CALGARY — The unveiling of the Liberal government’s Budget 2026 has seen Ottawa restate its support for the proposed Pacific Link pipeline to the West Coast, while projecting billions of dollars in additional investment in Canada’s energy sector, as higher oil prices give the feds more operating room. Despite an overall projected $62.3-billion deficit for 2026–27, Finance Minister François-Philippe Champagne’s announcement puts the proposed one-million-barrel-per-day (bpd) crude oil pipeline front and centre in Ottawa’s “nation-building” pitch to Western Canada, with the budget estimating it could generate “$70 billion to $81 billion in pipeline and upstream production investment.”That is on top of the $194 billion-plus already attached to projects referred to the Major Projects Office.If approved, the roughly 1,250-kilometre pipeline’s route would run from Bruderheim, Alberta, to a deep-water port near Delta, BC.The proposal was designated a project of national interest under the Building Canada Act on October 1 and includes an offer of at least 10% aboriginal ownership and claimed economic impacts of up to 140,000 jobs and more than $20 billion in GDP per year..UPDATED: Budget 2026 projects $62B deficit, $142B in spending.The Liberals also reiterated their September offer to 128 Indigenous groups in Alberta and BC for a collective 15% ownership share in Crown-owned Trans Mountain Corporation — one of the partners in the pipeline’s proposed ownership structure — alongside the Government of Alberta, through the Alberta Petroleum Marketing Commission.Both are described as having 45% shares during the construction phase, with Calgary-based Pembina Pipeline Corp. holding 10%, as well as an option to take up to another 10% once the line is operating.Ottawa believes the project would give Canadian producers greater access to overseas markets, particularly in Asia, helping to reduce the discount Canadian oil receives compared with US crude.The budget also attributes potential economic benefits of up to 140,000 jobs and more than $20 billion in annual GDP to the proposed pipeline.The pipeline’s preliminary capital cost remains within the range Alberta filed on July 2: $35.2 billion to $43.7 billion, with a possible completion date set for 2032.Alberta Premier Danielle Smith’s government has previously said it spent over $18 million on early planning.The feds are also presenting Pacific Link alongside the Pathways carbon capture and storage (CCS) project as part of their plan to expand Canadian energy exports while reducing emissions.“The government is taking a balanced approach to growing Canada’s energy sector while lowering its emissions,” the budget states.The Pathways project, together with other emissions-reduction commitments from the Oil Sands Alliance, would achieve 16 million tonnes in annual emissions reductions by 2045, alongside production-growth and market-access objectives tied to the pipeline to the BC coast.The federal Major Projects Office (MPO), supported by the Canada Energy Regulator (CER), is set to finalize a conditions document for Pacific Link by September 1, 2027..Several BC aboriginal groups say Ottawa fast-tracked Pacific Link pipeline before adequate consultation.Beyond pipelines, oil and gas producers could benefit from the previously announced Productivity Mega Deduction, which the budget puts at roughly $36 billion over the next five years across the economy.That measure would increase the deduction rate for Canadian development expenses from 30% to 100%. Those expenses include certain costs of drilling and completing oil and gas wells.The change would allow qualifying expenses to be deducted immediately, reducing taxable income sooner.Regulated natural gas distribution pipelines are among the assets excluded from the broader immediate-expensing measure.The budget also records $200 million in support for Woodfibre LNG in BC over three years, including $40 million drawn from existing departmental resources.On the industrial carbon tax, the feds plan to update the federal benchmark and "explore greater alignment and links between carbon markets across Canada to improve market efficiency and help achieve emissions reductions at lower cost."A new price-per-tonne schedule is not included in the budget.The government is also pursuing faster federal project reviews through Bill C-39, including concurrent assessments and permitting, with decisions targeted within one year after proponents provide all required studies and information.Under the proposed changes, the CER would lead reviews of pipelines, transmission lines and offshore energy projects.
