Who will cover the cleanup costs of an oil spill like this one by Enbridge into Michigan’s Kalamazoo River?
The news out of the Joint Review Panel looking into the Enbridge pipeline should have a profound effect on us all.
One of the conditions is a requirement that Enbridge carry close to $1 billion in insurance, plus $100 million on hand to cover losses from spills.
I find this interesting, since normally an assessment of future damages covered is accompanied by an assessment of the risk to be covered. What is the size of the risk and how big a part of that risk will be taken? This so in every kind of insurance – be it life, casualty, automobile, what have you. This means not only must there be an assessment of the risk – i.e. is there likely to be a loss – but how much is a loss going to cost? This is especially true of casualty insurance, as the Joint Review Panel is dealing with here.
The second critical point is whether or not the insurer will continue to cover Enbridge after a loss has occurred? Can they cancel, leaving Enbridge’s further damages up to us the people?
This story will be seen (Enbridge hopes) as an encouraging sign, because opponents will be shut up now that these big numbers are involved.
I am not impressed – indeed quite the opposite – for this indicates that the Joint Panel thinks that there’s a risk involved. There is in fact a certainty. Dealing with this as simply “a risk” and announcing the coverage required is asking us to accept that “risk” because the damages are prepaid. Moreover, the amount of insurance involved is nowhere near what the ultimate cost will be and ignores the question: what will the long range cost to our environment be and how do you comopute that loss? If one uses, as an example, the Enbridge spill into the Kalamazoo River, two years later they had used up all of their insurance of $650 million. The cleanup continues and the cost is expected to be over a billion dollars and much of the damage is forever.
Enbridge will be required to demonstrate insurance coverage at $950 billion – roughly equivalent cost of the Kalamazoo spill. BUT, the Kalamazoo spill was easily accessed. There were no mountain ranges like the Rockies or the Coast Range; no Rocky Mountain Trench; no Great Bear Rainforest to contend with. Let us, for God’s sake, ask a key question: How does Enbridge have access to spills on land? How does it get labour and heavy equipment to the spill? Doesn’t the Kalamazoo spill demonstrate that there can never be a total cleanup?
The BP disaster in the Gulf of Mexico has cost, so far, about $36 billion and rising.
Another critical question is who insures oil tankers, especially when many of them will be owned by companies flying a flag of convenience like Panama, the Cayman Islands and the like?
How is a coastal spill to be cleaned up and at whose cost?
What the people of British Columbia are certainly to have are spills on land and sea for which they will pay much of the cleanup out of their taxes. What we are also certain to have is enormous environmental damage forever.
Finally, the pronouncement of the Joint Review Panel should be assessing the frequency and probability of damage and laying that before the public for a decision as to whether or not these pipelines should be built in the first place.
This won’t be done and the Harper government is on record giving its approval of these pipelines no matter what the National Energy Board recommends.
Given the Kalamazoo experience, how does Enbridge control and clean up a spill when the only access is by helicopter? Every way one looks at this case shows huge costs – much paid by the public – with permanent damage to our environment.
