Mark Carney is not the first prime minister to put forth the argument that an oil pipeline is a form of climate action.
When former prime minister Justin Trudeau approved the Trans Mountain Pipeline expansion (TMX) in 2019, he assured Canadians “that every dollar the federal government earns from this project will be invested in Canada’s clean energy transition.”
Both the revenues from operations and any profit from the eventual sale of Trans Mountain were going to be “invested in clean energy projects that will power our homes, businesses and communities for generations to come,” Trudeau declared, with the backing of his environment minister, Catherine McKenna.
This promise has yet to materialize and likely never will, experts say.
“It was a hope, more than anything, that there would be money that could be dedicated to environmental things to try to put balance into it,” Richard Masson, former head of the Alberta Petroleum Marketing Commission, said in an interview with Canada’s National Observer.
“I don’t think there was ever a high level of confidence by anybody that that was going to amount to much,” Masson said.
TMX’s revenues are currently being used to repay the billions of dollars in loans that were required to get the project built, Finance Canada confirmed in an emailed statement to Canada’s National Observer. Kinder Morgan estimated construction costs at $5.4 billion in 2013 and by the time TMX was completed in 2024, the price tag hit $34.2 billion. When you factor in the $4.4-billion purchase price, loans, government grants and interest expenses, the government’s total estimated exposure hits $40.86 billion, according to a September 2025 report by the Institute for Energy Economics and Financial Analysis.
As environment minister, McKenna stood behind the government’s decision to purchase and approve TMX, but it “was a very challenging decision,” she told Canada’s National Observer in a phone interview, reflecting on her time in government. It was a different situation than today: the Alberta NDP were in power and willing to work on climate policies like methane standards and the coal phase-out, McKenna said.
At the time, she believed Trudeau and Finance Canada when they said the revenues would help fund the clean energy transition, but as TMX construction costs spiralled out of control, it became clear there wouldn’t be money to make good on that promise.
“The reality is that the pipeline went from $5.4 billion to close to $40 billion … and that the cost overruns are not being borne by oil and gas companies; they’re being borne by the public because the tolling does not cover the overruns,” McKenna said.
“I feel like I was duped.”
Only $15.4 billion of the $34.2-billion cost of the pipeline will be recouped by tolls, according to 2024 analysis published by the International Institute for Sustainable Development.
NDP House Leader Don Davies said Trudeau’s failed promise was “fundamentally dishonest” and akin to greenwashing.
“They lied to the Canadian public,” Davies said in an interview with Canada’s National Observer.
“They can be climate leaders, or they can be oil and gas cheerleaders, but they can’t be both.”
Now, Carney and Alberta Premier Danielle Smith have laid out a timeline that could see construction on a new oil pipeline start as early as September 2027.
Carney went so far as to call the agreement “climate action,” which left some experts scratching their heads — and raised parallels to the rhetoric Freeland and Trudeau employed to get public approval for Trans Mountain.
‘We’re getting into the same situation’
The memorandum of understanding between Alberta and the federal government stipulates there must be a private-sector proponent willing to take on the project. As of now, with negotiations winding down, there is not.
“You don’t often hear industry clamouring for a million-barrel-a-day pipeline to the coast; that’s [Danielle Smith’s] thing, mostly,” Masson said, adding that such a project would likely be at least a decade away, and industry will first look to other opportunities like optimizing existing pipelines or alternative ways to transport oil.
“I generally don’t believe that we should be putting public money into pipelines,” Masson said, with the caveat that it is “very complicated.”
“There used to be a time we could build pipelines, and it wasn’t a big deal, but we have made it such a politically charged issue that the private sector won’t do it anymore,” Masson said.
The Canada Energy Regulator’s 2026 forecasts predict that under the current policy mix and lower production scenarios, oil sands production will remain near 2024 levels in 2050. A scenario where Canada reached net-zero shows a small decline in oilsands production, but most of the dip in oil production is predicted to come from declines in offshore, conventional light and heavy oil, according to the forecasts.
“We need to get demand for oil down, but in the world where there is a demand for oil, Canada needs to be able to produce responsibly developed oil,” Masson said.
“And in order to do that, we need to get it to market — and because we messed up so badly over that last decade, probably the only way that’s going to happen is with public money, because the private sector just won’t do it.”
McKenna recently returned from delivering a keynote address at a Singapore conference on sustainable growth run by the nation’s sovereign wealth fund, Temasek. She saw how, after yet another energy shock, Asian countries are realizing that relying on imported fossil fuels has become an energy security risk.
In the short term, these countries will take any product they can get to alleviate the price shocks, but their goal is to reduce the risk of future oil price spikes by moving quickly to produce energy domestically, with a particular focus on cost-competitive renewables and driving down oil demand by growing electric vehicle uptake, she said.
The notion that Canada needs a new pipeline — which would be built by 2033 or 2034 at the earliest — to supply Asian markets is not aligned with the region’s short-term energy needs nor long-term energy security needs, McKenna said.
Aside from the energy transition, there’s another risk for oil companies: lawsuits. McKenna says it’s “no wonder there’s no private sector proponent” because the risk of litigation is “far too high.”
Pre-approving a pipeline without knowing the route, impacts and Indigenous consultation will not pass muster in a federal court, she said, noting that even in the case of TMX, where the route was established and there had been engagement with Indigenous communities, the courts still struck down the federal government’s approval in 2018 and required them to redo the consultation process.
“Right now, it looks like we’re getting into the same situation, although worse,” McKenna said, adding that now Canada must also contend with a “reckless premier” in Smith and her push to hold an Alberta referendum to hold a future referendum on separating from Canada.
With no private-sector proponent, “the risks are extraordinarily high for the public,” because when these projects go over budget — which they almost always do, McKenna noted — the cost is borne by taxpayers.
Canadians, as the owners of Trans Mountain, are still on the hook for its debts.
In 2022, then-finance minister Chrystia Freeland promised that no more public money would prop up TMX, at the same time as she greenlit taxpayer-backed loan guarantees to get banks to invest.
“Because I’m a finance guy by training, it used to drive me nuts when the finance minister would say, ‘We’re not putting any public money in, we’re only guaranteeing somebody else’s cash,’” Masson said.
“It takes away their credibility when they say stuff like that,” he said. “Absolutely, it’s public money.”
Freeland, who left federal politics in September, was not reachable for comment.
Finance Canada told Canada’s National Observer the government doesn’t plan to own the pipeline indefinitely and “will consider a divestment process, when the timing is right, that would maximize the return on Canadians’ investment in this asset and benefit Canada’s broader energy and economic priorities.”
However, at a recent event in Toronto, the head of the Canada Development Investment Corp. suggested there is value in remaining the long-term owner of TMX.
Trans Mountain Corporation is looking for approval to further optimize the pipeline, including using a drag-reducing agent to improve flow and new pump stations and approximately 30 kilometres of pipe near the mainline. Because of this, it might make sense for the federal government to wait until these upgrades are complete and proven before making a final decision on whether to sell it, Masson said.
“The Trans Mountain pipeline has brought immense value to Canada’s energy sector and economy – and has helped cement Canada’s position as a secure and reliable energy producer on the global stage; a position we intend to put to good use as we open our natural resources to new markets,” reads an emailed statement from a Department of Finance official.
Carney’s net-zero claims ‘perplexing’
The Alberta-Ottawa agreement released May 15 — which lays out a timeline to advance an oil pipeline and commits to weakening Canada’s industrial carbon pricing system — says Carney and Smith agree to “work toward” net-zero greenhouse gas emissions by 2050.
“Trying to understand how this would fit with net-zero by 2050 is perplexing,” McKenna said.
McKenna, who chaired a high-level expert group for the UN Secretary General on net-zero and greenwashing, emphasized that you need short- and medium-term emission reduction targets and a plan to phase out fossil fuels, while scaling up renewable energy, to credibly claim you are on the path to net-zero by 2050.
Instead, “we have dismantled all of the key elements of Canada’s climate policy,” she said.
Canada will not achieve its 2026 and 2030 targets, according to a federal progress report, released in December. Now, the Canadian Climate Institute is warning that the final Alberta-Ottawa MOU also puts Canada’s net-zero by 2050 targets firmly out of reach, thanks to the weakened industrial carbon price and clean electricity regulations, as well as a slew of other climate policy rollbacks that have stacked up over the past year.
“Climate policy is about outcomes,” McKenna said, emphasizing the importance of having interim targets. “And that requires you actually having policies that are going to drive those outcomes, and oil and gas will not do that. We know that they are the one sector in Canada that the only thing they’ve done is take taxpayer dollars and increase their emissions.”
The proposed pipeline to the West Coast is still in the early stages but is being pushed along by the federal government and Alberta, and the federal NDP is worried public dollars could be tied up in another fossil fuel project, repeating the TMX saga.
“Already, the taxpayers have a $37-billion boondoggle on their hands, and I fear that they’re gonna be left holding the bag for the next one,” Davies said.