From the Fraser Institute

By Tegan Hill and Elmira Aliakbari

Prime Minister Carney’s recently released list of five projects—which the government deems to be in the national interest and will expedite—doesn’t include a new oil pipeline for western Canada in general or Alberta in particular. The reason given was that no private developer stepped forward to finance or build one. But the reason for that is not a mystery: Justin Trudeau’s damaging energy policies continue to drive away oil and gas investment even though his successor campaigned on a different, more pragmatic approach. It’s no wonder Albertans are frustrated.

Promising to make Canada the world’s leading “energy superpower,” the Carney government in the spring introduced Bill C-5, the “Building Canada Act,” to give the federal cabinet sweeping powers to circumvent existing laws and regulations for projects deemed to be in the “national interest.” In effect, cabinet and the prime minister are empowered to pick winners and losers based on vague criteria and priorities. But while specific projects will be expedited, so far nothing has been done to undo the damaging federal policies that have hamstrung Canada’s energy sector over the last decade.

Trudeau-era changes to the regulatory system for large infrastructure projects included: Bill C-69 (the federal “Impact Assessment Act”); the West Coast tanker ban (as spelled out in federal Bill C-48); and the federal cap imposed exclusively on oil and gas emissions. These have hindered energy investment and development and impeded prosperity, not only in energy-producing provinces, but across the country.

The Energy East and Eastern Mainline pipelines from Alberta and Saskatchewan to the east coast would have expanded Canada’s access to European markets. But the Trudeau government rendered the projects (Energy East and the Eastern Mainline) economically unprofitable by introducing new regulatory hurdles that ultimately forced TransCanada to withdraw from the project.

A year after taking office, the Trudeau government simply cancelled the Northern Gateway pipeline, an already approved $7.9 billion project that would have transported crude oil from Alberta to the B.C. coast, thus expanding Canada’s access to Asian markets. As for Trans Mountain, the one pipeline project that did survive the Trudeau years, after the private investor was frightened off by regulatory hurdles and delays and the federal government took over, costs sky-rocketed to $34 billion—more than six times the original estimate.

With policies like these still in place, it’s no wonder investors aren’t lining up to put big money into Canadian oil and gas. Just how great the discouragement has been is indicated by the 56 per cent inflation-adjusted decline in overall investment in the oil and gas sector between 2014 and 2023 (from $84.0 billion to $37.2 billion).

That decline in investment has had and will continue to have big consequences for the western provinces, particularly Alberta, where energy is a key part of the economy. But it would be a mistake to think the costs are limited to Alberta. From 2007 to 2022, Albertans’ net contribution to federal finances (total federal taxes they paid minus federal money spent on or transferred to them) was $244.6 billion. A strong Alberta helps keep taxes lower and fund public services across Canada.

Canada urgently needs new oil pipelines to tidewater. The U.S. is currently the destination for 97 per cent of our oil exports. This heavy reliance on a single customer leaves us exposed to policy shifts in Washington, such as the recent threat of tariffs on Canadian energy. Expanding pipeline infrastructure both westward and eastward would help diversify our export market into Asia and Europe, as well as strengthen our energy security.

Prime Minister Carney’s short list of projects is another blow to western Canada, and especially Alberta. There’s an obvious reason no private developer has stepped forward to finance or build a new oil pipeline: the Trudeau government’s damaging energy policies. The federal government needs to undo these policies and allow the private sector to make Canada an energy superpower.