline, including hiring qualified Aboriginal workers. However, the company makes no commitment to training local residents, making it likely that high-paying, high skills jobs will go to workers from outside the region.
- Importantly, Enbridge’s calculations do not account for alternatives to the pipeline; i.e. they assume that without the pipeline, workers would be unemployed and there would be no other possible investment in the economy.