A pipe yard servicing government-owned oil pipeline operator Trans Mountain in Kamloops, B.C. on June 7, 2021.JENNIFER GAUTHIER/Reuters
The federal government is facing new calls to launch an Indigenous loan guarantee program, and Enbridge Inc. ENB-T chief executive officer Greg Ebel is championing the investment backstop as a way to promote reconciliation and help fund the global energy transition.
Mr. Ebel, head of North America’s largest natural gas distributor, said Indigenous communities across Canada want to improve their standard of living by investing in major projects, but are constrained by a lack of capital. In a speech Friday to the Toronto Board of Trade, he said federal loan guarantees – similar to guarantees the Alberta government already offers – would pave the way for Indigenous participation in pipelines and numerous other national projects, including mining of critical minerals and electricity transmission networks.
“We need to see political courage,” said Mr. Ebel. With Ottawa offering a backstop, he said banks would be far more willing to lend to Indigenous groups making multibillion-dollar investments.
In an interview following his remarks, he added: “Only the federal government can offer Indigenous groups the loan guarantees they need on projects with interprovincial or national scope.”
Ottawa’s resistance to an Indigenous loan guarantee program is rooted in a desire to avoid being seen as backing further investment in conventional oil and gas projects, Mr. Ebel said. But he said the government should be agnostic on projects Indigenous groups invest in, and simply back private-sector loans that create an opportunity for groups that have historically been excluded from owning stakes in businesses operating on their lands.
In 2018, Prime Minister Justin Trudeau’s government acquired the Trans Mountain pipeline for $4.5-billion from Kinder Morgan Inc. KMI-N, and backed doubling is capacity. The cost of the project has soared, and now exceeds $30-billion. The pipeline expansion is expected to be completed next year.
Earlier this year, the federal government began negotiations aimed at selling a stake in Trans Mountain to First Nations. Mr. Ebel said federal loan guarantees would help Indigenous groups acquire a meaningful stake in the project, while paying back taxpayers.
“Leadership has to come from the top in politics,” said Mr. Ebel, the former chief of staff to then deputy prime minister and finance minister Don Mazankowski. He compared Mr. Trudeau’s opportunity to be a global leader by promoting natural gas as a low-carbon emission replacement for coal, with Indigenous ownership of production and infrastructure, to Lester Pearson’s peacemaking efforts in the Suez Crisis of 1956 and Brian Mulroney’s contributions to help end apartheid in South Africa in 1990.
Last week, the First Nations Major Projects Coalition, which represents more than 130 Indigenous groups, and the Business Council of Canada held a conference focused in part on the need for a federal loan guarantee program. At the time, a spokesperson for Finance Minister Chrystia Freeland declined to comment on the concept, while pointing out Ottawa already offers funding for Indigenous investments through the Canada Infrastructure Bank and First Nations Finance Authority.
The blueprint for loan guarantees, according to Mr. Ebel, is the Alberta Indigenous Opportunities Corp., a Crown corporation created in 2019. Last year, 23 Indigenous groups tapped the AIOC for $250-million to help raise a total of $1.1-billion and acquire an 11.6-per-cent stake in a network of seven Enbridge pipelines.
CEOs such as Mr. Ebel and industry groups are lobbying for government loan guarantees in part because the federal Indian Act bans First Nations from owning the land on their own reserves, which restricts their ability to borrow.
Enbridge has made significant investments in projects that are moving forward with Indigenous approval, and could be candidates for investment. The utility owns a 30-per-cent stake in the US$5.1-billion Woodfibre liquefied natural gas terminal near Squamish, B.C., one of two LNG terminals planned for Canada’s West Coast. Woodfibre is expected to begin shipping LNG by 2028.
Canada’s first LNG terminal, in Kitimat, B.C., is expected to open in 2025 and cost approximately $40-billion, the country’s most expensive energy project. In March, the B.C. government approved plans for the nearby Cedar LNG export facility, a project that is majority-owned by the Haisla Nation.