Photo Credit; CDN Aviator
By: James Wilt (Policy Development Manager for Climate Action Team Manitoba)
It’s the idea that just won’t go away. After years as a go-to talking point for conservative politicians, Premier Wab Kinew has picked up the baton of advocating for a “resource corridor” to Hudson Bay that could ship everything from “critical minerals,” to potash and grain, to oil and gas. This rail-based corridor was included in the recent list of top “nation-building” projects to potentially be fast-tracked under the controversial new federal Bill C-5, serving as part of a broader “economic corridor connecting British Columbia’s northwest coast through the Prairies to Hudson Bay.” On Tuesday, Manitoba and Saskatchewan announced another memorandum of understanding to collaborate on an “Arctic trade corridor,” building on a similar agreement signed between the three Prairie provinces in early 2023.
There are two competing proposals on the table: the push for increased exports through the existing Port of Churchill by Arctic Gateway Group (which owns the port and railway between The Pas and Churchill), and NeeStaNan’s pitch involving an entirely new port at Port Nelson, at the mouth of the Nelson River. Arctic Gateway recently announced that it has tripled its storage capacity for “critical minerals” and added a second weekly freight train to its schedule, while NeeStaNan secured a two-year federal approval to export liquified natural gas (LNG) despite not having any of the necessary infrastructure in place and still being in the feasibility study stage of development. Uncritical reporting in the Winnipeg Free Press has repeated claims that LNG exports are both realistic and necessary.
Here are six major reasons that an “Arctic trade corridor” is a risky, costly, and likely infeasible concept that the Province should replace with a clear vision of economic development that produces genuine climate resiliency, good green jobs, and widespread public benefits, including in Northern Manitoba.
1. Hudson Bay can’t compete with southern ports
A fundamental argument made for increasing shipping through Hudson Bay is also the bleakest: the steady rise in ice-free days, along with ice break-up starting earlier in the year. Proponents of a resource or trade corridor have seized on these trends to argue that year-round shipping through the bay will become a possibility in the coming decades, enabling far shorter routes to Europe and South America than from the West or East Coasts. It sounds sensible enough: climate change is clearing the way for a new trade route, so why not use it?
Reality is simply not that accommodating. Ice-free days will increase in the coming decades, but it will remain very far from year-round open water. A recent analysis of impacts of climate change on Hudson Bay’s polar bear populations calculated that ice-free days will increase to up to 155 days with 1.5°C of warming, up to 175 days with 2°C of warming, and up to 255 days with a catastrophic 4°C of warming. These are sizable increases, but Hudson Bay will still be covered in ice for much of the year. As Heather Exner-Pirot of the Macdonald–Laurier Institute put it: “In the best case scenario, what was once a three or four month shipping season may now be a five month shipping season.” Further, changes in ice patterns are actually making shipping more difficult in some places.
Brian Zinchuk of Pipeline Online has argued this would either require the port to stockpile huge amounts of resources for the winter, or make a “massive investment into a large fleet of multi-billion-dollar icebreakers” along with “several dozen” ice-capable carriers. He also noted that icebreaking is extremely slow—averaging around three knots, instead of the usual 14 or 16—which would further disadvantage shippers. While the politics of new resource transportation through BC or Quebec may complicate things, there’s little reason to believe that Hudson Bay could successfully compete with southern ports that don’t have to contend with ice (or buckling permafrost and muskeg).
2. Fossil fuels are becoming an extremely risky industry to invest in
You wouldn’t know it from the way that Canada’s political leaders are talking about it, but global oil and gas is no longer a safe bet for multi-decade investments. The International Energy Agency now forecasts that global oil demand will peak by 2030, in large part due to the “extraordinary surge” of electrification in China. Meanwhile, growth in global oil supply is expected to more than double anticipated demand growth, leading to concerns about a supply glut that could slash prices.
The same goes for LNG. A recent IISD analysis reported that “importing markets—notably in Europe and Asia—are already downgrading demand for LNG in favour of more reliable and affordable alternatives, including domestic renewables,” while claims of LNG’s use as a “transition” or “bridge” fuel have been widely debunked. The US, Australia, and Qatar are already dominant in LNG exports and a global oversupply is also anticipated due to a 40 per cent increase in export capacity under development for 2030, which could crater prices and profits.
Any resource or trade corridor concept that hinges on oil and gas exports—which would take many years or even decades to plan, permit, and build—is fundamentally disconnected from real-world transformations in the global energy market. Further, NeeStaNan is currently advocating for using “LNG by rail” a transportation method that was recently suspended in the US due to lack of information about safety risks, and is not in large-scale use anywhere in the world. These are extremely unviable proposals.
3. An Arctic trade corridor would require huge public subsidies
A Conservative MP and Winnipeg Sun writer turned NeeStaNan special advisor has declared that “NeeStaNan does not need heavy government subsidies!” But recent resource megaprojects like the Trans Mountain Expansion and LNG Canada have clearly demonstrated that cost overruns of already gigantic budgets are basically inevitable and a litany of public subsidies—tax breaks, policing and surveillance, even outright nationalization—are almost always required for them to proceed.
There’s no reason to think that a resource corridor to Hudson Bay would be any different. Governments have already spent huge amounts of public money on restoring the railway to Churchill after flooding washed it out in 2017 and it was effectively abandoned by its US owner. Federal and Manitoba governments have spent more than a half-billion dollars since 2018 on the Hudson Bay Railroad and Port of Churchill, including another $175 million over five years announced in March, despite the port operating well below capacity.
The NeeStaNan proposal is at a much earlier phase of development. In 2023, the province kicked in $7 million for a feasibility study. Much, much more money would be needed to turn Port Nelson into “a big international multi-modal port for big ships,” including an additional 150 kilometres of railway track, new transmission lines and roads, and storage facilities. A gas liquefaction facility would cost many billions of dollars, as well. One NeeStaNan booster said the project “would cost $50 billion to $100 billion and likely take a couple of decades to complete.”
Given the tendency of governments across Canada to subsidize resource megaprojects—and Premier Kinew’s support of the project—there should be little doubt that the public would be on the hook for a good chunk of this spending through direct and indirect supports, particularly if and when commodity prices crater, returns prove far less lucrative than anticipated, or climate chaos once again wipes out infrastructure with flooding, fires, or thawing permafrost.
4. Environmental risks and impacts could be substantial
By far the most concerning environmental risk posed by the trade corridor concept is a large oil spill, which is particularly likely in the case of dedicated oil exports but could also occur through the shipments of any other commodities given the presence of increased marine traffic and fuel storage facilities. Oil spills tend to be extremely difficult to respond to, with response measures limited to booming and skimming, in-situ burning, dispersants, or so-called “natural attenuation” over the course of years and even decades. Ice and cold can make spill response even more difficult, with worst-case Arctic spills from an oil tanker projected to cost billions of dollars in response and damages. Spills could also occur anywhere along the rail or pipeline route. It was because of such risks that the Manitoba NDP government opposed an oil export plan in 2013, including potential harm to the region’s vital tourism industry. For its part, LNG comes with air pollution and explosion risks.
But there are many other potential environmental impacts associated with Northern development, including deforestation and habitat loss for new roads and transmission lines. NeeStaNan’s plan of up to 1,000 rail cars per day would have obvious effects on local ecosystems too. Increased shipping activities in Hudson Bay would also risk “noise pollution, introduction of invasive species, disturbance of marine mammals, and disruption of sea ice.” Reducing ship speeds can help reduce some of these risks, but it appears improbable that a new export facility would agree to such regulations given the already limited shipping season in Hudson Bay. And these environmental threats would not be restricted to the port area but would extend along the entire shipping route and the Inuit communities that span it.
Exporting oil or gas would also add to Canada’s already massive contribution to global emissions, which will further accelerate climate-caused breakdown in the North.
5. Provincial revenue and employment would be minimal
Premier Kinew has mostly promoted the trade corridor concept on the basis of its economic returns for the province, arguing that improving climate resiliency and public services like healthcare and education requires that the province is able to “pay the bills” through “the hard hats building big projects.”
Of course, this assumes that whatever money the government received outweighed all the subsidies that it paid out over the project’s lifetime. But the returns to Manitoba of an export terminal would likely be limited to taxes and fees associated with its construction and operation, along with Manitoba Hydro’s electricity sales to the project (assuming the Province doesn’t subsidize these too, as the BC Government has done for LNG Canada). Asides from “critical minerals,” Manitoba wouldn’t be producing many of the exported commodities in question, meaning that increased revenue from higher taxes and royalties would largely accrue to companies and governments in Alberta and Saskatchewan.
However, even if the corridor was shipping resources extracted from Manitoba, it’s doubtful the returns would be worth it. In 2024, the province only received $35 million in royalties, taxes, and fees from oil, gas, and mineral extraction, mostly from Tundra Oil and Gas (Tundra paid another $15 million to rural municipalities). Hudbay Minerals, which operates the Lalor Mine in Snow Lake, paid out a total of $10 million to the province and municipalities in 2023. Major pipelines aren’t much of a money-maker, either, with TransCanada paying $20 million in property taxes and $7 million in provincial taxes in Manitoba at last count; Enbridge’s contributions are even lower.
These numbers might sound like a decent amount, but the provincial government collects and spends upwards of $25 billion a year. Even in the miraculous event that an export facility somehow contributed $500 million in public revenues a year—roughly the same amount as the massive LNG Canada plant in Kitimat—that would still only represent 2 per cent of the current provincial budget. As always, a combination of taxes, fees, and federal transfers will continue to fund Manitoba’s public services. To raise more revenue to fund services in Manitoba, it would be far more expedient to simply raise taxes on high-income earners and big corporations.
6. Climate infrastructure funding is a far better job creator than resource exports
Like we argued in our recent briefing on direct air capture, the biggest problem with these types of moonshot proposals is that they waste precious time, money, and focus that should be spent on advancing aggressive climate action that reduces emissions, creates jobs, and improves affordability for Manitobans. The province should be showing clear leadership in outlining a transformative vision for the coming years and decades that recognizes the catastrophic threat of the climate crisis and escalating inequality, not deferring economic development decisions to the whims of project advocates.
Pipelines and export terminals are simply not long-term job creators. Yes, any big construction investments will trigger an employment boom for several years. But once up and running, export facilities require far fewer workers: the massive LNG Canada facility in Kitimat has reportedly created a grand total of 300 permanent jobs. Such numbers are far more significant in the North, but there are much better ways to create such opportunities that align with the urgent need for energy transition—and that don’t result in abrupt layoffs when global commodity prices shift.
Globally, the clean energy sector is now outpacing fossil fuels in job growth, led by construction and installation of solar panels. A recent metastudy comparing job creation in the energy sector concluded that “policies supporting renewables and energy efficiency may lead to net job creation compared to the counterfactual of jobs which may otherwise have been created by investing in fossil fuels.” Other studies have highlighted the higher job creation potential of ecosystem restoration, building efficiency retrofits, and mass transit when compared to fossil fuel-based projects. There are tremendous opportunities in Manitoba for the province to increase funding to such sectors and create good green jobs that would otherwise not exist.
Northern Manitoba urgently requires large-scale funding commitments to address fundamental needs like housing, healthcare, education, transportation, and infrastructure like high-speed internet and clean drinking water, which could produce long-term employment opportunities for local residents. There is also huge potential and need for protecting and restoring carbon-storing ecosystems such as the Hudson Bay Lowlands, and precedent for what funding of this could look like with the national Indigenous-Led Area-Based Conservation and Indigenous Guardians programs. The province and federal governments need to dedicate enormous resources to prepare Northern Manitoba for future climate-caused extreme weather events, as well, such as flood protection and improved evacuation infrastructure which could be Indigenous-led and create many jobs in communities.
The provincial government is marginalizing such needs and opportunities through their focus on increasing commodity exports through Hudson Bay, which would entrench economic volatility, expensive public subsidies, and environmental risks for little public benefit. Rather than an unrealistic resource corridor, Premier Kinew should be asking Prime Minister Carney to fund and fast-track the basic infrastructure that Northern First Nations in Manitoba have been seeking for decades. And despite the corporate dreams of conservative premiers and proponents, Premier Kinew should realize that the energy transition is already well underway—and hitching our cart to the resource export horse would only put Manitoba further behind.