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Study calls for federal carbon price to win broad support for oil pipelines

CALGARY - Ontario must push to ensure the benefits of proposed oil pipelines in the province not just their costs and risks are spread throughout Canada, says a study released Monday by the Mowat Centre.

"Unless Alberta and the federal government are more prepared to find ways of sharing costs and benefits more equitably, it is unlikely that pipeline projects will reach fruition," write the report's authors.

While Ontario would see economic benefits of pipelines in the form of employment and government revenues, the report's authors argue Alberta and other oil-producing provinces reap a disproportionate share of the bounty.

At the same time, they write, Ontario and other provinces have been doing the heavy lifting when it comes to reducing greenhouse gas emissions, only to be eclipsed by rising emissions from fossil fuel-rich provinces like Alberta.

The most "realistic and reasonable" way to win broad support for pipelines is through a federal price on carbon, the proceeds of which could be invested in research, development and clean technology.

"The Ontario government has made it clear that it sees a national interest in oil and gas development and is committed to supporting Alberta's ambitions," the report says.

"But it is now up to the federal government, the Alberta government and the governments of other hydrocarbon-producing provinces to likewise see the national interest and ask how pipeline development produces benefits across the country."

The report also flags concerns over the impact to Ontario's natural gas consumers in light of TransCanada Corp.'s proposal to switch part of its west-to-east gas mainline to oil service.

There are two proposals in the works to ship western crude to eastern markets via Ontario: Enbridge Inc.'s (TSX:ENB) Line 9 reversal and TransCanada's (TSX:TRP) much larger Energy East project.

On a recent visit to Calgary, Ontario Premier Kathleen Wynne expressed support for such projects, provided the environment is protected and First Nations are properly consulted.

The report was authored by Richard Carlson, who worked in the U.K. advising investors and governments on energy policy and environmental issues, and Matthew Mendelsohn, who has served in both the Ontario and federal governments.

The Mowat Centre, located at the University of Toronto's School of Public Policy and Governance, is a non-partisan public policy research centre.



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