Carney Puts Oil Pipeline at Center of Bid to Keep Alberta in Canada

Dow Jones
3 hours ago

TORONTO-Weeks before a referendum on Alberta's future in Canada, Prime Minister Mark Carney on Thursday sought to strengthen ties with the province by designating a proposed oil pipeline to the Pacific coast a "project of national interest," a move that speeds its regulatory approval process.

Separatists in the oil-rich prairie province have pointed to longstanding disaffection with the federal government's energy and climate policies, which they say have constrained the oil-and-gas industry, as a key reason they champion independence. The province will vote on Oct. 19 on whether to stay in Canada or to start the process of holding a second, binding referendum on leaving.

"The demonstration of today's announcement is Canada's working," Carney said at a news conference in Fort McMurray, in the heart of Alberta's vast Athabasca oil sands. "We came together, we looked at an opportunity and this opportunity is unlocked by Canada as a whole."

Alberta Premier Danielle Smith, who called the referendum after hundreds of thousands of Albertans signed petitions seeking a vote on the province's future, has cast the pipeline as a test of whether Canada's federal system can work. Smith, who supports Alberta staying in Canada, has said she hopes Ottawa's support for the Pacific Link pipeline, which aims to carry 1 million barrels of oil a day from Alberta to the British Columbia coast, will strengthen her case.

"I know there's always going to be issues where we might have some disagreement, but the approach that I've seen the government of Canada take is one where they genuinely want to identify problems and genuinely solve them," she told reporters. "I think that's going to demonstrate that Canada can work."

Since taking office, Carney has pledged to build infrastructure "at speeds not seen in generations" and to transform Canada into an "energy superpower" as part of an effort to spur economic growth and reduce reliance on the U.S. by moving goods to Europe and fast-growing markets in Asia. Almost all of Alberta's crude is now exported to the U.S.

Carney's support for oil and gas projects marks a departure from the policy of his predecessor, Prime Minister Justin Trudeau, also a Liberal, whose critics said he prioritized curbing greenhouse gas emissions over oil and gas development. It is also a shift for Carney, a former U.N. special envoy on climate action and finance, who once warned pipelines risked becoming stranded assets.

Earlier this year, Carney said his government needed to pivot from Trudeau's climate plan, which "was well-intentioned and well-suited for the times in which it was designed," but "was not sustainable over the long term" or in a world where countries are seeking alternative energy sources to those in the Middle East amid the war in Iran.

"The question is: who will emerge as the world's trusted suppliers?" he said Thursday. "It should be us. It must be Canada."

Alberta is home to the world's fourth-largest proven oil reserves.

Polls show a minority of Albertans support a second referendum on separation. An Ipsos poll last week found 70% back staying in Canada. But the outcome could ultimately hinge on turnout, and some analysts say separatists might be more motivated.

Carney and Smith completed a deal to approve the pipeline, now dubbed Pacific Link, in July. As part of the agreement, Canada exempted Alberta from certain federal environmental policies, and the province agreed to a more stringent carbon levy on its energy producers and to build a carbon-capture and storage facility.

Carney had initially said that the pipeline would be built and financed by the private sector. But officials have since said that Canada and Alberta will hold equal ownership. Calgary-based Pembina Pipeline will hold a 10% interest in the project and equity will also be reserved for indigenous groups, they said.

The government of neighboring British Columbia had also expressed reservations over the pipeline, in part because of concerns over risks to its coast and marine ecosystems. Carney later struck a deal with the province, in which he reaffirmed the ban on oil-tanker traffic off the north coast in exchange for its support, and this week announced additional funding for ocean protection.

Carney's government passed a law last year giving it sweeping powers to designate projects in the national interest and accelerate the regulatory processes for them. Some business groups have argued that the approval and environmental assessment process for major infrastructure projects in Canada drags on and has chilled investment.

Some business groups cheered Thursday's announcement.

"To invest with confidence in Canada, investors need certainty," Goldy Hyder, chief executive of the Business Council of Canada, said in a statement. "Today's announcement delivers it."

But the pipeline could still face opposition and legal challenges from environmental groups and indigenous people. Under Canada's constitution, the federal government must hold adequate consultations with indigenous people whose territory will be impacted by projects such as pipelines.

Avi Lewis, leader of the leftist New Democratic Party, disputed the idea that the pipeline is in Canada's national interest.

"This is a pipeline to the courts," he said, "and it's not worth the risk."

 

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