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The Imperial Oil refinery, located near Enbridge's Line 5 pipeline, in Sarnia, Ont., on March 20, 2021.

CARLOS OSORIO/Reuters

Whether by coincidence or design, it was a day of demarcation for energy in Canada.

Wednesday marked the end of the odyssey that was Keystone XL, a pipeline proposal born from expectations of limitless demand for Alberta’s oil sands-derived crude. Seeing no path forward after more than a dozen years of studies, approvals, rejections, protests, bilateral spats and court battles, TC Energy Corp. formally threw in the towel.

It was also a day in which the five largest oil sands producers announced plans to achieve net-zero CO2 emissions by 2050 by sharing technology and employing carbon capture. Many environmentalists are skeptical. That is understandable, given the industry’s years of fighting against climate initiatives and asserting it was being unfairly targeted.

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But make no mistake, the very fact that the companies in a sector responsible for 11 per cent of Canada’s emissions are beginning a process that, one assumes, can be tracked and analyzed shows they are no longer counting on a future of unlimited-growth as envisioned when Keystone XL was devised and debated.

The Keystone XL pipeline is no more, but it continues to divide experts

They are not taking their cues from protesters on their doorsteps, but from growing legions of investors worried sick about the risks presented by the transition to cleaner energy, including write-downs and stranded assets, if companies fail to stay ahead of policy changes. And those investors are increasingly vocal.

Witness activist shareholder Engine No. 1, which last month managed to get three directors installed at Exxon Mobil Corp. in a proxy battle over pressing the oil company to get serious about its climate risks after years of resisting action. It is worth noting Calgary-based Imperial Oil, which is majority owned by Exxon Mobil, is part of the new net-zero oil sands group, called Pathways.

In another move on Wednesday, Air Products and Chemicals Inc. unveiled plans to build a $1.3-billion plant in Edmonton to produce hydrogen derived from natural gas, with a goal of opening in 2024. The company is in talks with the Alberta and federal governments for incentives for the facility, which is being designed to also be carbon-neutral.

It has been fascinating to watch the change in tone about Alberta’s biggest industry, especially from Premier Jason Kenney, who started his tenure with a “fight back” position that appeared to elevate the oil patch above all else in the economy. This as financial fortunes dwindled. He has gone from calling environmental, social and governance issues “the flavour of the day” to lauding green initiatives within the province, and even opening an ESG office.

Keystone XL has been a painful lesson for his government and for the province’s taxpayers, who have lost $1.3-billion on a project that was fraught with risk when Mr. Kenney revealed Alberta was making the investment in March, 2020.

Even at the time, the Premier’s announcement looked like a Hail Mary as the province’s economy creaked under the weight of the energy downturn, itself made worse by the pandemic and its devastating impact on global energy demand and prices. TC Energy had been unable to scare up any private-sector partners.

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Then-U.S. president Donald Trump had issued a presidential permit for the project, but with the November election in sight, his poll numbers were tanking. Democratic hopeful Joe Biden, running on a green agenda, said at the time he would revoke the permit, and after he was inaugurated in January, he did just that.

None of this is to say that fossil fuels will be replaced by wind farms and solar arrays tomorrow. The International Energy Agency, in its much-discussed roadmap to global net zero emissions by 2050, talked about the immense challenge of transforming the world’s energy systems. The IEA, created in the 1970s to co-ordinate the West’s oil supplies during the energy crisis, said spending on new oil and gas fields would not be needed. But the world’s infrastructure is still built for petroleum-fuelled transport, and the switchover can only be gradual.

This is what transition means, and Alberta finds itself on the front lines of it. Providers of capital - both public and private – have created a miniboom in the province’s clean tech sector. Some of that money has flowed from the oil sands producers that are in need of a range of new technologies to help solve their carbon problems.

The province has all the knowhow and tools to be a leader in all-of-the-above energy sources. With Keystone XL finally off the table, it’s an opportune time to turn the page.

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