Editorial comment
Incentivisation is a crucial part of the midstream sector, whether you’re talking about getting pipeline projects built, attracting companies to operate them, or keeping them safe and efficient. It’s a word that policymakers and industry leaders tend to return to, since pipelines are capital-intensive and safety-critical, and none of the magic happens without financial or regulatory carrots and sticks.
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The passage of US President Trump’s signature ‘Big Beautiful Bill’ in July brings changes in how companies, and state and local governments, allocate their capital investments. The new law, along with an extension of the 2017 tax cuts, and new provisions to allow immediate expensing of capital investment in the US including real property, may lead to unlocking projects throughout the US. The emphasis here is on regulatory reform and tax relief as a stimulus to private investment.
Chris Lloyd, Senior Vice President at McGuireWoods Consulting LLC, recently spoke to me about this, saying: “Clearly, the One Big Beautiful Bill sent a strong signal of support for fossil fuel energy sources and deemphasising emerging energy sources like hydrogen, which will boost the need for new pipeline infrastructure to deliver oil and gas to markets. While there are certainly some financial incentives for such projects contained in the bill, the most significant impact is likely to be in the regulatory reform and streamlining activities in the bill and through executive orders issued by President Trump.”
Of course, the US has successfully used this formula before. Look at the LNG build-out of the past decade: Gulf Coast terminals and the pipelines feeding them were unlocked by regulatory streamlining, export authorisations, and favourable tax treatment that made private capital flow more freely. Incentivisation came in the form of clearing bottlenecks and signalling policy certainty. The US has become the world’s largest LNG exporter, a position attained via midstream infrastructure financed largely by private investors responding to clear, consistent incentives.
Canada, by contrast, has struggled to replicate the same model. Canada has been slow to capture a share of the global LNG market, despite being the world’s fifth largest gas producer. A mix of high costs, regulatory and permitting hurdles, and persistent opposition (particularly around Indigenous rights and environmental concerns) has delayed projects and raised investor risk. LNG Canada, the country’s flagship liquefaction project, has faced technical problems as it ramps up, while negative gas pricing highlights the strain of oversupply with limited export capacity. Together, these factors have left Canada lagging in the race for global LNG market share. According to a PolicyOptions analysis, Canada is “late to the game” and has infrastructure costs that far exceed industry norms.1
The contrast is even starker when you consider Canada’s troubled Trans Mountain Expansion project (TMX), where the government has already spent more than CAN$35 billion rescuing a pipeline that private investors walked away from. When governments subsidise projects, they seek to ensure energy security but sometimes end up cushioning projects that might otherwise have fallen on harder ground. Incentives can unlock infrastructure but also risk masking projects with weak fundamentals. Recently, some private interests and public officials are calling for government funding to construct more pipelines across Canada to enhance oil export, but Mark Kalegha, IEEFA Energy Finance Analyst argues: “Oil infrastructure development, once seen as a financial boon, is beset by rising costs and lower price trends … As the Canadian government experiences pressure to pay industry infrastructure costs from public coffers, it’s time to step back and take a hard look at the energy questions Canada faces.”
In the US, we can see how domestic policy certainty (even without perfect alignment) helps investors move. In Canada, the ‘unknowns’ make risk margins widen and leave many projects struggling to clear investment hurdles. Internationally, Trump-era policy is unpredictable (tariffs, trade disputes, sanctions) but at home, regulatory streamlining and tax relief have provided enough certainty for private capital to commit to midstream build-out.
1. https://policyoptions.irpp.org/2025/04/lng-exports
