In a significant development for Canada's energy sector, Prime Minister Mark Carney has reached a landmark agreement with Alberta Premier Danielle Smith that could pave the way for new oil pipeline construction to Asian markets.
Major Concessions for Energy Cooperation
The federal government will suspend clean electricity regulations in Alberta and consider making an adjustment to the federal oil tanker ban off British Columbia's coast. These substantial concessions come in exchange for Alberta strengthening its industrial carbon price, marking a compromise between environmental concerns and economic development.
The commitments were formalized through a memorandum of understanding signed on November 27, 2025 in Calgary by both Carney and Smith. This document outlines how both jurisdictions will collaborate on energy projects and work toward transforming Canada into what Carney promised during the spring federal election campaign: a global energy superpower.
Pipeline Projects and Environmental Commitments
The agreement specifically addresses the construction of one or more private sector constructed and financed pipelines that would carry one million barrels per day of low-emission Alberta bitumen to Asian markets. Importantly, this new pipeline project would be in addition to the expansion of the Trans Mountain pipeline.
In a balancing act between energy development and environmental protection, the deal links the new bitumen pipeline to the advancement of a massive carbon capture and storage project in Alberta. Both Carney and Smith committed to negotiating a trilateral agreement with the oilsands partner behind this proposal.
The agreement maintains that both Alberta and Canada remain committed to achieving net-zero emissions by 2025, demonstrating the complex interplay between energy development and climate goals.
Specific Terms and Timelines
Premier Smith committed to several key actions under the agreement. Her United Conservative Party government will submit a pipeline proposal to the federal major projects office by July 1, and she agreed to work with Ottawa on negotiating a new industrial carbon pricing agreement before April 1, 2026.
For his part, Prime Minister Carney committed to declaring the pipeline proposal a nation-building project. If ultimately approved under a special cabinet designation, his government would enable bitumen export from a strategic deep-water port to Asian markets, potentially requiring an adjustment to the Oil Tanker Moratorium Act.
The immediate suspension of clean electricity regulations will occur in exchange for Alberta hiking its industrial carbon price, which the province had frozen earlier this year.
Additionally, both governments committed to negotiating a new methane equivalency agreement before April 2026, setting a target of reducing methane emissions by 75 percent below 2014 levels by 2035.
This comprehensive agreement represents one of the most significant energy policy developments since Carney took office, balancing economic ambitions with environmental responsibilities while addressing long-standing tensions between federal and provincial energy priorities.
