Carney, Smith all smiles while time runs out on climate change

Alberta Premier Danielle Smith and Prime Minister Mark Carney were all smiles last week when they signed an agreement to begin construction of a new oil pipeline by 2027, while also delaying and softening an industrial carbon pricing regime that would apply to producers.

Both Alberta and Ottawa portrayed the deal as a victory: an agreement to fulfil one of Alberta’s principal economic development ambitions while also allowing Ottawa to claim it had agreement from Smith and the oil and gas industry to invest more in carbon capture systems in exchange for less punitive carbon pricing.

Those smiles were evidence both political leaders had erased from their memories a late 2025 report from the Parliamentary Budget Office. The report warned governments of all levels to brace for a rapid rise in the costs of mitigating and repairing damage from severe weather events triggered by climate change.

The PBO projected federal costs related to the Disaster Financial Assistance (DFAA) program, which provides financial support to provinces and territories to help pay for costs related to “natural hazards,” were going to double on an annual basis, starting this year.

From 2010-2024, the PBO found the DFAA cost the federal treasury about $881 million a year. Moving forward to 2034, those average annual costs will be $1.8 billion. The PBO forecast that floods would be the costliest disasters, with $1.2 billion a year devoted to mitigation and repairs.

Those figures are alarming, but they don’t really begin to capture the total cost of severe weather events. The DFAA only covers a portion of mitigation and repairs after a province has reached a deductible threshold. In Manitoba, the province must cover the first $1.5 million; in Ontario, provincial government has to pay 100 per cent of the first $16.2 million.

Then, Ottawa will eventually pay between 70 per cent and 90 per cent of eligible costs for responding to a disaster, helping homeowners, restoring infrastructure, financial relief for those most affected and mitigation efforts.

Which is to say that the provinces and territories — and to some extent, local governments as well — are on the hook for untold billions of additional dollars.

The Canadian Climate Institute has determined that climate change triggers disasters that damage more than $5 billion in municipal infrastructure every year.

On a macro level, the CCI says that by 2050, weather events and associated costs of initial responses health-care costs could reach more than $100 billion a year.

And even with all of these warning signs, we have the premier of the largest oil-and-gas-producing province and our federal first minister glad-handing over a deal to build yet another pipeline.

It must be said, despite the hyperbole surrounding the announcement, the pipeline deal is, for the time being, largely a statement of intention.

Alberta has Ottawa’s tacit blessing to build another pipeline as long as oil and gas producers invest in carbon capture systems. Even if they do that, the new pipeline is not a slam dunk.

Even with federal fast-tracking legislation, there would still be some environmental hurdles, along with opposition from British Columbia and First Nations. More importantly, there is no private investor as of yet to manage the estimated $30-billion cost.

There is also growing concern about whether the new pipeline is even needed. Thomas Gunton, the director of the resource and environmental planning program at Simon Fraser University, wrote a commentary in the Globe and Mail that noted existing pipelines have room to grow, and there is the matter of the partially built Keystone XL pipeline.

Add all the unused capacity, and existing pipelines — along with XL — could move more than 2 million additional barrels per day of Alberta oil, which is already more than the estimated 777,000 barrels per day for the new proposed pipeline.

“The Alberta pipeline proposal makes little to no sense,” Gunton wrote in the Globe. “That is why no private company has come forward to build it.”

Why would Carney even go through the motions for a resource project of such dubious purpose and remote likelihood?

Building a new pipeline to move Alberta oil is just as much, or perhaps more, of a powerful political symbol as it is a tool of economic development. Smith and the Alberta oil and gas industry want another pipeline, and anything Ottawa does to obstruct or cancel the project is immediately used to fuel the fires of alienation and, in the extreme, separation.

However, Smith and her fossil fuel acolytes appear deliberately ignorant about the broader environmental and economic implications of continuing to grow the size and scope of oil and gas. And they are certainly downplaying, if not completely ignoring, the massive and growing collateral costs of climate change.

The most devastating and disappointing aspect of the Smith-Carney deal is not stated intentions to build another pipeline. It’s the fact that Carney agreed to weaken and delay industrial carbon pricing and allow producers more time to institute full carbon capture systems.

The prime minister seems to think we have time on our side when it comes to climate change. As his government is forced to write ever-bigger cheques for disaster assistance, the prime minister should be able to see we’ve probably already run out of time.

dan.lett@freepress.mb.ca