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IEEFA: Trans Mountain (TMX) pipeline ($17 billion+) will require even more Canadian taxpayer dollars to prop up

March 09, 2022

March 9, 2022 (IEEFA) – Three years and an estimated $17.3 billion* into the controversial Trans Mountain pipeline expansion (TMX) project, the Canadian government has declared that no more national tax dollars will be used to complete it. A new report by the Institute for Energy Economics and Financial Analysis (IEEFA), however, finds that additional cost overruns cannot be financed without government backing. 

In the wake of a disclosure that project costs have soared by 70% in just two years, Canadian Finance Minister Chrystia Freeland pledged no more public funding would be invested in the troubled pipeline. The government promises to rely on banks and public debt markets to raise the estimated $8.8 billion that would be necessary to complete the project. IEEFA’s analysis concludes the no-more-tax-dollars pledge is a promise the government can’t keep. 

“Finance Minister Freeland’s assertion that Canada will invest no more public money in TMX is grossly misleading to the public. Any new money poured into the pipeline will be backed by the Canadian taxpayer,” said Tom Sanzillo, IEEFA’s director of financial analysis. “Private money cannot be raised without a government guarantee.”

The Canadian government took possession of the partially built, financially distressed Trans Mountain pipeline from energy infrastructure company Kinder Morgan (KM) in June 2018. To support the desire of Canadian oil producers to reduce the costs of oil transport for export, the government overpaid for the asset and effectively signed a blank check to complete construction.

“Kinder Morgan quit the project because it was a bad bet for investors,“ Sanzillo explained. “On its own, this project is not profitable. No amount of fiscal gimmickry can hide the fact that Canadian taxpayers must stand behind another estimated $8.8 billion. Investors won’t finance it without a guarantee.” 

“We have carefully reviewed the Trans Mountain project’s balance sheet,” said Omar Mawji, IEEFA’s energy finance analyst for Canada. “The project is unbankable. To make a go of it, TMX would need to hike shipping tolls by 100%, raising the price of Canadian oil way beyond the level it needs to compete in the global market. Without substantial governmental support, the pipeline is unsustainable.”

Now, Canadian taxpayers face steep losses unless the government can make good on its promise to sell the pipeline for more than it paid to buy it and ultimately, to build it. IEEFA’s report finds that scenario improbable.

The report finds: 

  • Between the $4.7 billion purchase price and the reported $12.6 billion construction costs, Canadian taxpayers have already funded $17.3 billion on the project.
  • To complete the project, another estimated $8.8 billion will be needed. 
  • Under typical market conditions, the pipeline will require a 100% increase in tolling revenues to make a profit. If this occurred, however, it would drive up the market price of Canadian oil to uncompetitive levels. 
  • The government’s claim that it will use private dollars to finance the $8.8 billion is unsupported. 
  • Given the project’s high financial risk, the government will not be able to obtain private investment unless it guarantees the $8.8 billion. 
  • The government would also have to write off or subordinate all or part of its interest in the $17.3 billion that reportedly has already been spent. 
  • Even if the Canadian government finds a buyer for the pipeline, under current market conditions, it will not receive a price that covers the $26.1 billion project costs, and any additional costs to come. 
  • The $26.1 billion could have been spent instead on renewable energy development. It could have funded every major wind and solar project in Canada from 2019-2021 five times over, adding 15 gigawatts to Canada’s power supply—equivalent to the total energy capacity added from wind and solar projects built in Canada over the last decade.


“From the start, the Canadian government has not been forthcoming with the details of this project,” Sanzillo said.

(*NB: All dollar amounts are in Canadian dollars. The construction costs cited by IEEFA were reported by the government of Canada and TMX but have not been verified by an independent third party).


Full report: Trans Mountain Expansion Could Never Return the Expected $26.1 Billion Spent by Taxpayers


Author contacts

Tom Sanzillo ([email protected]) is IEEFA’s director of financial analysis.

Omar Mawji ([email protected]) is IEEFA’s energy finance analyst, Canada.


Media contact: Vivienne Heston ([email protected]) tel: +1 (914) 439-8921



The Institute for Energy Economics and Financial Analysis (IEEFA) explores issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.


See also:

IEEFA: Trans Mountain Pipeline Financials Suggest Taxpayer Dollars at Risk  

IEEFA: Trans Mountain Pipeline Financials: Built on Quicksand and Clear as Mud

IEEFA: “Canada’s Folly”: Government Purchase of Trans Mountain Pipeline Risks an Increase in National Budget Deficit

Omar Mawji

Omar Mawji is a former Energy Finance Analyst, Canada. At IEEFA, Omar focused on oil & gas upstream, midstream, and downstream companies and projects in Canada.

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Tom Sanzillo

Tom Sanzillo is Director of Financial Analysis for IEEFA. He has produced influential studies on the oil, gas, petrochemical and coal sectors in the U.S. and internationally, including company and credit analyses, facility development, oil and gas reserves, stock and commodity market analysis, and public and private financial structures.

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