Alberta pipeline project renews dialogue on federal climate policy
Vlad Semeshko, Contributor
Following the ambitious announcement of Alberta Premier Danielle Smith’s new pipeline project, environmental policy discussions persist in Ottawa, shedding light on the friction between the federal and provincial governments in regards to regulations.
While the newly announced pipeline project is yet to receive approval, the creeping demand for expansion in the energy infrastructure persists.
Prime Minister Mark Carney voiced his support for the development of a new oil export pipeline, but despite his alleged reassurance, none of the major companies that specialise in pipeline building have shown interest in taking on any projects.
Federal environmental restrictions are the primary barriers disincentivising private developers from engaging with these projects. Unwilling to risk their investment dollars, firms remain hesitant when opportunities like this arise.
While stakeholders argue that the province has “no business” in building the pipeline, Smith made it clear that the province does not intend to build or operate the pipeline itself, pledging to attract a private partner once the regulatory groundwork is in place.
Smith’s government ultimately points fingers at Ottawa for the existing policy landscape for causing the standstill. Citing high costs and a complex regulatory framework as the reason behind the private sector’s reluctance to spearhead energy projects of that scale.
With federal environmental policies like the cap on oilpatch emissions and the ban on tanker traffic for parts of the coast in British Columbia still in the way, Alberta argues that the province is left with no choice but to lead the charge.
Working with an advisory group consisting of three private sector pipeline companies—South Bow, Enbridge and Trans Mountain—Alberta has been seeking to create and submit the pipeline proposal to the federal Major Projects Office in the spring.
Alberta taxpayers are already bearing a portion of the projected cost, with the $14 million initial investment to put the project in motion. The province estimates that its investments are likely to increase, once more alluding to the high costs to the complexities created by the federal environmental regulations.
This project stems from a larger trend in Smith’s agenda, which prioritises Alberta’s energy sector and provincial autonomy in those matters, staying central in her approach to negotiations with Ottawa.
In parallel with the pipeline announcement, Smith confirmed Alberta will maintain a freeze on its industrial carbon price set at $95 per tonne through 2026, defying the federal government’s plan to raise its backstop price to $110 next year.
While Smith insists that the freeze will keep the balance between competitiveness of the industry and encouraging investment in clean technology, critics argue that the move undercuts Canada’s climate goals and sends the wrong signal to investors.
Unlike the federal carbon tax, which broadly applies to consumers and businesses, the industrial carbon price program targets large industrial emitters.
The program creates a market-based incentive to reduce emissions and encourage investments in green technology. Every company is given an emissions limit. Those that emit below their limit earn carbon credits they can sell, while companies exceeding their limit must buy credits to cover their excess emissions.
Despite tensions between the province and Ottawa, in the recent meeting with Carney, Smith expressed her willingness to adjust Alberta’s industrial carbon pricing program, signaling openness to negotiations around carbon pricing and energy policy.
Taken together, the pipeline proposal and the carbon price freeze reflect a broader provincial strategy aiming to reclaim jurisdiction over resource development.
The United Conservative Party (UCP) continues to challenge federal oversight while staying on course with energy expansion.
As Ottawa prepares to evaluate the pipeline proposal in spring and establish the terms of carbon pricing, the intergovernmental tug of war over Canada’s energy future continues to unfold.
