8 Takeaways From Ottawa‑Alberta Pipeline and Energy Deal

Prime Minister Mark Carney and Alberta Premier Danielle Smith shake hands after signing an MOU in Calgary on Nov. 27, 2025. The Canadian Press/Jeff McIntosh

Prime Minister Mark Carney and Alberta Premier Danielle Smith signed an agreement on Nov. 27 that paves the way for a new West Coast pipeline if a private proponent comes forward, while also changing key energy policies introduced by the previous Trudeau government.

As part of the agreement, Alberta has also made certain commitments to reduce emissions.

A Pipeline With a Caveat

The memorandum of understanding (MOU) between Ottawa and Alberta allows for one or more privately financed pipelines, including a proposed route capable of carrying roughly 1 million barrels a day of  bitumen to Asia.

According to the document, the application for the pipeline will be ready to submit to the newly created Major Projects Office (MPO) on or before July 1, 2026. The office is meant to speed up regulatory approvals for projects deemed to be of national importance by the federal government.

The construction of a prospective pipeline project is tied to the creation of the proposed Pathways Alliance carbon capture project, which would compress CO2 into liquid form, ship it through a pipeline, and store it in a facility more than 1,000 metres underground.

Smith has pushed for a carbon capture project for over a year, calling it a “grand bargain” that would cost $10 billion to $20 billion, but be paid for with revenues from more oil being sold to international markets.

Adjusting Oil Tanker Ban

In order to get the oil from the pipeline to markets in Asia, it would have to be shipped via oil tankers. However, since 2019, there has been a ban on oil tankers carrying more than 12,500 metric tons of crude oil from docking or loading at ports on B.C.’s northern coast.

The MOU states that Ottawa could make an “adjustment” to the Oil Tanker Moratorium Act to allow the oil to be shipped to Asia. Smith has long been calling for the tanker ban to be overturned to allow oil to be shipped to international markets.

No More Emissions Cap, Net-Zero Emissions Electricity Grid

The MOU states that the federal government will not implement its cap on oil and gas emissions, which it had said in its latest budget may not be “required” due to emerging technologies such as carbon capture and storage. In 2023, then-Environment Minister Steven Guilbeault unveiled the federal government’s oil and gas emissions cap, requiring emissions in the sector to be cut by at least one-third by 2030.

In response, Smith said the cap acted as a de facto limit on production, calling it an “intentional attack by the federal government on the economy of Alberta and the financial well-being of millions of Albertans and Canadians.”

In late 2024, draft regulations were introduced that called for oil and gas operations to lower their greenhouse gas emissions by 35 percent below 2019 levels sometime between 2030 and 2032. The regulations were expected to come into force in 2026.

The MOU also says that Alberta will be exempt from Clean Electricity Regulations, which are aimed at decarbonizing Canada’s electricity grid by 2050, with interim targets to reduce emissions significantly by 2035. Alberta has been strongly opposed to this regulation, since the province heavily relies on natural gas for electricity generation.

Other Trudeau-Era Energy Policy Changes

Smith described the agreement as a “win for Alberta,” and noted that seven out of what she has called the “nine bad laws” relating to the energy sector are addressed by the deal.

Besides the removal of the emissions cap, exemption to the Clean Electricity Regulations, and adjustment to the tanker ban, the MOU also calls for a “cooperation agreement” on the Impact Assessment Act (formerly Bill C-69) by April 1, 2026, which Alberta has criticized as the “no more pipelines act” because of its strict environmental assessment requirements for major projects such as pipelines.

Other measures include lifting federal restrictions on energy companies’ environmental advertising, giving Alberta oversight of its industrial carbon tax, and working with the province to enable oil and gas exports.

On remaining federal policies the province opposes, Smith said Alberta’s court challenge may resolve the single-use plastics ban, while the EV sales mandate will likely need “significant modification or removal,” noting that Ottawa’s one-year delay suggests it may not be feasible.

Carbon Tax Change and Methane Emissions

The MOU also requires Alberta to increase its industrial carbon pricing system to a minimum of $130 a tonne. In May, Alberta froze its industrial carbon price at $95 per tonne through 2026, which put it out of sync with the federal government’s backstop price, set to increase to $110 per tonne in 2026 and $170 a tonne by 2030.

Smith had said following a meeting with Carney in October that she was open to adjusting it. “That’s part of why we’re having a conversation about how we adjust some of the programs,” she said when asked about the $95 per tonne price.

As part of the MOU, Alberta also committed to reduce methane emissions from the oil patch by 75 percent from 2014 levels by 2035.

The MOU reiterates that both Canada and Alberta have committed to achieve net-zero greenhouse gas emissions by 2050.

Reactions From BC, First Nations, Conservatives

In a landmark 2020 decision, the Supreme Court of Canada upheld a decision by a lower court that Ottawa has legal authority over pipelines between provinces. However, speaking this past June, Carney said Ottawa wouldn’t “impose” any projects on provinces while noting that projects will also need “the participation of indigenous peoples.”

That may make building the pipeline more difficult, given that the B.C. government and First Nations in the province have expressed opposition to parts of the plan. B.C. Premier Eby said on Nov. 27 that he was “anxious” that the project would distract from other projects with indigenous support, and said the pipeline still does not have a private proponent to build it or support from coastal First Nations.

“It cannot draw limited federal resources, limited indigenous governance resources, limited provincial resources, away from the real projects,” he said, adding that B.C. should have been “at the table” for discussions between Ottawa and Alberta.

Eby and coastal First Nations are also opposed to changing the ban on oil tankers operating off B.C.’s northern coast, citing environmental concerns.

Coastal First Nations President Marilyn Slett said this week that a pipeline to B.C.’s northern coast would “never happen,” as it is “fundamentally at odds with Canada’s constitutional, legislative and international obligations to coastal First Nations.”

Conservative Leader Pierre Poilievre also criticized the MOU, but for a different reason. He said the agreement doesn’t promise that a pipeline will be built, merely that “seven months from now, a pipeline proposal will be referred to a federal office for two further years of study.”

Poilievre said the federal government should “get out of the way,” get rid of the industrial carbon tax, and grant a permit for Alberta to build a pipeline.

Carney said that any pipeline project to B.C. would need indigenous co-ownership, and involvement from the B.C. government.

“Canada and Alberta also agree to engage meaningfully with Indigenous Peoples in both Alberta and British Columbia on this project, with the involvement of the B.C. Government for engagement with B.C. First Nations,” the MOU says.

Smith said that not all indigenous communities oppose the pipeline, and that such a project would also bring prosperity to them.

“As you can see, there are some leaders of some Nations that are in this room [who are] supportive as well, and that’s the nuance that happens,” Smith said in Calgary on Nov. 27 at a gathering of industry representatives.

Guilbeault Leaves Cabinet

Culture Minister Guilbeault, who was formerly the environment minister from 2021 to 2025, announced he was resigning from cabinet over the MOU on Nov. 27. He said he will remain in the Liberal caucus as the MP for the Quebec riding of Laurier-Sainte-Marie.

“When I entered politics, it was because I had a deep conviction that I could make a difference in fighting climate change and protecting our environment. My commitment to leaving a better world for the future of our children and our planet remains unchanged,” he said in his resignation letter.

Guilbeault said “environmental issues must remain front and center” and the decision to exempt Alberta from the Clean Electricity Regulations in exchange for stricter industrial carbon pricing rules and the Pathways project was a “serious mistake.” He also expressed disappointment in Carney government’s changes to the other policies he brought in as environment minister, such as dropping the consumer carbon tax and delaying the electric vehicle sales mandate.

Guilbeault, a longtime climate-change activist, had an adversarial relationship with Smith when he was environment minister, which led her to repeatedly call for him to be replaced.

Making a Pipeline Happen

It could likely be many years before a pipeline to the coast of B.C. could be built, although the MPO, which was created to speed up approvals, aims to reduce approval times to two years.

A key factor is the emergence of a private investor, which Smith says would materialize once regulatory requirements and other barriers are eased under the MOU.

Opposition from B.C. and First Nations would also add to complications in the process.

The Trans Mountain Expansion pipeline project to take oil from Alberta to the B.C. coast took around six years to build, from the start of construction in 2018 to becoming fully operational in 2024.

“We look at this as the start of a process. We’ve created some of the necessary conditions for this to happen, but there’s a lot more work to do,” Carney said on Nov. 27.

Smith said her government will hold Ottawa to its commitment.

“Although I am not blind to the fact that the people of Alberta have had the rug pulled out from underneath them too many times to count over the past 10 years, I also know that a new relationship and a new beginning needs a starting point grounded in good faith,” Smith said.