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Pipelines run at the McKay River Suncor oil sands in-situ operations near Fort McMurray, Alberta, September 17, 2014.

Todd Korol/Reuters

The Liberal government is promoting the need for new markets for Canada's oil sands producers, even as it promises an aggressive approach on climate change and tougher environmental assessments of pipeline proposals.

As it attempts to build credibility ahead of the Paris climate summit, the new government is walking a difficult line, insisting that Canada's resource development can be made "sustainable" through investment in innovative technology, even as the oil industry is reeling from financial losses that will sap its ability to invest in cleaner, less-carbon-intensive processes.

"We are blessed in Canada with a diversity of resources, including conventional resources. And it is our challenge as a government and as a nation to develop them sustainably through innovation," Natural Resources Minister Jim Carr said Wednesday in a conference call from Paris where he attended a meeting of the International Energy Agency.

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The Liberals say they oppose the Northern Gateway pipeline, which the previous Conservative government approved last year after imposing 209 conditions. The new government is promising to ban oil tanker traffic from British Columbia's northern coast – a death knell for the project – but its proponent Enbridge Inc. is crying foul, adding it remains committed to the controversial pipeline. Enbridge says it has signed 28 aboriginal communities as equity partners, and they must be consulted before Ottawa acts on the tanker ban.

While Ottawa has targeted the Northern Gateway pipeline, environmental assessments for two other controversial pipeline projects will continue while the Liberals decide how to reverse changes made to the review process by the Harper government.

Mr. Carr said the government is still determining how – indeed whether – those new rules would apply to those two proposals already in front of the regulatory agency: Kinder Morgan's expansion of the Trans Mountain pipeline to Vancouver, and TransCanada Corp.'s Energy East line to Saint John.

Echoing the New Democratic Party government in Alberta, the federal Liberals argue that oil sands will only gain access to new markets if governments impose a credible environmental policy to assure the world that it is being done responsibly. Many environmentalists who have tagged the sector with a "dirty oil" label argue that any further oil sands development is inconsistent with a credible climate policy.

"We believe there are export markets for Canadian resources, [and] we believe the diversification of those markets is important and particularly important in light of recent decisions taken in the United States," Mr. Carr said in reference to U.S. President Barack Obama's rejection of TransCanada Corp.'s proposed Keystone XL pipeline from Alberta to the U.S. Gulf Coast.

"Ultimately we are faced with the challenge of assuring our markets, our customers and our citizens that the assessment process factors in everything one ought to consider important as we develop our resources sustainably."

Prime Minister Justin Trudeau was scheduled to meet Thursday with Mr. Obama on the sidelines of the Asia-Pacific Economic Co-operation summit in the Philippines. In rejecting the Keystone XL project earlier this month, Mr. Obama said approving the pipeline from Canada's "dirty oil" sector through the U.S. was inconsistent with his administration's leadership on climate action.

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Environmentalists argue that Mr. Trudeau cannot win Canadian credibility on climate change so long as the federal and provincial governments fail to impose a substantial carbon price on the sector to rein in greenhouse gas emissions. The NDP government in Edmonton has increased an existing, small levy on oil sands emissions, but the government has said that measure will not slow down the industry's expansion. The federal Liberal government is not promising to regulate the industry's emissions.

"Investing in extraction of high-carbon, polluting fossil fuels is rolling the dice with Canada's economy and will increase our contribution to the climate crisis," Peter Robinson, chief executive officer of the David Suzuki Foundation, said on Wednesday. "The business case for these types of infrastructure assumes continued, unlimited emissions growth. This approach is incongruent with a commitment to cut carbon emissions."

Editor's note: An earlier digital version of this story incorrectly stated that Peter Robinson is executive director of the David Suzuki Foundation, he is in fact the chief executive officer. This digital version has been corrected.

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