Photo: The Canadian Press

Prime Minister Justin Trudeau leaves after holding a press conference in New York on Thursday, May 17, 2018. THE CANADIAN PRESS/Sean Kilpatrick

Prime Minister Justin Trudeau says putting federal cash down as an insurance policy of sorts to get the Trans Mountain pipeline expansion built is the result of an "exceptional" political situation.

Speaking in New York City a day after his government announced it would compensate Kinder Morgan for any delays in construction caused by political problems, Trudeau said he has every confidence the pipeline will proceed.

"What we have proposed in our finance minister's proposal yesterday is to remove some of the risk by providing a sort of insurance policy for this particular context of political risk," Trudeau said. "It's very much an exceptional situation."

Kinder Morgan halted non-essential spending on the project in April because of pending legal questions by the government of British Columbia, and the federal government now has just two more weeks to come to an agreement with the company before its May 31 deadline.

The big political obstacle at play is the British Columbia government's opposition to the project, and B.C.'s court challenge asking whether it has jurisdiction to regulate what flows through the pipeline even though Canada has jurisdiction to build it.

That court challenge, filed in late April, could take months, if not years to sort out, and it has given jitters to pipeline investors who fear starting construction on the project is risky if there is a possibility no oil can ever flow through it.

Those jitters are extending beyond the pipeline and threatening Canada's competitiveness in the energy industry overall. Coupled with the unease created by the North American Free Trade Agreement's meandering path to renegotiation — a politically imposed deadline to get a new deal in place passed by on Thursday — investor confidence in Canada is showing signs of trouble.

The Bank of Canada said earlier this week that trade uncertainty due to issues like NAFTA will chill business investment in the country by two per cent this year.

Combating those concerns was the main focus of much of Trudeau's three-day trip to the United States this week, where he met with more than a dozen different business executives, pension fund managers and CEOs in New York and has more meetings planned in Boston Friday.

None of those meetings involved the Trans Mountain pipeline however, Trudeau said. While Finance Minister Bill Morneau said Wednesday that if Kinder Morgan won't build the pipeline there are others that will step in, Trudeau said he was not meeting with any such parties on this trip and is leaving the pipeline talks to Morneau.

"I have tremendous confidence in our finance minister and the work he's done with both the company in question and with leading voices and investors in the Canadian and global energy sector," said Trudeau.