Enbridge Should Rethink Old, Troubled Line 5 Pipeline, IEEFA Says
(P&GJ) — A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) questions the financial and strategic viability of Enbridge Energy’s proposed tunnel project to replace an aging section of the Line 5 pipeline under the Straits of Mackinac.
The report highlights mounting costs and declining market demand for the pipeline’s products, suggesting that Enbridge should reconsider its approach. The $750 million project aims to replace two underwater pipeline segments with a tunnel beneath Lake Michigan and Lake Huron. However, IEEFA argues the investment may exceed initial estimates and offers limited long-term benefits.
“Enbridge should reconsider its current business strategy of pouring billions of dollars into redesigning troubled segments of the Line 5 pipeline,” said Suzanne Mattei, IEEFA energy policy analyst and co-author of the report. “An expeditious but well-planned approach for closing Line 5 would not only relieve Enbridge of debt burdens and significant litigation battles related to the projects, but also would allow the company to chart a more flexible energy transition course.”
The report outlines several key findings:
- Rising Costs: Enbridge initially estimated the tunnel would cost $500 million in 2018. By 2022, the projection climbed to $750 million, with further increases expected due to construction inflation and project risks.
- Financial Risks: Stock and bond analysts warn of Enbridge’s growing reliance on fossil fuel infrastructure and the debt burden associated with such investments.
- Declining Demand: The report notes that electrification and alternative energy technologies are rapidly reducing the market for Line 5’s products.
IEEFA suggests Enbridge explore alternatives to the tunnel and consider decommissioning Line 5 entirely.
The findings come amid ongoing legal and public scrutiny over the environmental risks posed by the aging pipeline. Critics argue that Enbridge’s reliance on fossil fuel infrastructure locks the company into a declining market trajectory.
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