Posthaste: This dormant pipeline needs to be restarted for the sake of Canada, economists say

Restarting Line 2 could tick all kinds of boxes, including strengthening East-West unity, helping to fulfil Canada's nation-building ambitions and expanding homegrown energy consumption, say economists. Photo by Government of Alberta

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TC Energy Corp.‘s Line 2 has been inactive for more than a decade, but economists at National Bank say now is the time to restart the pipeline, which runs through Ontario and Quebec and forms part of the Canadian Mainline.

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The Mainline currently transports gas from Alberta into the Prairies, Eastern Canada and the United States.

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“Ottawa’s newly articulated defence industrial strategy, combined with a more unstable geopolitical backdrop, strengthens the case for eastbound gas infrastructure as a pillar of industrial resilience and national security,” Pat Kenny, Dan Payne and Stefane Marion said in a note.

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“A stronger East–West energy corridor would anchor the Alberta–Ontario–Quebec industrial partnership, reduce reliance on foreign supply and ensure Canadian resources power Canadian prosperity.”

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The trio estimate the additional natural gas from a reopened Line 2 could generate electricity equivalent to 20 per cent of the peak demand in Ontario.

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Electricity demand in Ontario is only expected to rise 75 per cent by 2050 from 2025 due to industrial expansion, electric-vehicle supply chain manufacturing, demand from data centres and an increasing population.

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National Bank said electricity produced by gas-fired plants would act as a “reliable” stopgap until the province’s new nuclear energy facilities are up and running.

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Ontario is building the first of four small modular nuclear reactors, with the first scheduled to start operating by the end of the decade. Ontario is also looking at constructing two other larger-scale nuclear projects.

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Another reason why the economists think TC Energy should restart Line 2 is that a Mainline tolling agreement — the amount charged to ship gas through the pipeline — is set to expire at year-end.

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Natural gas demand has also doubled since the company signed a deal with shippers that runs from 2021 to 2026.

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Meanwhile, the goals of the so-called energy transition have evolved into an energy “trilemma.” That leaves policymakers seeking to balance energy affordability, reliability/security and decarbonization, the economists said, so both companies and Canadians would support “optimizing … existing North American energy infrastructure, particularly assets that are already in place but underutilized.”

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Finally, the Major Projects Office has identified several natural gas projects, including the expansion of LNG Canada and the construction of a floating liquefied natural gas terminal off the coast of British Columbia.

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“Reactivating and optimizing existing capacity — rather than pursuing new greenfield corridors — is capital-efficient, operationally pragmatic and likely to encounter fewer social and environmental hurdles,” the economists said.