Ottawa and Alberta reach a major energy deal outlining carbon pricing changes, regulatory exemptions, and support for a new pipeline to B.C.’s coast.
Ottawa, Alberta Strike Landmark Energy Framework
High-Level Accord Reached
Prime Minister Mark Carney and Alberta Premier Danielle Smith have reached a sweeping agreement outlining a new federal–provincial energy framework. The memorandum of understanding (MOU), set for formal release Thursday in Calgary, aims to reshape the long-strained relationship between Ottawa and Alberta by aligning climate policy with economic development priorities.
Announcement Set for Calgary Event
The deal will be unveiled during a joint announcement featuring the prime minister, the premier, and Alberta business leaders, including the Calgary Chamber of Commerce. Officials familiar with the negotiations say the agreement has been briefed internally but not publicly disclosed ahead of the scheduled event, marking it as a significant political and economic moment for the province.
Regulatory Flexibility for Alberta
The framework is expected to include exemptions for Alberta from selected federal environmental regulations, including aspects of Ottawa’s net-zero electricity standards. These carve-outs reflect Alberta’s longstanding concerns about federal climate rules and are positioned as a compromise to facilitate provincial cooperation on emissions reductions.
Carbon Pricing Commitments in Exchange
In return for increased regulatory flexibility, Alberta is prepared to tighten its industrial carbon pricing system. This includes raising the effective cost of emissions for major industrial players, particularly within the oil and gas sector. Climate experts have consistently identified strong industrial carbon pricing as a highly effective tool for achieving emissions reductions.
Potential Shift on Federal Emissions Cap
The federal government signaled in its 2025 budget that an enhanced provincial carbon regime could make the national oil and gas emissions cap unnecessary. Under the new framework, those conditions appear closer to being met, potentially clearing the way for Ottawa to withdraw the controversial cap while still maintaining national emissions targets.
Pipeline Pathway and B.C. Engagement
The MOU also establishes a roadmap for advancing an Alberta-to-northwest-B.C. pipeline project, including provisions for negotiations with the B.C. government and stipulations for Indigenous participation and equity ownership. While B.C. Premier David Eby confirmed discussions with the prime minister, he noted that final details were still in flux earlier this week.
Tankers, Trade Routes, and Next Steps
Sources indicate the agreement may outline a structured approach to revisiting tanker restrictions along the northern B.C. coast, aligning with earlier reports that the federal government is considering exemptions to facilitate new export routes. This component remains sensitive due to environmental and Indigenous concerns along the corridor.
Focus on Carbon Capture Investment
A central pillar of the deal is renewed momentum behind the $16.5-billion Pathways Alliance carbon capture and storage (CCS) project. The initiative would transport emissions from oilsands facilities to an underground storage hub near Cold Lake, creating one of Canada’s most ambitious decarbonization systems. Ottawa and Alberta view the CCS project as essential to meeting national and provincial climate goals while supporting the energy sector’s long-term viability.
