Final Death Knell For CDPQ's REM de l’Est Project?
Quebec and Montreal are taking over the management of the controversial REM de l’Est project after Quebec’s pension-fund manager backed out of the project, Premier François Legault and Mayor Valérie Plante announced Monday.
The Caisse de dépôt et placement du Québec’s proposed $10-billion, 32-kilometre light-rail project has raised the ire of citizens’ groups and heritage organizations who slam its elevated portion as an instant eyesore that would tower over eastern downtown.
In February, Montreal’s regional transit authority said planners should go back to the drawing board because the REM de l’Est would be costly to run, disfigure Montreal and provide no clear benefit to most east-end commuters.
At a news conference at Montreal city hall, Legault and Plante said they have heard citizens’ complaints and experts’ criticisms and will radically revise the transit project to respond to them.
Monday’s announcement “proves that we are listening to citizens,” Legault said.
The downtown portion of the light-rail project will be eliminated and the remaining portion will be better integrated with the métro’s Green Line, he announced.
The new project will also be modified to fit better into the Mercier-Est neighbourhood, he said, where residents have held protests, warning it would cast their homes in shadow and reduce property values.
The future rail link could be the key to unlocking the vast potential of Montreal’s east end, said Legault, who touted the need to revitalize the former industrial zone in a 2013 book, Cap sur un Québec gagnant: le projet Saint-Laurent.
Legault said the project could help transform former oil refinery land into “a little Silicon Valley.” He’d also like to extend the rail line to Laval and the Lanaudière region.
While the premier said he wanted to move the revised project forward as quickly as possible, the opening of the driverless train will likely be postponed beyond the original target of 2029.
It will be up to a new team, representing local and regional transit authorities as well as the city and province, to determine the new details, timeline and budget, he said.
Plante hailed the decision to press the reset button on the project as the outcome she’d been dreaming of when she reached out to Legault to seek improvements to the REM de l’Est.
It shows “when there’s a will, there’s a way,” she said.
“The premier and I are on the same wavelength,” added Plante, who had been pressing for Montreal to have a seat at the table in planning the rail project.
“There is an important need for public transportation in this area and this is something to which the premier and I are deeply committed,” she said.
It was clear that “the aerial section crossing downtown would have been a historic error that we absolutely had to avoid,” said Plante, noting that giant structure would have had a disastrous impact on Chinatown and Morgan Park in the Hochelaga district.
In a statement, CDPQ Infra, the Caisse de dépôt subsidiary that had been responsible for the project, defended its record, saying that its latest proposal had integrated more than 80 per cent of the recommendations made by an expert committee on improving the rail link’s architecture and urban integration.
“CDPQ Infra designed and presented to the public a detailed, ambitious and achievable architectural proposal, in order to effectively meet the sustainable transportation challenge of hundreds of thousands of citizens in the eastern part of the metropolis,” it said.
In March, CDPQ Infra unveiled some design changes it hoped would mollify critics who said the elevated train would cause an urban scar comparable to the Metropolitan Expressway.
The tweaks included replacing the massive pillars of the original REM project on the West Island and South Shore with more decorative ones and using a lighter colour of concrete.
Daniel Chartier, vice-president of the Collectif en environnement Mercier-Est, welcomed the change of direction.
“We’re very happy,” he said. It will be up to the new team to come up with a solution for the east end neighbourhood, where citizens firmly oppose an elevated train along either Sherbrooke St. E. or Souligny Ave., he said.
“What is needed is an objective and impartial analysis,” Chartier said.
The municipal opposition warned the change in governance would delay the project.
“With this return to the drawing board and the discussions to be initiated with the new partners, it is clear that Montrealers in the east and northeast will have to wait to see this public transit project become a reality,” said Aref Salem, the interim leader of Ensemble Montréal.
The Chamber of Commerce of Metropolitan Montreal also complained the project would be delayed.
“The Chamber of Commerce has been calling for years for a fast and efficient public transit link to connect the eastern part of the metropolis to downtown,” president and CEO Michel Leblanc said in a statement.
“Today’s decision unfortunately casts doubt on the possibility of proceeding quickly,” he added, urging the government “to commit to a clear timetable” and open the new line by 2030.
The Chamber of Commerce for eastern Montreal also called for the project to be built within 10 years. The new rail link must be “a lever for revitalizing the territory,” it said in a statement, while the $10-billion price tag, plus $2.5 billion for urban integration, must be maintained. It deplored that the REM de l’Est will no longer go all the way downtown.
Patrice Bergeron of the Canadian Press also reports that Plante's change of mind torpedoed Caisse's REM de l'Est involvement, Emond says:
It took Montreal Mayor Valérie Plante just 10 days to change her mind about the eastern extension of the Réseau express métropolitain and, by doing so, to torpedo the project, Caisse de dépôt et placement du Québec president Charles Emond told a legislative committee on Tuesday.
Emond told the committee that a month ago Plante seemed delighted with the project but suddenly changed her mind 10 days later. The provincial government has yet to determine who will now take over the project.
Emond made his remarks a day after Plante and Quebec Premier François Legault announced their respective governments were taking control of the controversial REM de l’Est light rail project from the Caisse and heading back to the drawing board.
The Caisse chief said a meeting last month with Plante determined that his group would deal with the transport component of the project while the city oversaw its development.
“She was delighted with the proposal,” said Emond. “Ten days later, she calls the government to say she wants a new project. The government told me it didn’t think the Caisse would be a part of it. … (They) told me: ‘That’s the end of the REM de l’Est.’ ”
Emond said he was unaware of any disavowal on the part of the government.
Quebec Finance Minister Eric Girard told the committee it was too soon to say who would be responsible for the new version of the REM extension.
Emond confirmed the Legault government would pay $100 million in compensation to the Caisse for the expenses incurred in commissioning studies for the project.
“We’re going to repay for the fact the government made a mistake for four years” in entrusting the extension plan to the Caisse, Parti Québécois MNA Martin Ouellet told the committee.
Emond said the international reputation of the Caisse, which administers the province’s retirement fund, would not suffer because of its project being abandoned, adding the organization could still present its public transit model to other cities.
I had a bad feeling the Quebec government was going to dump the REM de l'Est project but even I was dumbfounded when I saw the news conference at Montreal city hall yesterday where Legault and Plante said they have heard citizens’ complaints and experts’ criticisms and will radically revise the transit project to respond to them.
Just like that, they killed the REM de l'Est project.
I know, back to the drawing board, they will regroup and review the project because "the future rail link could be the key to unlocking the vast potential of Montreal’s east end", but mark my words, the project is dead for good.
And all this because heritage organizations slammed the elevated portion of the project as an "eyesore".
Let's build everything underground, even if it will end up costing ten times as much ($100 billion++ instead of $10 billion).
Anyway, I can't say I am surprised, there were powerful special interests that wanted to kill this project and they won.
This project represented a threat to transit workers who don't like driverless light-rail cars and it represented a threat to others who couldn't profit off it (let me leave it at that, read between the lines).
In the process, our politicians squandered a great opportunity to revitalize the city's east end by bolstering its transit network and the people living there will pay the ultimate price because they will need to live with subpar commuting options.
Meanwhile, in the rest of the city, the REM project is moving along nicely and the latest updates show everything is on schedule and on budget (a 10% cost overrun because of the pandemic, if anyone else was in charge, it would have been 50% or more).
It's worth reading the semi-annual update from last June to really appreciate this project.
I note this:
With more than 3000 workers and employees deployed on approximately 30 construction sites, REM work is now taking place for the first time on all 67 km of the future light metro system at the same time. The year 2021 will be a critical one in preparation for commissioning the REM’s Rive-Sud branch next year. Currently, 23 stations are under construction, 3 of which are nearing completion, 10 km of the overhead structure is complete, 13.7 km of rail has been laid, and a 3.5-km test segment has been commissioned on the Rive-Sud branch for a series of pre-commissioning tests.
“Active REM construction sites and the planned commissioning on the South Shore is the direct result of thousands of workers and professionals who have faced the exceptional conditions of a global pandemic for the past 15 months and found solutions to every challenge that arose. I would like to thank each one of them for their remarkable commitment to this project,” said Jean-Marc Arbaud, President and Chief Executive Officer of CDPQ Infra.
The updated project schedule is maintained and the Rive-Sud branch will be commissioned in the summer of 2022, the central segment in the fall of 2023, the Anse-à-l'Orme branch in the spring of 2024, the Deux-Montagnes branch in the fall of 2024, and the airport branch in late 2024.
I feel bad for Jean-Marc Arbaud, President and Chief Executive Officer of CDPQ Infra and all the employees working at this subsidiary.
Sure, they still have to complete the REM project over the next couple of years and it will be a big success, but with the governments axing the REM de l'Est, I'm not sure what the future of CDPQ Infra will be.
CDPQ's CEO, Charles Emond, put on a brave face stating the international reputation of the Caisse would not suffer because of this project being abandoned, adding the organization could still present its public transit model to other cities.
I certainly hope so but this isn't going to be easy.
The number one reason why Canada's big pensions don't take on construction risk of major infrastructure projects is because of regulatory/ political risks.
Typically that's associated with foreign governments but they steer clear of domestic construction projects too until the governments derisk them, meaning they build them so they become brownfield infrastructure projects (with known and regulated cash flows).
But under Michael Sabia's watch CDPQ did the impossible, it decided to build and operate the 67 km REM project, becoming the first pension fund in the world to undertake a major greenfield infrastructure project.
The REM was "Sabia's baby" but Charles Emond wanted to take it further because it made sense and was an important and profitable project and part of CDPQ's responsible investing strategy to achieve net-zero way before 2050.
But while Michael Sabia, Macky Tall, Charles Emond and Jean-Marc Arbaud got all the glory for this project, under them are hundreds of other employees who really worked hard to make this project a success.
This is what I find truly sad, the REM de l'Est was a great project and CDPQ Infra has incredible and talented employees who now face a more uncertain future because our politicians caved to special interest groups.
On a more positive note, today CDPQ's large real estate subsidiary, Ivanhoé Cambridge, pledged to reduce the carbon footprint of its Montreal properties by 55% by 2030:
In conjunction with its involvement in the Montréal Climate Summit taking place today, Ivanhoé Cambridge has pledged to reduce the carbon intensity of its Montreal properties by 55% by 2030 in relation to 2017. This commitment is equivalent to a reduction of about 8,000 tonnes of CO2 equivalent and will align the Company’s Montreal portfolio with the goal of 1.5 degrees Celsius established under the Paris Agreement.
To a large extent, the planned reductions are based on a strategy focusing on energy savings, more efficient systems, and buildings, proven technologies, and a shift to electrification. Ivanhoé Cambridge’s commitment is also aligned with the City of Montreal’s Climate Plan and the commitments that the City announced during the Summit for the decarbonization of buildings in Montreal.
“By announcing this commitment today, we want to continue to play a leadership role in our industry and inspire our peers to make ambitious commitments and invest in the transition to low-carbon real estate. As we did in Glasgow last November when we took part in COP26, we’re determined to work with all players in the real estate industry to identify solutions that will enable us to accelerate the decarbonization of our real estate assets,” said Élise Proulx, Head of Quebec Economic Development at Ivanhoé Cambridge.
Key role of the real estate sector
The latest report of the Intergovernmental Panel on Climate Change states that, in relation to the other economic sectors, real estate will have to contribute one-quarter of the emission reductions needed to achieve carbon neutrality by 2050. Because 80% of the buildings we will be using in 2050 have already been constructed, the major challenge is to transform the existing building stock.
Last April, Ivanhoé Cambridge announced ambitious decarbonization targets with its commitment to achieve carbon neutrality by 2040 for its global portfolio of assets. This commitment includes:
- reducing the carbon intensity of the global portfolio by 35% by 2025 versus 2017;
- increasing low-carbon investments by $6 billion by 2025 versus 2020; and
- aiming for all the Company’s new developments to be net zero carbon from 2025.
“The target we’ve set for 2030 for our Montreal properties is, therefore, yet another ambitious step toward our overall commitment to carbon neutrality by 2040,” Ms. Proulx added.
Ivanhoé Cambridge intends to continue its active involvement in the work of the Montréal Climate Partnership (MCP), which brings together from various sectors leading players who are all committed to achieving the city’s climate ambitions. For example, the Company is involved the MCP’s Buildings Working Group and will continue to share its decarbonization expertise with the group and contribute to the search for common solutions.
A big reason why CDPQ is a global leader in responsible investing is because of the ambitious targets Ivanhoé Cambridge has set to lower its carbon footprint.
Nathalie Palladitcheff, CEO of Ivanhoé Cambridge, and her team are doing a great job reducing the carbon footprint of their holdings, investing for the future (see an earlier interview of mine here).
I also urge you to read my comment on CDPQ's 2021 Sustainable Investing Report as well as its recently released 2021 Annual Report for the year ended December 31, 2021, titled Investing in a sustainable future.
What else? The management of SNCF, CDPQ, SNCB and Federated Hermes Infrastructure, recently announced the alliance of Eurostar and Thalys:
The first stage of this alliance is the creation of a holding company owned by SNCF (55.75%), CDPQ (19.31%), SNCB (18.5%) and funds managed by Federated Hermes Infrastructure1 (6.44%). The holding company named “Eurostar Group” is based in Brussels and owns 100% of Eurostar International Limited (Eurostar) and THI Factory SA (Thalys), both of which remain fully fledged railway companies with headquarters in London and Brussels respectively.
The shareholders have also appointed Jacques Damas, currently CEO of Eurostar, as CEO of the new entity who will be supported by a symmetric executive committee representing both Eurostar and Thalys.
Initiated in September 2019, the Green Speed alliance project had been temporarily postponed due to the pandemic. Following a relaunch in autumn 2021, the project received approval from the European Commission at the end of March 2022.
The shareholders of Eurostar and Thalys are more convinced than ever that the combination of Eurostar and Thalys will help to meet the growing demand for sustainable mobility by promoting the development of rail transport in Europe. The ambition is to carry 30 million passengers a year within 10 years (compared to 18 million customers in 2019) under a single brand: Eurostar.
This alliance will also accelerate the recovery of Eurostar and Thalys, who have both been hit by the pandemic.
The new entity will offer the largest international high-speed network in Western Europe and aims to implement an ambitious sustainability policy over the next few years.
1 Funds managed by Federated Hermes Infrastructure hold a 6.44% interest via Patina Rail LLP.
This is great news for CDPQ and its partners, laying the foundations for a new European player in sustainable high-speed rail.
Below, a beautiful clip on the REM de l'Est project which has sadly been officially shelved.
Second, CTV News Montreal reports on the decision to abandon this project. I think this was a terrible decision, one Montrealers will deeply regret in the future.
Lastly, former hockey stars, politicians, and hundreds of fans gathered in Montreal Tuesday for the national funeral for Montreal Canadiens legend Guy Lafleur.
The hockey great died April 22 of lung cancer and was laid to rest at the Mary, Queen of the World Cathedral in downtown Montreal.
On the news tonight, they said Guy Lafleur raised $1.5 million for cancer research for the Montreal CHUM. You can give to the Guy Lafleur Fund here.
Adieu Guy Lafleur, I will leave the last word to former Montreal Canadiens' goalie Patrick Roy who earlier today stated this: « Repose en paix mon ami, tout le monde ici sait que tu es un vrai » ("Rest in peace my friend, everyone here knows you're the real deal").
Update: Paige Saunders wrote a comment for MTL Blog on how changes to Montreal's REM de l'Est are a disaster for the city and planet. I note this part:
With transportation, time is what matters most to people and adding ten minutes for a transfer just means more people taking the car. Not a great start for our fearful leaders.
Watching Plante and Legault make their announcement was like watching an award-winning restaurant firing the head chef who founded the restaurant and then deciding to become a Mcdonald's. Why would they become a Mcdonald's? Because the head chef took all the management, sous chefs and recipes with them so they have nothing exceptional left.This is all a story we have heard before. Difficult sacrifices need to be made for the climate, but not if it means upsetting special interests, or political ideologies, or homeowners who like their view. Sure, climate change is a critical and pressing issue, but let's restart this process because we couldn't get all four million residents of the greater Montreal area to agree on something.
You can read the entire comment here, it's spot on and well written.