TMX’s C$3B/Year Oil & Gas Subsidy Lesson: Design Energy Corridor For Electrons Not Oil

Sign up for CleanTechnica’s Weekly Substack for Zach and Scott’s in-depth analyses and high level summaries, sign up for our daily newsletter, and/or follow us on Google News!

Canada is once again flirting with the idea of an east-west energy corridor. The vision sounds big and bold: a designated path across the country to carry everything from crude oil to natural gas, hydrogen to electricity. In this rapid, Trump-inflected election cycle, political leaders are lining up behind the idea, polling suggests the public is receptive, and infrastructure players are circling the concept like it’s a long-lost gold vein. The inclusion of hydrogen should tell you something.

But before the country starts clearing right-of-ways and pouring concrete, it’s worth asking what happened the last time Canada embarked on a nation-building energy infrastructure project with this much ambition. The cautionary tale isn’t buried in history—it’s fresh, fully built, and already bleeding red ink. It’s the Trans Mountain Expansion.

TMX was supposed to be straightforward. Add a twinned pipeline beside an existing one. Move more oil to the West Coast. Access international markets. The private sector, specifically Kinder Morgan, initially carried the torch. Then the delays started. Legal challenges. Permitting battles. Public resistance. Indigenous consultation gaps. By 2018, the federal government stepped in to buy the entire project—pipe, plans, liabilities, and all—for C$4.5 billion, with an expansion still to build. That expansion, pegged at around C$7 billion at the time, ultimately cost C$34 billion. The line came online in 2024. Crude is flowing. But so are the questions.

The economic case for TMX was always more political than financial. It was framed as a necessary route to market diversification. And in that narrow sense, it has delivered: for the first time, a substantial volume of Canadian oil is being loaded onto tankers bound for South Korea, California, and occasionally India or China. The oil sands have their tidewater outlet. But what did it cost? The tolls that shippers pay are set by long-term contracts signed years ago.

For most of the line’s capacity, committed tolls are around C$11.46 per barrel. According to economists who’ve run the math, the break-even toll to recover the full capital cost of the expansion is somewhere between C$22 and C$25. That leaves a gap of over C$10 per barrel. Multiply that by the volumes moving through TMX—around 700,000 barrels per day at 80% utilization—and the public is implicitly subsidizing the project to the tune of nearly C$3 billion per year. At full capacity, the subsidy would exceed C$3.6 billion annually. I’m on record as believing it will never fill up, will see declining volumes in a decade and be bankrupt in 2040 as oil demand drops and Alberta’s heavy, sour, low-quality product is first off the market, so we will never likely get to the C$3.6 billion, but C$3 isn’t exactly change you find in your car seats.

That’s not a rounding error. It’s not just the usual slippage that comes with megaprojects. It’s a systemic underpricing of fossil infrastructure, backed by taxpayer dollars. It’s exactly the kind of thing the country needs to reckon with before charging ahead with another grand corridor scheme. Whatever form this energy corridor takes—whether it carries bitumen, gas, electrons, or some combination—the same risks loom. Cost overruns. Weak commercial guarantees. Political interference. Underpriced access. And ultimately, the quiet assumption that when the economics don’t pencil out, the public will make up the difference.

TMX shows what happens when governments take on risk that the market won’t. It demonstrates how strategic infrastructure can mutate into fiscal liabilities when cost controls are soft and pricing discipline evaporates. It also reveals how difficult it is to charge market rates once long-term contracts are signed at political moments of urgency. Shippers don’t renegotiate. Regulators get boxed in. Taxpayers are left holding the bag. For all the political talk of market access and international leverage, what TMX became was a very expensive way to move Canadian bitumen to global markets at a price that’s not remotely economic for the public that built it.

The players who build and operate pipelines in Canada are dwindling. Kinder Morgan sold their to-be-stranded TMX asset to Canada, who created a Crown corporation to hold it. TC Energy is out of the pipeline business, having divested its assets. That leaves Enbridge, who hasn’t exactly been presenting fully costed pitches for an energy corridor that will likely cost C$20 billion plus when all the dust settles. After all, as badly as the TMX tripling was managed and as challenging as going through the Rockies is, the energy corridor would be four times longer.

And yet, there’s a case—if a reluctant one—to be made for a corridor. If a pipeline has to be built, for political reasons or as part of a transitional bargain, then let it come with something more valuable. Let it carry the electrons that will define Canada’s future. If a national corridor is going to be pushed through, it should be designed as a multi-use backbone—with HVDC transmission lines as the central spine and molecule infrastructure as a temporary passenger. The corridor should connect Alberta wind, BC hydro, prairie solar, and Quebec hydroelectricity. It should facilitate two-way clean energy trade between provinces and enable deep electrification across sectors. If oil and gas pipelines are the excuse, fine—but the HVDC must be the legacy.

Canada needs a continental-scale transmission backbone. It needs a way to move renewable energy from surplus to deficit, to integrate provincial grids, to handle seasonal peaks and long-duration storage. The kind of system that doesn’t just meet today’s needs but creates tomorrow’s capacity. That’s the infrastructure worth underwriting. If the political capital to build a corridor exists, it must be spent on electrons first. Molecules can hitch a ride—but they shouldn’t define the route or the return.

TMX also teaches a subtler lesson about fiscal design. If a future pipeline or corridor is to be publicly facilitated, the toll structure must be robust, transparent, and tethered to cost recovery. Committed shippers must pay rates that reflect full lifecycle costs. There can’t be another round of underpriced access justified by short-term market politics. Because once the toll is set, it’s set. If it’s wrong, the damage compounds for decades. Infrastructure finance is brutal that way: the math is indifferent to rhetoric. Subsidizing fossil fuels out of the public purse has to stop.

There’s also the matter of stranded risk. TMX may end up being the last major oil pipeline built in Canada. It arrived just as peak global oil demand started to feel real, just as capital markets began pivoting, and just as international climate commitments started biting. The same pressures that made TMX a hard sell will make the next pipeline even harder. If Canada commits to building a corridor in the 2020s and it turns out the 2030s bring declining oil volumes, then the public might once again be left with a stranded asset—or worse, a stranded corridor.

So what does a smart corridor look like? It starts with discipline: clear criteria for public investment, enforced toll recovery models, Indigenous ownership from day one, and a modular buildout that prioritizes electricity transmission. It must be resilient, not just physically but economically. It must accommodate future decarbonization trajectories, not fight them. And it must be designed to deliver long-term public value, not just short-term political credit.

If TMX is the price of learning that lesson, then at least the tuition was paid. What Canada can’t afford is to treat it as a blueprint. The next corridor must carry more than oil. It must carry the grid. If we get that part right, we might just turn one of the costliest pipeline mistakes in history into the spark that powers a smarter, cleaner future.