There was a brief, telling moment when Prime Minister Mark Carney was onstage at a Calgary Chamber of Commerce event last year, following the announcement of a memorandum of understanding with the Alberta government for a new “private sector constructed and financed pipeline” to the West Coast. 

Deborah Yedlin, the CEO of the chamber, mentioned the agreement’s stipulation: the project needed a private proponent rather than public funding. Then she said the project required “derisking.”“Are you saying there’s no room for the government to derisk something for a period of time in order to attract private capital that’s needed for a project like that?” she asked Carney. In other words, how far was Carney willing to go to protect industry from losses?Carney listed off moves his government was making, including regulatory clarity, tax incentives and loan guarantees to move the project forward. And then he said: “In essence, the Asian pipeline will be a private sector project …”

That one word, essence, bore considerable weight. 

So too did the timing of the Oct. 1 announcement that the pipeline — now known as Pacific Link — would be the first project of national interest listed under the federal government’s sweeping Building Canada Act. It comes just over two weeks before Alberta holds a referendum on whether to hold an independence referendum, as well as a slew of questions aimed mostly at immigrants. 

From the beginning, the pipeline plan was a political one, based on a calculus that can be hard to understand outside of Alberta, where decades of government and industry messaging has succeeded in tightly weaving oil and gas into the province’s culture. 

Never has that narrative been pushed harder than by the United Conservative Party government, first under former premier Jason Kenney and now amplified even more under Premier Danielle Smith. 

Having directly linked the future of the country with deregulation for the oil and gas sector, Smith now faces the headwinds of that rhetoric in the form of a burgeoning separatist movement. It’s one she has aided to protect herself from an influential secessionist base in her party. 

It’s a situation Carney has recognized and attempted to shape, acquiescing to Alberta’s demands in an effort to shore up a united front as threats from the United States grow more stark. 

The prime minister might have promised Canadians a “private sector constructed and financed pipeline” in last fall’s memorandum. But it was clear from the beginning he was willing to pay a premium to achieve peace. 

How Alberta’s politics of wealth and alienation fuelled the Pacific Link promise

After their first meeting in March of last year, Smith threatened Carney with an “unprecedented national unity crisis” if he did not respond to a list of demands almost entirely focused on boosting the oil and gas sector. 

It was part and parcel of a wider campaign to link Alberta’s political and economic fortunes more tightly with fossil fuels, including moves to designate emissions data as critical infrastructure to prevent the federal government from accessing it and put up regulatory and economic hurdles to block renewable energy development. 

Smith’s actions are part of a long history of resentment that stretches back as far as the creation of the province, when the federal government denied Alberta control over its natural resources, a move that was later reversed. 

There’s an entire mythology of eastern Canadian domination built up around the National Energy Program introduced by Pierre Elliot Trudeau in the early 1980s, which still resonates with separatists and mainstream conservatives alike. In this century, the climate actions of his son Justin Trudeau inflamed a new sense of subjugation in the oil patch. 

Those resentments and mythologies have been curated by successive Alberta governments as an easy way to rally Albertans to their cause and help cover up internal failures, particularly when it comes to budget crashes. And now it has reached a fever pitch. 

Carney, a veteran of Brexit and big brain amidst big brain money makers, recognized the weight of Smith’s threat and an especially restless Alberta, particularly as the geopolitical landscape shifted under his feet. He wasted no time in wooing her, and her province. 

He has proven willing to deregulate and slash emissions programs and targets to help industry. Now, he’s opening the federal government’s hefty purse to buy peace. The pipeline will cost billions, without any promise that price will be enough to please Smith’s government and the powers it has unleashed. 

Pacific Link pipeline promise is rushing to meet a very specific moment

Pacific Link is moving fast, because it’s meant to meet this specific moment: oil prices are high, Alberta separation is occupying vital political real estate, and a trade war with the U.S. is both threatening Canadian well-being and galvanizing political will for big risks and fast action. 

In this rush, it’s easy to lose sight of the fact that many important details still aren’t finalized — such as the route, financing and oilsands companies meeting requirements for a massive carbon capture and storage project.

All of this makes meeting this specific moment difficult, to say the least. It will be years before the pipeline is online. 

There are also serious questions about investing billions of taxpayer dollars into a project for a sector facing possible reductions in demand and a global shift away from the uncertainty of oil markets. Not to mention concerns over the impacts of increased emissions and the reduced ambitions for carbon capture. 

Despite this announcement, the referendum will still take place. The provincial government is spending millions to tell Albertans to send Ottawa a message and stand up for a more sovereign province. Its list of demands remains, even if Smith is playing nice with Carney for the time being.

The willingness of the Alberta government to act in good faith is also questionable. Only days after it signed last fall’s memorandum with the federal government, it went ahead with changes which undermined its industrial carbon price that it promised to strengthen in the agreement. 

That’s the same memorandum containing the broken promise of a “private sector constructed and financed pipeline.” It all suggests Donald Trump isn’t the only Western leader who signs agreements in pencil. 

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Summary

• As polls suggest a majority of Canadians support building new pipelines, the Alberta government is proposing a new pipeline to the West Coast to help boost production in the oilsands.
• The terms of the pipeline proposal name Alberta and the Canadian government together as majority owners, suggesting taxpayers will foot much of the construction bill.
• Pipelines are very expensive to build. A recent analysis of the federal government’s Trans Mountain pipeline, which is already operational, showed that the pipeline’s revenues aren’t high enough to cover its construction and debt costs, making it a money-loser for taxpayers.

Pipelines, pipelines, pipelines. No matter how you feel about them, it’s hard to escape news of them lately. 

In July, the Alberta government announced it is formally proposing another pipeline to the West Coast. On the weekend, the federal government took another step towards designating the pipeline as a project in the national interest, meaning environmental assessments and other parts of the approval process could be fast-tracked.

Recent polling shows the majority of Canadians — 63 per cent according to the Angus Reid Institute in July — support that new pipeline from Alberta to B.C.

Why? Mostly for economic reasons. A majority told pollsters they were convinced by the argument that Canada needs to diversify its oil markets away from the U.S., while half said oil is just generally important to the economy. Forty-five per cent said the project would create jobs. 

The economic forecast, though, isn’t quite that simple. There’s still the question of who’s going to pay for it. A poll commissioned by the Pembina Institute and conducted by Probe Research in April found a majority of Albertans — 61 per cent — say they don’t want to spend taxpayer money on a new pipeline.

It’s increasingly clear: many Canadians say they do want a new pipeline, but they don’t want to pay for it. Companies aren’t exactly lining up to build new pipelines by themselves either. That raises a question: why?

So what are the economics of a pipeline in Canada? Do they make money? Here’s what you need to know.

How much do pipelines cost to build?

No one is going to build a pipeline on a shoestring. These are multibillion-dollar projects, often crossing multiple provinces. Even expanding an existing pipeline, or building along an existing pipeline route is a huge endeavour involving tens of thousands of people working on the project.

Take the Trans Mountain Expansion project, as an example. That increased the capacity of an existing pipeline, built in the 1950s, from Alberta to the West Coast. That expansion project ultimately cost taxpayers $34 billion — notably, that’s almost $30 billion more than initial estimates. 

The latest pipeline idea making headlines was proposed by the Alberta government, with an estimated cost pegged at between $35.2 billion and $43.7 billion. That proposal was brought forward alongside the federally owned Trans Mountain Corporation, which will lead the project, and Pembina Pipeline Corporation (which is not connected to the Pembina Institute that held the poll). 

Under the proposed partnership, Trans Mountain and the Government of Alberta — through the Alberta Petroleum Marketing Commission — would hold a majority interest. 

So who would actually own it? Well … taxpayers, in a way.

How much have taxpayers spent building pipelines in the past?

It varies. Canadian taxpayers have been on the hook for billions since the Government of Canada purchased the Trans Mountain pipeline in 2018.

And maybe that’s okay. Some would argue that pipelines are infrastructure, much like highways or railways. Others disagree that billions of dollars of public money should be put toward increasing oil and gas infrastructure.

Nonetheless, it continues to happen. TC Energy’s cancelled Keystone XL expansion was backstopped by Alberta taxpayers to the tune of $1.5 billion in 2021.

And it’s happening again. Alberta’s government has already contributed a little more than $18 million to its latest pipeline plan, saying the money went to early planning work “including preliminary engineering, cost estimates, economic modelling, early Indigenous engagement with communities and development of the proposal for federal consideration.”

The Alberta government calls it a “myth” that it will pay for the entirety of the pipeline, saying, “Now that this preliminary work is done, we will work alongside Trans Mountain and Pembina Pipeline to move this project ahead.” But Pembina Pipeline currently has only a 10 per cent stake in the project.

So, in the end, it appears if the West Coast pipeline project moves ahead, it will be governments — and taxpayers — who foot much of the bill.

“I am quite comfortable that this is a good investment for Canadian taxpayers,” federal Energy and Natural Resources Minister Tim Hodgson told CBC in July.

How does a pipeline operator make money?

Whether pipelines are owned by companies or governments (and taxpayers like you), they charge fees for companies to move their products. The fees paid to use pipelines by companies such as oil producers are called tolls or tariffs. 

The Canada Energy Regulator oversees pipeline tolls, saying it ensures “they are just and reasonable.”

According to the regulator, tolls “cover the company’s cost of service, including a fair and reasonable return to pipeline investors.” Rates vary based on many factors: whether there’s a long-term commitment to shipping, how far, what the product is and how much of it.

The Trans Mountain expansion ended up costing so much that the tolls it charges customers to move oil are higher than expected. Still, according to the International Institute for Sustainable Development, only $15.4 billion of the $34-billion cost of the pipeline is covered by the tolls it charges.

Does running a pipeline actually make money?

Let’s look at Trans Mountain Corporation as an example — that pipeline we all own together. 

The company says it is now profitable. It reported its net income for 2025 was $556 million — up from $5 million the year before.

It’s what Minister Hodgson described to CBC as “generating oodles of cash.” 

But that claim has raised some eyebrows. And untangling it is complicated. 

The Trans Mountain Corporation is a wholly owned entity of another company, Canada TMP Finance Ltd., which is itself a subsidiary of Canada Development Investment Corporation, the entity which holds the Government of Canada’s investment in Trans Mountain. Still following? 

Let’s do it in the opposite direction. The Government of Canada owns a Crown corporation. That corporation has a subsidiary, which then in turn owns Trans Mountain Corporation. Hopefully that helps.

The debt of the expansion, and the interest on that debt, isn’t paid off. But Hodgson can claim the pipeline is profitable because of the confusing corporate structure of which Crown corporation holds its construction debt and pays the interest, and which takes in the tariffs, according to a report from the International Institute for Sustainable Development.

The author of the report described Trans Mountain’s profit claims to The Tyee as a “misrepresentation of finances.”

Trans Mountain Corporation did not respond to questions from The Narwhal by publication time.

But a company’s balance books aren’t the only way of looking at it. Industry advocates argue pipelines generate money in other ways too, including tax and royalty revenues and making oil prices more competitive.

For example, a 2024 report from a group created for Alberta credit unions argued the Trans Mountain expansion project resulted in a significant increase in access to markets for Alberta oil and that access significantly narrowed the price difference between a type of Western Canadian oil called Western Canadian Select and a type sold out of Texas called West Texas Intermediate. The report estimated this had already increased revenues by about $10 billion in the first six months the pipeline expansion launched.

There’s little doubt that producing and exporting oil and gas makes money for Canada — and especially for oil and gas companies themselves. But many have argued a fuller accounting would include the significant costs of the health risks, environmental degradation and other damage that comes from increasing carbon pollution from the burning of fossil fuels.

What are the costs of carbon pollution from increasing oil production?

Fossil fuel production is driving climate change and the consequences are being felt today. Life is more expensive, cities have dirtier air from wildfires, deadly heat waves and other extreme weather are more common, First Nations are disproportionately threatened with disasters and Canadians are more at risk of poverty, heart disease, cancer and premature death.

As The Narwhal has reported, it’s possible, at least broadly speaking, to compare the economic output of fossil fuels with health costs. The federal energy regulator, for example, has reported the total value of crude oil exports from Canada was $138 billion in 2024. A Health Canada report that same year found the total cost of health impacts attributable to air pollution in 2018 was $146 billion. The cost of many foods produced here is also rising as farming becomes less predictable. 

Estimates vary, but the short answer is climate change is expensive. A 2022 report from Queen’s University projected trillions of dollars in losses in Canada due to climate change this century, with the greatest contributor to that change being the burning of fossil fuels.

Does Alberta produce enough oil to fill a new pipeline?

Trans Mountain is currently “Canada’s only pipeline system transporting oil products to the West Coast.” The company says its 1,200-kilometre pipeline network has room for 890,000 barrels of petroleum products to be shipped each and every day. 

The new pipeline proposed by the Alberta government would be capable of transporting one million barrels of crude oil per day from the Edmonton area to the West Coast.

If it goes ahead, that would significantly increase the network of pipelines leading from Alberta.

There are already several other pipeline systems in use — leading to other locations in the U.S. and eastern Canada — and according to the Alberta Energy Regulator, all of them together could carry 5.4 million barrels per day. 

Currently, Alberta produces an average of more than four million barrels of oil per day. That suggests Alberta’s oil production stands to increase substantially if a new pipeline is going to be filled each and every day. 

Meanwhile the International Energy Agency has predicted global demand for oil from combustible fossil fuels may peak as early as 2027 — raising questions about the long-term outlook for expanded oilsands production.

— With files from Drew Anderson and Carl Meyer

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.