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(Reuters) – Canada’s Prime Minister Mark Carney signed an agreement with Alberta Premier Danielle Smith on Thursday aimed at spurring investment in the energy sector and encouraging the construction of a new oil pipeline to the West Coast.
The agreement states the federal government will not implement an emissions cap on the oil and gas sector and gets rid of regulations for clean electricity in exchange for a commitment from Canada’s top oil-producing province to strengthen industrial carbon pricing and support a carbon capture and storage project.
Carney is counting on energy to help the Canadian economy weather uncertainty from U.S. President Donald Trump’s tariffs and has relaxed some environmental restrictions implemented by his predecessor Justin Trudeau. Canada is trying to diversify away from the U.S. market in the wake of Trump’s trade policies. It currently sends 90% of its oil exports to the United States. Reuters first reported on a potential deal between Carney’s government and Alberta involving the elimination of the emissions cap in September.
Alberta is exploring the feasibility of a new crude pipeline to British Columbia’s northwest coast in order to increase Canadian oil exports to Asia, but no private company has committed to building a new pipeline. The Trans Mountain pipeline, which is owned by the Canadian government and is currently the only option to ship Canadian oil directly to Asian markets, tripled its capacity last year with a C$34 billion ($24.2 billion) expansion.
Reporting by Promit Mukherjee and Amanda Stephenson; Editing by Caroline Stauffer and Rosalba O’Brien
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