Canadian Prime Minister Mark Carney signed a deal with the premier of Alberta that will roll back some climate rules to boost investment in energy production, while encouraging the construction of a new oil pipeline to the West Coast.
Under the deal, which was signed Thursday, the federal government will remove an emissions cap on the oil and gas sector and drop clean electricity rules in exchange for a commitment from Canada’s top oil-producing province to strengthen industrial carbon pricing and support a carbon capture and storage project.
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The deal, which was praised by the country’s oil industry but criticized by environmentalists, marks a shift in Canada’s energy policy toward fossil fuel development and is already creating tensions within Carney’s minority government.
Steven Guilbeault, who served as environment minister under Carney’s predecessor, Justin Trudeau, said he was leaving cabinet over concerns that Canada’s climate plan would be dismantled.
Carney is counting on the energy sector to help the Canadian economy weather uncertainty over U.S. President Donald Trump’s tariffs and is seeking to diversify away from the U.S. market, which currently absorbs 90 per cent of Canada’s oil exports.
In a speech at an industry event in Calgary, Carney said U.S. tariffs and the resulting uncertainty will wipe $50 billion from the Canadian economy, the equivalent of $1,300 for every Canadian, emphasizing the need to build projects that can spur growth and reduce dependence on the United States.
He eased some environmental restrictions put in place by his predecessor, Justin Trudeau, while reaffirming his commitment to reaching net zero carbon emissions by 2050.
New markets
Alberta is also exploring the feasibility of a new crude oil pipeline to British Columbia’s northwest coast to increase exports to Asia, but no private sector company has committed to building a new pipeline.
Pipeline companies and the Alberta government have repeatedly said significant federal legislative changes — including removing the federal cap on emissions from the oil and gas sector and ending a ban on tankers off B.C.’s north coast — would be necessary before a private entity would consider proposing a new pipeline.
The Canadian government will allow a clear and efficient approval process for a new pipeline that will be built and financed by the private sector, Carney said.
He added that the new pipeline would transport one million barrels of low-emission Alberta bitumen every day, with a route that would prioritize increasing access to new Asian markets.
Thursday’s deal includes a federal government commitment to adjust the tanker moratorium law to make it easier to export oil to Asia.
British Columbia Premier David Eby, who opposes the construction of a new pipeline through his province, said Wednesday the law should remain in effect.
Other pipeline opponents are also speaking out. A coalition of British Columbia Indigenous groups said this week they would not allow oil tankers on the northwest coast and that the pipeline project “would never happen.”
The Trans Mountain pipeline from Alberta to coastal British Columbia, which is owned by the Canadian government and currently the only option for shipping Canadian oil directly to Asian markets, tripled its capacity last year with a C$34 billion ($24.2 billion) expansion.
Climate concerns
Environmentalists have expressed concerns about the deal’s climate change implications, while oil producers have supported the deal.
“With this agreement, the federal government risks causing significant damage to national minimum standards, which will have broader impacts on Canada’s efforts on climate change,” the Pembina Institute, a clean energy think tank, said in a statement.
Industry leaders said the partnership between the province and the federal government would boost the energy sector.
“The elimination of the emissions cap, changes to the Competition Act and the commitment to work together for new market access are all important steps towards harnessing Canada’s vast natural energy resources,” the Canadian Association of Petroleum Producers said in a statement.
The federal government and Alberta also said they would reach an agreement on industrial carbon pricing by April 1 of next year.
Additionally, the two agreed to cooperate on the construction of the Pathways Plus project, which is expected to be the world’s largest carbon capture project and designed to capture emissions from Canada’s tar sands.
The federal government will also help Alberta build and operate nuclear power plants, strengthen its electricity grid to power AI data centers and build transmission lines to neighboring provinces.
