Bar­gain­ing chip

Car­ney, Trump dis­cuss reviv­ing Key­stone XL pipeline in trade talks, sources con­firm

This article was written by Alex Ballingall and was published in the Toronto Star on October 9, 2025.

A second aban­doned oil pipeline pro­posal in as many weeks is now the focus of a pos­sible resur­rec­tion, after Prime Min­is­ter Mark Car­ney raised reviv­ing the Key­stone XL project when dis­cuss­ing the heav­ily tar­iffed steel and alu­minum sec­tors with U.S. Pres­id­ent Don­ald Trump at the White House on Tues­day, two gov­ern­ment offi­cials con­firmed to the Star.

Accord­ing to the sources, who spoke about the closed­door talks on con­di­tion they aren’t named, Trump was recept­ive when Car­ney ref­er­enced the Key­stone XL devel­op­ment that was can­celled in 2021 when then U.S. pres­id­ent Joe Biden revoked author­iz­a­tion for the 1,900­kilo­metre pipeline that would have car­ried crude oil from Alberta to Neb­raska.

The men­tion of Key­stone XL in trade dis­cus­sions with Trump fol­lows the Alberta gov­ern­ment’s effort to spear­head a new plan to build an oil pipeline through north­ern Brit­ish Columbia, the same region as the defunct North­ern Gate­way project.

Both gov­ern­ment sources said Key­stone XL was raised when Car­ney and Trump were dis­cuss­ing pro­gress on the steel and alu­minum sec­tors, which the U.S. has hit with 50 per cent tar­iffs, while Canada has respon­ded with 25 per cent import duties on goods from those sec­tors in the U.S.

Alberta Premier Dani­elle Smith — whose province inves­ted more than $1.3 bil­lion in the Key­stone XL project — told report­ers in Toronto she was pleased to learn there’s a “deal to be had” with the U.S. that relates to steel, alu­minum and energy.

“We shouldn’t be threat­en­ing to sell the Amer­ic­ans less, we should be prom­ising to sell them more,” Smith said, say­ing agree­ments on energy could pave the way for wider pro­gress on a new trade deal between Canada and the U.S.

Mean­while, interim NDP Leader Don Dav­ies argued the idea of a new pipeline to the U.S. clashes with the prime min­is­ter’s prom­ise to reduce Canada’s eco­nomic reli­ance on its south­ern neigh­bour, at a time when Trump has said he wants to annex Canada and imposed pun­ish­ing tar­iffs on indus­tries like steel, alu­minum, autos, lum­ber and cop­per. Dav­ies also noted how Cana­dian oil has long been sold at a dis­count in the U.S., which has been part of the rationale for new projects.

“That’s not to men­tion the envir­on­mental impact con­sid­er­a­tions of that, so I fail to under­stand Mr. Car­ney’s reas­on­ing,” Dav­ies said.

It remains unclear how Key­stone XL could resume as a pipeline devel­op­ment.

The com­pany that ter­min­ated it in 2021, TC Energy, star­ted a spinoff com­pany called South Bow that now over­sees the already­exist­ing Key­stone net­work of pipelines. South Bow spokes­per­son Solo­m­iya Lyaskovska said by email on Wed­nes­day the com­pany is “not privy to the ongo­ing dis­cus­sions” between Canada and the U.S., and sug­ges­ted the com­pany remains focused on its exist­ing pipeline sys­tem.

“South Bow is sup­port­ive of efforts to find solu­tions that increase the trans­port­a­tion of Cana­dian crude oil. We will con­tinue to explore oppor­tun­it­ies that lever­age our exist­ing cor­ridor with our cus­tom­ers and oth­ers in the industry,” Lyaskovska said.

One of the fed­eral gov­ern­ment sources who spoke to the Star por­trayed the idea of reviv­ing the project as being in the early stages, with out­stand­ing ques­tions includ­ing whether South Bow would be the pro­ponent and whether the route would stay the same.

The Car­ney gov­ern­ment, mean­while, has vowed to make Canada an “energy super­power” while also redu­cing green­house gas emis­sions that cause cli­mate change. The prime min­is­ter has opened the door to approv­ing a major new oil pipeline under a new law to fasttrack major devel­op­ments the gov­ern­ment deems to be in the national interest, but only under a “grand bar­gain” that sees the fossil fuel industry pro­ceed with the Path­ways Alli­ance car­bon cap­ture project that would reduce emis­sions from the oils­ands in Alberta.

The pos­ture has promp­ted optim­ism from Smith, who calls her pipeline pro­posal to the B.C. coast a “test” for Cana­dian unity. At the same time, B.C. Premier David Eby has cast doubt on the pro­posal, while envir­on­mental advoc­ates have ques­tioned the dir­ec­tion of cli­mate policy under the Car­ney gov­ern­ment. Since tak­ing power in March, Car­ney has scrapped the con­sumer car­bon price, and paused incom­ing sales man­dates for zer­oe­mis­sion vehicles. The Star also repor­ted in June that the gov­ern­ment could weaken or can­cel the planned cap on emis­sions from the oil and gas sec­tor — the largest con­trib­utor to Canada’s green­house gas pol­lu­tion, accord­ing to the most recent data — if the Path­ways project gets built.

On Par­lia­ment Hill, Lib­eral MP Corey Hogan — the par­lia­ment­ary sec­ret­ary to the nat­ural resources min­is­ter — said it is “worth explor­ing” whether it is pos­sible to bring Key­stone back, pos­sibly as part of dis­cus­sions around a “grand bar­gain” with the fossil fuel sec­tor.

For Cath­er­ine Abreu, dir­ector of the Inter­na­tional Cli­mate Polit­ics Hub and an adviser on the fed­eral gov­ern­ment’s inde­pend­ent Net Zero Advis­ory Body, the dis­cus­sion around reviv­ing Key­stone XL flies in the face of what she argues is the need to turn to renew­able energy for eco­nomic growth as the world shifts away from fossil fuels.

“It’s depress­ing and frankly bor­ing to see Canada’s prime min­is­ter hav­ing a con­ver­sa­tion about an out­dated pipeline project with a pres­id­ent who’s clearly a mouth­piece of the oil and gas industry,” Abreu said.