Canada is proposing to lead on climate – but it’s doubling down on oil

Like all major rivers winding through the country, Canada’s most controversial oil pipeline is destined for the ocean.

The Trans Mountain pipeline crosses two provinces, threads a national park in the Rocky Mountains, dips underneath bodies of water and passes through dozens of First Nations communities before terminating at a sprawling oil storage facility on the verdant shores of the Pacific.

After a decade of fierce protests, cost overruns and construction delays, oil started flowing at the beginning of May, but there was no grand ceremony or ribbon-cutting. Instead, a China-bound Aframax tanker named Dubai Angel departed with 550,000 barrels of diluted bitumen to be sold to global markets. In the coming years, the megaproject will move nearly 900,000 barrels every day. The number of tankers will surge sevenfold.

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When Justin Trudeau was elected in 2015, he touted his government’s climate credentials on the world stage. “Canada is back, my friends,” he told delegates at the Paris climate summit. “We’re here to help.” His government rolled out a nationwide carbon tax (or as the then environment minister Catherine McKenna called it, a “price on pollution”).

But in the years since, Canada remains the only G7 nation to emit greenhouse gases far above its 1990 levels – while now also planning to extract and export record volumes of oil.

The pipeline itself has become emblematic of a Canadian contradiction: promises of strong climate action, coupled with billions in fossil fuel investments – and, critics say, massive government subsidies to the oil industry at a moment when the planet needs to move away from fossil fuels.

The project was first proposed in 2012 by Kinder Morgan, a Texas company that hoped to triple the existing capacity of a pipeline it bought in 2005 that was built more than 70 years ago. For years, too much oil passing through too few pipelines has meant Canadian oil sells at a discount on the global markets. The oil and gas industry said Trans Mountain would for the first time give Canada access to markets overseas, particularly China, and close the price gap.

Related: Canada oil and gas firms to drill 8% more wells next year as emissions target slips

In 2019, the project won regulatory approval. Trudeau, flanked by eight Canadian flags and five cabinet ministers, claimed it marked a “significant investment … in Canada’s future that will create thousands of good, middle-class jobs, maintain the highest environmental standards and fund the clean energy solutions that Canada needs to stay competitive on the global stage”.

The rosy outlook soon faded amid pushback from critics.

“I think a lot of us who knocked on doors for the Trudeau government really believed them when they said they were going to bring evidence-based analysis and science and democratic process back to pipeline reviews,” Tzeporah Berman told the Canadian Press in 2018, adding that the government had “made a very big mistake”.

After a legal challenge by the province of British Columbia, and protests by Indigenous and environmental groups, Kinder Morgan, fearing a messy fight, threatened to abandon the expansion.

In response, the federal government took the rare step of buying the pipeline .

“It must be built. It will be built,” Canada’s finance minister declared, identifying the project as a “vital interest” for the country.

The Green party leader, Elizabeth May, said at the time that Kinder Morgan was “laughing its way to the bank” after the sale. “Historically, I’m quite certain, this will go down as an epic financial, economic boondoggle that future students of political science will say, ‘Why on Earth did they do that? That made no sense.’”

Related: The US’s quiet rise to the world’s biggest fossil fuel state

Trudeau told voters before the 2019 election that Kinder Morgan “wanted to throw up their hands and walk away” from the project.

“It [wasn’t] in my platform that I was going to buy a pipeline for Canadians, but it was in my platform that I was going to grow the economy and protect the environment at the same time and do it in thoughtful and responsible ways,” he said.

“Canadians want both and we can have both,” the then natural resources minister, Jim Carr, said of the country’s desire to balance economic growth and fight climate change.

In the years since, however, the costs for the project ballooned. A global pandemic, construction delays, permitting issues and inflation have all pushed the bill far above initial estimates.

The pipeline is now expected to cost more than C$25bn (US$18bn) over budget – all of it in an attempt to get more Canadian oil burned, not less.

Now that the pipeline is finally operational, a TD Bank economist estimated that Canada could this year hit an all-time high in oil production, of 5.2m to 5.4m barrels a day, up from 4.9m barrels.

Critics ask how pumping more oil is consistent with Canada’s promise to reduce emissions and avert a looming global catastrophe. Its goal to cut emissions by at least 40% below 2005 levels by 2030 is not on pace, as confirmed by a recent report from the government’s own environment commissioner.

Despite some progress, the report noted, “we are still extremely concerned about the federal government’s ability to achieve meaningful progress under the new Canadian Net-Zero Emissions Accountability Act”, adding: “The stakes for failing to mitigate climate change grow ever higher, and the window of opportunity to reduce emissions and meet the 2030 and 2050 targets is rapidly closing.”

Trans Mountain is not the only culprit. Canada still pays billions in subsidies to the oil industry and Trudeau’s government has approved a number of controversial oil and gas megaprojects. In 2016, it approved the C$36bn Pacific NorthWest LNG project in northern British Columbia, though the project was killed a year later by the Malaysian energy giant Petronas. Two years later, the government contributed C$275m for another LNG project in British Columbia, a vast export terminal heralded by Trudeau as “the single largest private-sector investment project in Canadian history”. And in 2022, his government approved Bay du Nord, which though currently delayed would extract up to 73m barrels of oil every year off the coast of Newfoundland.

The apparent hypocrisy is rationalised by the fact that global emissions pacts, such as the Paris climate agreement , are structured in a way that Canada is not directly punished for increasing oil and gas production.

“Under the agreement, countries are only responsible for their own territorial emissions,” says Kathryn Harrison, a professor of political science at the University of British Columbia. “When it gets burned at destination, it’s not the exporter’s problem.”

The phenomenon, she says, is known as the “green paradox”. What it means is that “among the big oil exporters, there’s an incentive to get as much oil and gas to markets while they still can – even the ones that have signed on to the agreement to lower emissions”.

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The government claims its actions on the climate crisis , particularly its flagship carbon tax policy, are without precedent. But the prime minister has also learned that meaningful action on the climate crisis is nearly impossible without buy-in from powerful provinces, including those captive to the fossil fuel industry.

Most of Canada’s oil exports are from Alberta, and while marketed as “ ethical oil ” (supposedly, oil produced from countries with stronger labour and environmental laws), the sprawling “oil sands” operations are among the planet’s most emissions-intensive, dirtiest and expensive ways of producing oil.

In order to get the province on board with his nationwide climate plan, Trudeau made what Harrison calls the “ugly deal” of approving the Trans Mountain pipeline in exchange for Alberta putting a price on carbon emissions. Despite the multibillion-dollar purchase, however, Alberta has remained the country’s chief climate policy antagonist, fighting any attempt the government has made to rein in the oil and gas industry.

In December, the federal government finally announced its plans to cap emissions for the oil and gas sector – a long-delayed policy that climate groups say is critical if Canada is to reach its climate targets. The cap, which goes into effect in 2026, would limit industry emissions by 2030 to 106–112 megatons a year, down from 171 megatons in 2019. (The legal upper bound would let emissions hit 131 megatons.)

Alberta’s premier, Danielle Smith, immediately swore to fight it. “There’s no question that if the [federal government] continues on this path, it will end up in court and I think we will win,” she said.

Moreover, despite the ambitious intentions behind the cap, Jeff Colgan, director of the Climate Solutions Lab at Brown University, is skeptical the plan will do enough to bring down emissions.

“There’s just so many exceptions and caveats and ‘alternative compliance mechanisms’ for meeting those targets,” said Colgan, adding the plan was “vague and mostly silent” on penalties for exceeding the upper bounds of the cap.

In a recent report , he argues the framework – the result of consultation with industry, policy experts and environmental groups – is needlessly complex and creates loopholes for industry to avoid making real reductions to greenhouse gas emissions.

In that context, the Trans Mountain pipeline’s immense cost overruns feed into broader questions about the future of Canada’s oil industry.

Economists have already predicted that the Trans Mountain pipeline will soon be clogged with producers rushing to get their product to market. With no new megaprojects on the horizon, the growth trajectory of Canada’s oil output will slow by early 2026 as the appeal of Canadian oil – which has long traded at a discount on the global markets – fades.

“A year ago, we heard the federal environment minister telling [the fossil fuel] industry: ‘Don’t worry about this proposed oil and gas emissions cap, because we still expect production to grow by a million barrels per day by 2030,’” said Harrison.

“They’re not saying that any more. They’re now talking about an expectation of production decline – not due to the oil and gas emissions cap, but due to global climate action. It felt like a refreshing moment of honesty.”

Indeed, just a month after opening, the Canadian government is trying to walk away from the Trans Mountain pipeline. The finance minister said there was no interest in being “a long-term owner of the project” and the government has now floated the idea of selling the pipeline to a consortium of First Nations.

That does not sit well with some members of the Tsleil-Waututh Nation, a community directly across from the tanker farm that has emerged as some of the pipeline’s fiercest critics.

“They say it’s a ‘reconciliation deal’ to sell First Nations people the pipeline, so that we can share in the revenues,” said Reuben George of the Tsleil-Waututh Nation. “But it’s a debt-ridden stranded asset. It would be economic smallpox to Indigenous peoples.”

The nation’s analysis also concluded the environmental risks of an increase in tanker traffic or an oil spill were too high, and would have “ absolutely cataclysmic ” consequences for marine life. “We’ve spent decades trying to be stewards of this land and these waters,” George said. “My son told me the other day: we won’t be the generation that stops trying to fight for this place.”

For Colgan of the Climate Solutions Lab, the government’s decision to invest billions in a piece of infrastructure, in an industry that is among the least globally competitive because of its high extraction costs, makes as little sense today as it did then.

“At the end of the day, there is a direct tension between building the infrastructure – like a pipeline – to satisfy the profit incentives the Canadian oil and gas industry wants, and meeting Canada’s international commitments on climate change,” Colgan said.

“It seems very unlikely Canada can continue to increase its oil and gas output and also make its Paris commitments. I just don’t think those two are compatible.”