Within hours of the government confirming it had acquired the Trans Mountain pipeline and its related assets, a chorus of critics rose up to offer eulogies for the concept of social licence. Yet, with a nod to Mark Twain, reports of its death are greatly exaggerated.
Social licence can be difficult to define but is best described as the level of social acceptance needed to ensure that projects, especially infrastructure, can withstand the opposition they will face. It’s a different standard from public support as measured by opinion polls.
To be clear, social acceptance doesn’t mean universal approval. By their very nature, large scale energy infrastructure projects are contentious. It is unreasonable and unrealistic to expect that any such project could ever be supported by anyone and everyone.
Some commentators have suggested the federal government’s decision to intervene signed a death warrant for social license because it rendered it meaningless. With the greatest of respect, the opposite is true – government wouldn’t have intervened without it.
The Prime Minister’s support for TMX, and his decision to purchase its assets from Kinder Morgan, would’ve been indefensible if the project didn’t pass the social license test. He wouldn’t have had the moral authority needed to ensure the project is completed.
Those who oppose the TMX expansion are unlikely to be deterred by the fact that the new owners happen to be a federal Crown corporation. To get shovels in the ground, the government will need to make very hard choices in the face of fierce opposition.
Their ability to make those choices, and to take any and all steps required to get construction underway, would be hopelessly constrained if social license was not among the assets they were acquiring. It goes beyond a question of political will or political capital.
Major infrastructure projects – particularly those in the oil and gas sector – must achieve social license whether they’re owned and operated by the public sector or the private sector. Any such project, and any process to approve it, must be accepted in and on principle.
In this respect, Kinder Morgan deserves enormous credit. It undertook an extensive outreach and engagement effort, connecting with virtually every stakeholder group who was either directly or indirectly impacted by the TMX project as it was initially conceived.
More importantly, not only did Kinder Morgan engage with stakeholder communities, it gave them a meaningful opportunity to shape the final outcome – from changes to the pipeline route, to design enhancements, to protecting environmentally sensitive areas.
The fact it did all of that, above and beyond what was needed to secure the requisite regulatory approvals, is presumably why the government identified TMX as the only energy pipeline project that it was prepared to back with the full force of federal authority.
All things considered, then, the government’s decision is actually a validation or vindication of social license. If Kinder Morgan hadn’t taken the extensive steps that it did to secure social acceptance for its TMX project, the government would’ve left it to die.
This almost certainly explains why the government did not intervene in a similar fashion to rescue other energy infrastructure projects – as some had urged. The government invested in TMX because it was the only one that it felt met the social license threshold.
Of course, other factors were at play. The rationale given for the government’s asset purchase was rooted in overcoming political risk. While social license can mitigate risks, it can’t eliminate them entirely – and it’s certainly not a measure of commercial viability.
Put another way, while social acceptance can create an aura of inevitability around a given project – it doesn’t compel or prescribe the means by which it will ultimately proceed. TMX had social license, so it’s the one to go ahead come Hell or high (tide) water.