In a significant development for Canada's energy sector, Alberta Premier Danielle Smith and Prime Minister Mark Carney have reached a preliminary agreement that could pave the way for a new bitumen pipeline to the West Coast. The memorandum of understanding, signed on November 27, 2025, represents a temporary victory for Alberta's energy interests while leaving many questions unanswered about the project's ultimate feasibility.
What Alberta Gains From the Agreement
The federal government has made several important concessions to Alberta as part of this preliminary deal. Most significantly, Ottawa has agreed not to impose its controversial cap on oil and gas emissions - regulations that have been in development since 2023 and that Alberta had argued would be disastrous for the province's economy.
Additionally, the federal government will exclude Alberta from clean electricity regulations that the province had challenged in court on federalism grounds. These regulations would have penalized stable electricity sources while incentivizing wind, solar and hydro power.
Other federal commitments include potentially lifting the B.C. tanker ban to facilitate exports and pledging to streamline energy approvals to take no more than two years. The agreement also contains provisions for advancing carbon capture and storage technology as well as nuclear energy development.
The Strings Attached: Alberta's Obligations
The memorandum comes with several conditions that could present challenges for Alberta. The province must backstop Indigenous co-ownership of both the proposed pipeline and a potential carbon-capture project, working in consultation with Indigenous leadership.
Alberta will also need to collaborate with British Columbia to ensure that British Columbians receive substantial economic and financial benefits from the pipeline project. This requirement for extensive collaboration with multiple stakeholders represents potential friction points that could delay the project timeline.
Perhaps most controversially, Alberta must raise its industrial carbon price from the current frozen level of $95 per tonne to $130 per tonne. While the memorandum doesn't specify when this increase must occur, if implemented for 2026, it would represent a significant cost increase for Alberta's energy sector.
A Cautious Path Forward
While the agreement marks progress after years of pipeline gridlock, experts caution against premature celebration. The memorandum represents an agreement to potentially agree on a pipeline rather than a firm commitment to construction.
The extensive requirements for Indigenous consultation and collaboration with British Columbia introduce multiple variables that could affect both the timeline and ultimate feasibility of the project. The increased carbon pricing requirement also means that Alberta's victory on the emissions cap comes at a significant financial cost to the province's energy producers.
As both governments move forward with this agreement, the real test will be whether the promising framework can be translated into concrete action that finally unlocks Alberta's energy potential while addressing environmental concerns.
