The Canadian government on Tuesday approved a controversial pipeline expansion project to deliver oil to the Pacific coast for shipping overseas, setting the stage for a major political battle ahead of elections.

Prime Minister Justin Trudeau's administration had given the project the go-ahead in 2016 on the grounds it was in Canada's "national interest."

But it was stalled by legal challenges and protests by indigenous groups and environmental activists, and a federal court last August ordered the government to take a second look.

"Today, I am announcing that our government has approved the Trans Mountain expansion project going forward," Trudeau told a press conference in Ottawa.

"The company plans to have shovels in the ground this construction season," he said

Tax revenues and proceeds from the eventual sale of the pipeline -- which Ottawa purchased last year for Can$4.4 billion (US$3.3 billion) from Kinder Morgan to salvage the troubled expansion project -- would be invested in "Canada's transition to clean energy."

The project is to replace an aging conduit built in 1953 to deliver 890,000 barrels of oil a day from landlocked Alberta to the Pacific coast for shipping to new markets in Asia and elsewhere.

Most of Canada's oil output currently is sold to the United States at a discount.

The government, after an initial environmental review, concluded that the Trans Mountain pipeline was needed to ease Canada's reliance on the US market, boost local production and get a better price for its oil.

But environmentalists and indigenous tribes worry that increased shipping from a marine terminal in Vancouver could impede the recovery of local killer whale populations.

"We need markets for our resources so long as the world is still dependent on conventional resources," Trudeau said. "We need money to pay for innovation and the transition towards a greener economy."

"Fundamentally, this isn't a choice between producing more conventional energy or less. It's a choice about where we can sell it and how we get it there safely."

Critics were unconvinced, vowing to step up protests and legal challenges against the project, while Trans Mountain proponents were hesitant to declare a victory until the new pipeline is actually built.

"We've learned that approved is not built," the Canadian Chamber of Commerce said in a statement.

- Climate versus oil -

The issue also confronts Trudeau with a political dilemma.

The pipeline's most vocal opponents are normally key Trudeau supporters. And yet, failure to get it built could spell economic trouble for one of Canada's top industries while plunging Trudeau into a political fight with Canada's provincial governments over environmental policy.

Trudeau's Liberals have more seats at stake in the upcoming October election in westernmost British Columbia, where opposition to the pipeline is strongest, than in oil-rich Alberta.

Standing up for the oil patch also runs counter to Trudeau's championing action on climate change.

Environmental groups called him out for passing a motion in parliament declaring a national climate emergency and reaffirming measures to curb CO2 emissions late Monday, and then approving an oil pipeline the next day that could add as much as 15 million tons of carbon.

But further delays in construction of the Trans Mountain project would give ammunition to Trudeau's main rival, Conservative leader Andrew Scheer, who has tapped into oil sector grievances since oil prices plunged in 2015.

Scheer has gained a slight lead in recent polls promising to roll back environmental protections, while echoing provincial leaders who warned in an open letter that the federal government's resources management is having "detrimental effects on national unity."

In addition to lamenting a lack of new pipeline capacity, oil proponents have also taken aim at Trudeau's push to strengthen environmental assessments on major new energy projects, saying the new law will dash plans for any future pipelines.

Further complicating matters, a deal Trudeau had reached with Alberta to impose a cap on oil sands CO2 emissions in exchange for increased pipeline capacity has come apart.

The oil sands are the world's third-largest oil reserve as well as the single largest polluter in the country, and so any effort to meet Canada's Paris Agreement target of reducing CO2 emissions by 30 percent from 2005 levels by 2030 must include Alberta.

But a new Tory government in Alberta this month walked away from those commitments.

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