Welcome back to Adjournment Proceedings, our weekly long read series. We publish a new edition every Friday. In this week’s edition, we look at the promise of Indigenous equity in Alberta’s proposed West Coast pipeline, and why it could take a decade or more to become real.

Missed a week? Take a look through our archives here.

The federal government has until October to decide whether Alberta’s proposed West Coast pipeline is in the national interest, and a big part of that call rests on whether First Nations want in.

Advancing the interests of Indigenous Peoples is one of five factors Ottawa can weigh under the Building Canada Act in granting the designation, a status meant to expedite the regulatory process.

Alberta’s proposal tracks the factors listed in the act, calling Indigenous economic participation “a foundational component” of the project and promising “meaningful” equity along with models that move “beyond traditional impact benefit agreements.”

But while the designation will be decided in weeks, it will take years to determine what participation and equity will look like.

Under Alberta’s proposal, First Nations can not exercise their purchase until the pipeline is in commercial service, likely the early-to-mid 2030s at best, with financing set to be backstopped equally by provincial and federal Indigenous loan-guarantee programs.

And these programs have conditions of their own. “This isn’t really any different than how a bank would look at it,” said Chana Martineau, CEO of the Alberta Indigenous Opportunities Corporation, which assesses whether a project’s cash flows can repay the guaranteed loan. 

In the pipeline’s case, she said, the AIOC would not consider a loan guarantee until the project reaches a final investment decision, which Alberta hopes to make sometime in early 2028, after it secures commitments from oil companies. 

Following through on promises

Ray Cardinal has served on Trans Mountain’s Indigenous advisory and monitoring committee since its inception, representing Alberta First Nations. 

He argues there should be a process to check whether the benefits promised during consultation materialize and whether impacts stay within what was predicted.

“It’s one thing to promise: don’t worry, everything will be wonderful, there’ll be minimal or no impacts, and there’ll be tons of opportunity coming to you and your people. But where is that process to make sure that actually happens?”

He cites, among other examples, the Trudeau government’s statement, made when the expansion was approved in 2019, that Indigenous ownership in Trans Mountain “could be 25 percent, 50 percent, or even 100 percent.”

Ottawa began efforts to sell the Trans Mountain pipeline to Indigenous groups in 2023, but the process has since stalled, with federal Energy Minister Tim Hodgson recently saying tolls need to be clarified and the system’s output maximized before a sale can proceed.

Elizabeth Wademan, head of the Canada Development Investment Corp., which manages the pipeline on behalf of the federal government, went further, saying there was “absolutely a case to be a long term holder” of the asset.

“From a First Nation standpoint, there are communities that have been sitting here working on this for seven years, and I don’t think they’re any closer to any sort of formal deal,” said Cardinal. 

“It does leave a sour taste in people’s mouth, because you’ve been making these promises for a long time.” 

Cardinal worries this could happen again with Alberta’s proposed pipeline. “The longer you kick it down the road, the less clear it becomes.” 

Striking a more optimistic tone

Steve Mason is CEO of Project Reconciliation, a group formed to acquire equity in Trans Mountain on behalf of Indigenous communities. His early offer to buy 51 per cent of the company, tabled with then-finance minister Bill Morneau, went nowhere. But he strikes a more optimistic tone about the new pipeline project.

“I do believe that the Carney government recognizes it has to happen,” he tells iPolitics of Indigenous ownership.

He argues the new project’s circumstances would differ from Trans Mountain’s, where the sale has been snarled by the unresolved question of who should absorb the expansion’s cost overruns.

“I think part of the politics around that is, the expansion project cost over $35 billion, and if they sell for $20 billion, it’s going to be pointed to as a giveaway,” said Mason. “Conservatives will just start hammering.”

But even if Alberta’s new pipeline clears regulation and construction faster than its Trans Mountain before it, it’s unclear what Indigenous equity would look like. 

READ MORE: Rights-holders, not stakeholders: Indigenous groups prepare for era of project equity

During a Canada 2020 panel last month, Hillary Thatcher, who leads Indigenous investments at the Canada Infrastructure Bank, warned of “fake equity” and “glorified impact benefit agreements,” arrangements where communities arrive after the key decisions are made, and an equity stake delivers cash flow but no say in environmental assessments, procurement, or how the project gets built.

She said equity ownership means putting capital at risk. “Equity-like risks come with equity-like rewards.”

How much equity, and when?

Under Alberta’s proposal, the risks inherent to regulatory approvals and construction may already be behind the project by the time First Nations could buy in.

Jesse McCormick, a major projects lawyer with Pape Salter Teillet LLP, notes that most First Nations have no balance sheet to draw on and, under the Indian Act, cannot collateralize their assets, making pre-construction buy-ins a gamble not all can afford. 

“It’s wise to secure the opportunity,” he said, “but have it crystallize… once construction is complete or some other key transition point, such as commercial operation.” 

He says equity makes a project more responsive to First Nations, though not in direct proportion to the size of the stake. A collective share of 10 to 30 per cent is the norm, he adds, and anything above that on this pipeline would be “excellent.”

“Then the question becomes more on the access to capital,” said McCormick. 

How financing would work

Alberta’s proposal points to both governments’ Indigenous loan-guarantee programs as the route to capital. Under these programs, governments backstop loans First Nations take out to buy equity in major projects, securing financing communities could not otherwise access.

Kristan Straub, who heads the federal Indigenous loan-guarantee corporation, tells iPolitics that trust is the decisive ingredient when First Nations partner to buy a stake — among the communities themselves, and with the project’s proponent.

He points to the corporation’s deal on Enbridge’s Sunrise expansion in B.C., where 38 First Nations formed a single investment vehicle to hold their share. 

“That to me speaks volumes for the work that both those nations and the proponents had gone through,” he said, adding that a challenge is often trust among the nations themselves, especially when communities see their interests as diverging. 

He said the easiest and least risky stage to invest is after commercial operation, once construction costs are known and the line is proven to work. But some communities, he acknowledged, may want in earlier.

READ MORE: Indigenous guarantee program issues second loan, backing equity stake in Ontario transmission line

“It’s not for us, as the Indigenous Loan Guarantee Corporation, to decide whether a nation should take the risk or not. We’re there to support them,” he said.

His counterpart in Alberta takes the same view. 

“If the Indigenous communities aren’t satisfied with the investment, then there is nothing for us to support,” said Martineau. 

The Alberta Indigenous Opportunities Corporation manages $3 billion in loan-guarantee capacity, a fraction of what a meaningful stake in a project estimated at $40 billion would require.

But Martineau says she’s “not concerned about the cap room at this point.” 

The corporation’s $250-million per-deal ceiling can be exceeded with cabinet approval, she says, and its guarantees can be stacked with the federal program’s to go larger still. She points to a $1-billion guarantee Alberta’s cabinet approved for an investment by more than 70 communities in a TC Energy system, a deal she says the program was ready to close before the company cancelled it.

“The government has been very supportive of our program and supportive of indigenous investment,” said Martineau.

Community members concerned about climate crisis

Financing may be the easier problem.

The proposed corridor passes through the traditional territories of roughly 90 to 125 Indigenous groups and could cross as many as 11 reserves.

In parts of B.C., the members those leaders answer to living are living through the climate impacts a new oil pipeline represents.

McCormick, who lives in Kamloops, points to the fires burning through the region this summer, including losses suffered by the Okanagan Indian Band. “First Nations leaders will be looking at it through that political lens as well,” he said. 

Some “may find that their communities are less supportive of the pipeline infrastructure because they’ve been living through the impacts of forest fires for the last few months.” 

The other variable, he says, is waning confidence in the regulatory process itself, a concern sharpened by Ottawa’s push to speed up major-project approvals. Together, climate concerns and process distrust will shape how many First Nations back the project, what participation they pursue, and when.