Rudyard Griffiths and Sean Speer: Alberta may gain a pipeline—but what would it lose?

Alberta Premier Danielle Smith has made a bold move. Frustrated by years of failed pipeline projects and the reluctance of private firms to navigate Canada’s increasingly hostile regulatory environment, her government has stepped forward to champion a new pipeline project through a public-private partnership involving her government and some of the province’s most sophisticated private pipeline operators. It’s a forcing mechanism designed to test Prime Minister Mark Carney’s commitment to expediting energy infrastructure approvals in Canada. But this gambit ostensibly comes with strings attached—ones that won’t just impose economic costs but could strike at the heart of the Alberta advantage itself. The premier and Albertans should therefore proceed carefully. In theory, the emerging deal appears straightforward enough: Alberta gets its pipeline to tidewater in exchange for, possibly among other things, massive public and private spending on unproven carbon capture and sequestration technology. The prime minister gets to tell his caucus and coalition of climate-concerned voters that he’s approving a “clean” pipeline instead of a “dirty” one. Alberta gets access to higher global prices for its oil. Carney maintains his environmental credentials. Everyone wins, right? Not so fast. For most of Canada’s history, our network of oil and gas pipelines was advanced and financed by the private sector based on economic merit. Projects proceeded because they made business sense. Governments provided regulatory oversight, but the fundamental driver was market demand and profitability. That world is gone. An accumulation of federal policies—including an emissions cap, a tanker ban, and layers of regulatory complexity—has made it virtually impossible for private companies to justify these investments on economic grounds alone. The fact that the Alberta government must step in as a champion and partner for this project tells us everything we need to know about how far we’ve strayed from market-based decision-making. What worries us most is what comes next. If Alberta accepts the premise that pipeline projects won’t be assessed on their economic merits but will instead be part of a political pact involving federal subsidies for uneconomic carbon sequestration technology and any number of other conditions, we’re committing governments to be at the center of energy projects on a permanent basis. We’re accepting that politicians and bureaucrats, not markets and entrepreneurs, will determine the future of Canadian energy. Consider what we’re actually talking about here. No one is building large-scale carbon capture and sequestration plants in Canada today because there’s no market signal indicating profitability. The technology hasn’t been proven at the scale being contemplated. Even the Trudeau government, with its intense focus on climate policy, was unwilling to provide the massive subsidies required. We’re talking about tens of billions of dollars in federal debt-financed spending to de-risk a technology that may or may not work as promised—all to provide political cover for a pipeline that should be approved on its merits. This is the model of Laurentian capitalism. For decades, Central Canadian industries—from banking to telecommunications—have operated under a similar model. Government regulations create barriers to competition, which effectively guarantee regulated profits, and then those same industries accept strings attached, such that they deliver non-economic goods to Canadians. Telecoms must provide services in rural areas at below-market rates. Banks must provide low-cost accounts. These political interventions represent the substitution of government preferences for market signals. Up until now, Alberta’s energy sector has largely avoided this trap. Yes, it faces hostile policies like the tanker ban and emissions cap, but it hasn’t had a government deeply embedded as a financial partner determining winners and losers. This prospective deal risks changing that fundamentally. We spent this past week meeting with hundreds of Hub community members across Western Canada. The desperation in Alberta is understandable. After Northern Gateway and other failed pipeline attempts, many Albertans are willing to accept virtually any deal just to get their resources to tidewater. We understand that frustration. But we also believe a bad pipeline deal—one that loaded a project up with a set of non-economic conditions—wouldn’t just harm the economics of pipelines, but it would also strike at the heart of the Alberta advantage. It would involve Alberta’s political economy becoming more like the rest of the country. There would be no outliers when it came to Laurentian capitalism. That’s the real cost here. The Alberta advantage has never just been about lower taxes or faster approvals. It’s been about a culture—one rooted in enterprise, individual responsibility, and a belief that prosperity flows from effort, not entitlement. Once that ethos is diluted by state dependency and political bargaining, it’s almost impossible to recover. Alberta would gain a pipeline but risk losing the spirit that made it exceptional in the first place.