In a dramatic shift that marks the end of a decade of federal interference, Alberta Premier Danielle Smith has secured a landmark agreement with Prime Minister Mark Carney that fundamentally restores provincial authority over energy and environmental matters.
A New Era of Cooperative Federalism
The memorandum of understanding signed on Thursday, November 27, 2025, represents far more than just policy adjustments on pipelines, electricity regulations, and carbon taxes. This agreement signals a seismic change in federal-provincial relations, with Ottawa making a significant retreat from what many Albertans viewed as oppressive federal overreach.
The industrial carbon levy will now be set and collected exclusively by the Alberta government, with both parties agreeing to eventually raise it to $130 per tonne. This represents a major concession from Ottawa, which had previously imposed federal carbon pricing mechanisms against provincial wishes.
Key Victories for Alberta's Energy Sector
The deal includes several crucial wins for Alberta's energy industry. Success in carbon capture initiatives will be directly tied to approval for a bitumen pipeline to the British Columbia coast, creating a clear pathway for Alberta's energy exports. There could even be a carveout from the North Coast tanker ban to allow such a pipeline to proceed.
Ottawa has lifted the emissions cap and withdrawn the controversial clean electricity regulations, both of which had been significant points of contention. In another important change, oil and gas companies will now be permitted to make positive statements about their environmental efforts without facing multimillion-dollar fines.
Constitutional Authority Restored
The agreement effectively recognizes provincial jurisdiction across Alberta's energy economy, though this principle isn't explicitly stated in the document's wording. This represents a breathtaking reversal after years of federal policies that many constitutional experts argued violated Canada's constitutional division of powers.
Alberta had repeatedly challenged federal moves in court and consistently won, yet the previous Liberal government under Justin Trudeau continued implementing policies that undermined provincial authority. This federal approach cost Alberta billions of dollars in lost investment and created ongoing tension between Edmonton and Ottawa.
The timing of this breakthrough is particularly significant for Premier Smith, who will present the agreement to her United Conservative Party convention in Edmonton this weekend. Despite potential skepticism from some party members about any deal with Ottawa, the substantial nature of these concessions makes this unlikely to cause significant trouble for the premier.
The departure of former environment minister Steven Guilbeault from Carney's cabinet on the same day adds symbolic weight to the policy shift. Guilbeault had been the architect of many environmental policies that Alberta found particularly objectionable.
This new approach marks a return to what political scientists call cooperative federalism, with both levels of government agreeing to respond positively to each other's initiatives rather than issuing unilateral orders. For Alberta, this represents not just a policy victory but the restoration of constitutional balance that had been missing for over a decade.
