(Adds quotes from Trudeau, Alberta premier, aboriginal band, reaction from company)
By David Ljunggren and Leah Schnurr
OTTAWA, Nov 29 (Reuters) - Canada on Tuesday approved Kinder Morgan Inc's hotly contested plan to build a pipeline from the Alberta oil sands to the Pacific coast, setting up a battle with environmentalists who helped elect Prime Minister Justin Trudeau.
The Liberal government, under pressure from both green groups and the energy industry, said allowing Kinder Morgan to construct a second pipeline next to its existing Trans Mountain line would help ensure oil exports reach Asia and reduce reliance on the U.S. market.
"We are under no illusions that the decision we made today will be bitterly disputed by a number of people across the country," Trudeau told reporters.
Ottawa imposed 157 binding conditions on the C$6.8 billion ($5.06 billion) project, which would nearly triple capacity on the artery to 890,000 barrels a day. Opponents say the risks of a spill are too large.
"As long as Kinder Morgan respects the stringent conditions ...this project will get built because it's in the national interest of Canadians," said Trudeau.
The government also blocked Enbridge Inc's Northern Gateway pipeline from Alberta to the Pacific province of British Columbia, as expected. Trudeau had long opposed the project, which would run through the Great Bear Rainforest.
Enbridge, however, will be allowed to replace the Canadian segments of its ageing Line 3 from Alberta to Wisconsin, a proposed upgrade that had been less controversial than Northern Gateway. Enbridge said it expected the pipeline to enter service in 2019, pending U.S. regulatory approval.
Canada's energy sector, hit hard by a two-year slump in oil prices, wants more pipelines to help ease bottlenecks in moving crude out of Alberta.
"It has been a long dark night for the people of Alberta ... today we are finally seeing some morning light," Alberta Premier Rachel Notley told reporters in Ottawa after talks with Trudeau.
"We're getting a chance to sell to China and other new markets at better prices."
Kinder Morgan said it planned to start work in September 2017 and should be finished by late 2019.
Environmental groups were quick to promise resistance.
"You will see the movement continue to escalate in the streets as the number of protests and actions continue to grow, in the courts, and at the ballot box here in (British Columbia) and beyond," said Seven Biggs of climate group Stand.earth.
Trudeau, keen to show environmentalists he is not selling out to the energy industry, also said the government would ban tanker traffic along the northern coast of British Columbia.
Earlier this month he said Ottawa would toughen its response to oil spills at sea, which some saw as a signal Trans Mountain would be approved.
The Tsleil-Waututh aboriginal band in British Columbia, which says its land would be devastated by a spill, promised to oppose the pipeline by all legal means.
"We will file a judicial review ... This is not the end of this pipeline issue for (us), this is the beginning of a long road," said band member Charlene Aleck. (With additional reporting by Nia Williams and Ethan Lou in Calgary and Nicole Mordant in Vancouver; Editing by Chris Reese, Meredith Mazzilli and Andrew Hay)