With Pipeline Deal Coming Soon, New Analysis Shows Big Risks for Investors, Crushing Losses for Provinces

Nov. 20, 2025

With the federal and Alberta governments touting an imminent deal on a new oil pipeline to British Columbia’s northwest coast, analysis released Thursday morning concludes that investors in Canadian oil and gas will face serious financial risk—and provincial revenues from the industry could fall 82%—as the global energy transition unfolds through the 2030s.

“Both Canadian oil and gas company valuations and provincial budgets are exposed to the same structural risks of weakening long-term oil and gas demand,” the London, UK-based Carbon Tracker think tank states in a release for its two new reports, Fading Fortunes and Petro-Provinces at Risk. “Under a fast-paced energy transition, new projects place up to 30% of Canadian oil and gas value at risk,” yet the industry would only gain about one-third as much if a slower transition led to longer, stronger demand for fossil fuels.

Carbon Tracker released its findings less than 24 hours after the Globe and Mail reported that Ottawa and Alberta are close to a deal on a western oil pipeline.

“Two federal insiders said the broad outlines of the agreement, which would take the form of a memorandum of understanding, involve an oil pipeline running from Alberta to the northwest coast of British Columbia,” the Globe wrote. “On the table to support it would be a limited exemption to the current ban on oil tankers on the B.C. coast, a plan to move ahead with changes to industrial carbon pricing in support of scaling up carbon capture technology, and a lowering or removal of the industrial emissions cap.”

CBC says Prime Minister Mark Carney and Alberta Premier Danielle Smith are “personally brokering the deal”. The Globe writes that the two leaders have been “in regular contact”, with Privy Council Clerk Michael Sabia and Energy Minister Tim Hodgson playing key roles in the talks. Officials from both governments said a decision could be announced before Smith’s United Conservative Party holds its convention Nov. 28-30.

“It may well be that there are some members of his caucus who are not fully onboard with that new vision, but I will know in the matter of days whether or not they’re influential enough to change the direction that I think the prime minister and I want to go,” Smith told media Monday.

No Investors on the Horizon

But neither government is giving any sign that private investors are lining up to backstop a major, new pipeline, and the Carbon Tracker analysis might hold the explanation. The first of the two reports, Fading Fortunes, warns that new fossil fuel infrastructure in Canada delivers a high level of risk if other countries move faster to decarbonize, but almost no reward in the increasingly unlikely event that the energy transition slows down.

“In a Paris-aligned, fast-paced transition scenario where [oil] prices fall to $30 per barrel, around 30% of the sector’s total value is at risk if the sector maintains business-as-usual investment behaviour,” the think tank writes. The new fossil fuel exploration that would provide the production volume for a future pipeline would be “notably unattractive,” the release adds, even in a slower energy transition with oil priced at $70 per barrel.

New gas infrastructure, “long considered a strategic pillar of Canada’s energy sector,” would lose money in a moderately-paced energy transition, with world prices at the equivalent of $50 for a barrel of oil.

“Canadian oil and gas expansion is increasingly a high-risk, low-reward strategy,” said lead author and Carbon Tracker Analyst Olivia Bisel. “Investors and policy-makers should be cautious: the long-term risk profile of Canadian portfolios is deteriorating. Capital allocation decisions and public policy need to reflect this reality.”

“Investing in oil and gas expansion in 2025 is like watering a dead plant—no amount of hope can stop the inevitable,” Adam Scott, executive director of Shift Action for Pension Wealth and Planet Health, said in a release. “The global energy transition away from fossil fuels is under way and picking up steam. Visible demand destruction and market oversupply makes shovelling funds into fossil fuels increasingly risky. That’s why smart investment capital is rapidly moving to finance growing, profitable climate solutions.”

“What we actually need are MOUs and regional integration for sharing renewable energy across our country, not this dangerous investment of political capital in pipelines that will divide Canadians, hurt coastal communities and ocean life, and destroy our chances of bringing down climate pollution, “ said Sierra Club Canada Executive Director Gretchen Fitzgerald.

A Financial Disaster for Canadian Provinces

If the future of oil and gas demand is risky for investors, it’s disastrous for provincial governments that rely on tax income from an industry now entering its sunset. The second report in the Carbon Tracker series, Petro-Provinces at Risk, shows those revenues falling 82% through the 2030s, from C$218 billion to $39 billion, as energy-consuming countries shift to more affordable and less carbon-intensive options.

“Canada’s high-cost oil and gas production will increasingly be squeezed as clean energy and transport electrification curb global demand and put downward pressure on prices,” the report states. “While carbon capture, utilization and storage (CCUS) could go some way to cutting the oil and gas sector’s operational emissions, it has not seen the kind of learning curves experienced by technologies such as solar photovoltaic (PV) and batteries, and would not insulate the sector from demand substitution, even if successfully deployed.”

Carbon Tracker paints a stark picture of the revenue losses provincial governments will face next decade as oil and gas demand dries up:

• By 85% in Alberta, from $153 billion to $23 billion;

• By 72% in British Columbia, from $47 billion to $13 billion;

• By 78% in Saskatchewan, from $16 billion to $3.5 billion;

• By nearly 100% in Newfoundland and Labrador, from $4.4 billion to $300 million.

“Provincial governments need to prepare for a future of lower oil and gas demand,” said Carbon Tracker Analyst Rich Collett-White, lead author of the provincial analysis. “Rising global deployment of clean energy and electrification of transport threaten to wipe out future tax-take, with high-cost Canadian production likely struggling to compete globally. Diversification into transition-resilient sectors is the safest route to maintaining fiscal stability.”

Along with clean energy investment, Carbon Tracker cites critical minerals as “a more sustainable path for long-term fiscal stability and investor returns on Canadian assets.”

No Winning Scenario for New Fossil Investment

The Carbon Tracker analysis turned on the energy future scenarios in the International Energy Agency’s World Energy Outlook (WEO), published last week. The carefully-hedged analysis, released after months of intense pressure from the Trump administration, modelled two possible outcomes with greater reliance on fossil fuels and higher greenhouse gas emissions, along with a net-zero scenario that adhered more closely to a 1.5°C climate target.

This year’s edition of the WEO—long styled by the IEA as the “gold standard of energy modelling”—appeared nearly five years after the Paris-based agency first reported no need for new investment in oil, gas, or coal development as the energy transition gains momentum. That was long before Trump officials threatened to pull out of the IEA—taking 40% of the agency’s funding along with it—if it didn’t bring its independent forecasts in line with the administration’s “drill, baby, drill” agenda.

“We will do one of two things: we will reform the way the IEA operates or we will withdraw,” U.S. Energy Secretary Chris Wright told Bloomberg in July. “My strong preference is to reform it.”

But even the IEA’s radically unrealistic Current Policies Scenario (CPS), which projects rising oil and gas demand through 2050 and 3°C average warming based on existing national laws, policies, and regulations, holds little comfort for new fossil fuel production in Canada, said Michael Sambasivam, senior analyst at Investors for Paris Compliance.

“Investment firms are sophisticated enough to be able to read between the lines of what the IEA is publishing,” he told The Energy Mix. The CPS “assumes absolutely no new progress, that all countries on Earth abandon their climate commitments and all their forward-thinking policies. It assumes zero electric vehicle growth outside Europe and China. It’s a worst-case scenario [for what would happen] if all of a sudden, right now, the world decided it did not know or care about climate change.”

Even then, he added, the wide range of possibilities for investment risk between the CPS and the IEA’s net-zero scenario—not to mention other scenarios and modelling that investment firms might rely on—“really does highlight the uncertainty of it all,” Sambasivam said. If Canada doesn’t pay attention to that reality and diversify its energy economy, “we’re baking ourselves into a position where we are at risk in quite a few scenarios.”

For the international customers Canada wants to attract, Sambasivam added, the fossil industry’s efforts to reduce operational emissions through electrification of liquefied natural gas terminals or CCUS are beside the point.

“The markets oil companies are targeting are energy consumers, nations, sub-sovereign jurisdictions, and utility companies, and the incentives that are being put in place to force governments to decarbonize their energy supplies are not about Canadian production,” he said. “Ultimately, what’s more significant from a value perspective is decarbonizing your output,” which means shifting to a product that does not consist primarily of carbon or methane.

Navigating Around the Tanker Moratorium

The Globe and Mail’s sources for its story Wednesday said a northwest pipeline “would require a private sector proponent, buy-in from coastal Indigenous communities, and environmental approvals,” the paper writes. The memorandum of understanding (MOU) taking shape between Ottawa and Alberta could also aim to revive the twice-cancelled Keystone XL pipeline to the United States.

“The two sources cautioned that talks are fluid and nothing has been written in stone. But the sources said Ottawa may be willing to grant some waivers, such as lifting the tanker ban for the specific area where the pipeline would emerge on the B.C. coast,” the Globe adds. “B.C. Premier David Eby is adamantly opposed to lifting the ban.”

And he’s not alone. B.C. Liberal MPs said Wednesday the tanker ban can’t change without provincial and First Nations consent.

Former federal environment minister Jonathan Wilkinson (North Vancouver—Capilano) said “a number of things” would need to happen before the tanker ban could change, including discussions with the B.C. government and coastal First Nations, The Canadian Press reports.

“The prime minister was pretty clear that the projects would need the support of the jurisdictions in which they’re being built. So I think there’s got to be some conversations with the premier,” Wilkinson said.

“In terms of First Nations, I mean, there needs to be significant support,” he added. “It doesn’t necessarily have to be unanimous. It wasn’t in the case of [the Trans Mountain pipeline expansion]. But there needs to be significant support and at present I don’t think there is.”

MP Gurbux Saini (L—Fleetwood Port Kells) said before Wednesday’s weekly caucus meeting that “there will be no pipeline” unless First Nations and the B.C. government give their consent.

On his way into the caucus meeting, Finance Minister François-Philippe Champagne said he does not want to prejudge the outcome of the talks with Alberta. He didn’t rule out the possibility of allowing tanker traffic on the northern B.C. coast, CP says.

“Canadians understand now the nexus between energy security, economic security, and national security,” Champagne said. “I think people understand we live in a different world and I’m sure that with technology you can do that in a very responsible way.”

MP Corey Hogan (L—Calgary Confederation) called for a national conversation on resource development.

“So that’s what the prime minister and the premier of Alberta are talking about, is getting to an understanding on all of those things and making sure that we can grow our energy sector while also still being environmental stewards and getting to our net-zero goals,” Hogan said.

Late Wednesday, Hodgson said he would want the project to have B.C.’s backing before it went forward. “For it to go through a jurisdiction, you need the support of the jurisdiction,” he told the Toronto Star. His spokesperson Carolyn Svonkin “later clarified that the government will not ‘confer a veto’ to B.C. over development of a pipeline,” the Star writes.

“Instead, she said the Carney government’s ‘strong preference’ is for a new pipeline to have B.C.’s support, especially if it is to be eligible for fast-track approval under a new process for ‘national interest’ projects,” as Smith has demanded.

Landslide Tsunamis

Dan Shugar, director of the University of Calgary’s Water, Sediment, Hazards, & Earth-surface Dynamics (waterSHED) Lab, said discussions around a possible pipeline must include the risk of devastating “landslide tsunamis” in the “narrow, steep-sided glacially carved valleys called fjords that are common on Canada’s West Coast and southern Alaska.”

“Besides the very real issue of climate change caused in no small part by combustion of fossil fuels, there are other important reasons to be apprehensive of a new pipeline to the West Coast and the associated increase in tanker traffic that would accompany it,” Shugar writes for the Globe. While the most common tsunamis are caused by earthquakes and might grow to a dozen metres as they approach land, scientists at the Geological Survey of Canada has documented nearly 100 previously unrecognized underwater tsunamis in Douglas Channel, the terminus point for the last pipeline proposed for the northwest.

“Many of these landslides, if they occurred today, would almost certainly produce a very large tsunami, presenting a risk to any people, ships, or infrastructure in the fjord,” Shugar writes. He recalled one landslide tsunami in Alaska in 1958 that topped 500 metres, nearly as high as Toronto’s CN Tower and 2½ times the height of the Calgary tower.

[Top photo: Jason Woodhead/Flickr]