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By Ron Wallace
“In the past 10 or so years Canada has made policy mistakes that have caused the country to lose billions of dollars, by turning away from economic prosperity in favor of failing battery plants and other unprofitable green energy fantasies. Politics over economics has cost us dearly; we cannot miss the opportunity and the message again. Build the pipelines and get our oil and gas to market.” Adam Pankratz.
The past “lost decade” for Canada’s energy sector has cost Canada dearly. The Carney government claims that it has the will and the means to reverse that decline. Does it? The fast-approaching April 1, 2026, deadline for key elements of the Carney–Smith Memorandum of Understanding (MoU) has become a focal point for Canadian political and economic interests. That MoU, signed as a “Grand Bargain” with much fanfare on November 27, 2025, committed the federal and Alberta governments to negotiate a final agreement with industry for a new west‑coast bitumen pipeline, Industrial Carbon Pricing (ICP) and a Pathways CCUS megaproject. As the stakes escalate in face of roiling global oil markets is a viable deal in sight?
The MoU, designed to reset federal‑provincial relations on energy policy, requires Alberta to reach a negotiated industrial carbon pricing system (ICP) as part of a broader Canadian climate plan – one that would coordinate a federal–provincial–industry agreement for the ICP, emissions reductions and infrastructure approvals. As part of that process, the federal government offered to suspend proposed clean electricity regulations and to pause an oil and gas emissions cap in Alberta while offering tax credits for enhanced oil recovery (EOR). The MoU also contemplates adjusting or waiving the 2019 Oil Tanker Moratorium Act if a west coast pipeline is approved to enable and expand offshore oil exports from Alberta. This possibility has engendered serious opposition from the government of British Columbia and several First Nations. Notably, the MoU contained requirements for follow‑on agreements, such as the draft Canada‑Alberta Impact Assessment Cooperation Agreement. That agreement was released March 6, 2026.
Meanwhile, Canadian Natural Resources president Scott Stauth announced a suspension of investment in its Jackpine mine expansion project citing regulatory uncertainty associated with pending carbon pricing and rules for methane emissions. The company emphasized that the absence of a finalized federal–provincial emissions policy had created an economic burden that has prevented an assessment of the long‑term viability of the $8.25‑billion project noting that the project had been deferred “due to lack of finalization of government regulatory policies around carbon pricing and methane, which creates uncertainty and economic burden for a long-term growth investment.” The decision eliminated roughly $310 million from its 2026 capital plan and has delayed about $150 million in planned engineering work.
Geoff Russ subsequently commented:
“Investors, for now, still appear to like CNRL’s discipline. Analysts at Scotiabank and RBC raised their price targets this week after the company’s latest results, citing strong mining and upgrading performance and solid fundamentals. That is a reminder that public markets may reward restraint when policy risk clouds a long-dated investment…. when a company as large and experienced as Canadian Natural decides to wait, it is a sign that the real work of building a resource economy still lies beyond the podium.”
This underscores that, while it is critically important for Alberta and Canada to reach final agreements within the MoU for issues such as Industrial Carbon Pricing, it is equally important that those terms and conditions provide investment certainty sufficient to attract the private sector. Regrettably, the regulatory complexity that has developed in Canada under the Trudeau government has meant that that no major company has willingly stepped forward with a proposal to build or finance another new pipeline. This position was reflected by the CEO Greg Ebel of Enbridge who stated that a new pipeline was “not the type of risk” that the company was prepared to undertake: “I don’t think investors or the infrastructure companies should be taking on all that risk of the development in jurisdictions that have historically created” such political and policy challenges. Enbridge is Canada’s largest shipper of crude oil with a vast cross-border network and is also the company that proposed, at great cost to its shareholders, the Northern Gateway oilsands pipeline that was scrapped by the Trudeau Cabinet in 2016 after it was approved by the National Energy Board.
Alberta has initiated a broad strategy to reopen West Coast access and to reduce reliance on U.S. markets by choosing to fund the technical work required for a new pipeline proposal. Without a private sector proponent, the province has seen fit to generate the foundational analysis required for a federal review. In what is regarded as a notable shift, as provinces have generally not front‑loaded pipeline proposals, Alberta will act as the formal proponent for early engineering, routing and cost analysis by funding three pipeline companies with $14 million to provide it with technical recommendations for a proposed Alberta North Coast pipeline. The results of this work will be submitted to the federal Major Projects Office (MPO), created to accelerate projects deemed to be in the “national interest”. The three pipeline companies, Enbridge, South Bow and Trans Mountain are not acting as project proponents but as a technical advisory group for Alberta who will be the project proponent.
Nonetheless, there remain many hurdles for the proposed pipeline. Opposition from the government of British Columbia and Indigenous groups and the absence of interest from private investors must ultimately be addressed. Presumably, that task will fall to the MPO as it undertakes to assess many factors such as long-term capacity constraints, global market access challenges, technical readiness, alignment with the “National Interest” and commitments to Indigenous engagement. Then there are questions about how allowing limited tanker traffic off the northern B.C. coast would occur, as that would require a partial repeal of, or modification to, the North Coast tanker ban – before an expansion of port facilities in Prince Rupert or Kitimat could even be considered. Regrettably, the MoU sets out terms for a tanker ban that ‘may be lifted’ after the project is approved. That inherent uncertainty alone is probably a critical impediment for private sector proponents.
The MoU presupposes ambitious timelines that may, or may not, be realistic while attempting to reaffirm federal policies intended to strengthen Canada’s emissions trajectory, policies that are the backbone of Carney’s approach under its 2025 “Climate Competitiveness Strategy”, that seeks to balance Canadian competitiveness with climate ambitions with a long‑term carbon pricing trajectory rising to $170/t by 2030. However, it remains to be seen if the federal government can simultaneously achieve its ambitions to balance economic independence and energy security while retaining “global climate leadership”. The Alberta-Canada MoU is central for the federal government to achieve those ambitions.
Similarly, the Pathways Plus CCUS project is central to the success of the MoU. The attempt to “decarbonize” Western Canadian oil represents a monumental expenditure that is solely aimed at Alberta’s heavy oil production sector. In short, the attempt by Alberta to obtain a federally backed pipeline to provide long‑term, international market access is predicated upon an MoU that is, in turn, predicated upon a CCUS megaproject that is ultimately predicated upon an agreement for an Industrial Carbon Price. One could rightfully question if this regulatory house of cards has improved the prospects for any new pipelines.
Canada is already projected to fall well short of its 2030 emissions target, achieving only about half of the required 40–45% emissions reduction relative to 2005 levels under current trajectories. At a time of rising federal and provincial deficits, questions will inevitably arise about the financial viability of producing “decarbonized oil”. This requirement alone potentially compromises Alberta’s “Grand Bargain” and brings into question whether Alberta, or Canada, can afford it. Notably, the most prominent federal supporters of “decarbonized oil” have been less clear about the marketability of that oil which would demand a significant price premium. Although the federal government has asserted that that low‑emission oil will be more competitive in a net‑zero world, it does not claim that such oil will earn a price premium in global markets, choosing instead to frame decarbonization as necessary to avoid losing market share, not as a pathway to higher prices. This makes the point that, while the Carney government seeks selectively to promote decarbonized oil from Alberta as a competitiveness strategy, it stops short of demonstrating marketability at a premium.
The viability of this policy and regulatory house of cards will depend on a buy-in from the private sector, without which Alberta stands to gain none of the promised benefits from proposed federal concessions. In short, there can be no energy policy certainty without certainty for long‑term emissions regulations. Reaching a professionally structured agreement on industrial carbon pricing, one that aligns with private sector interests and avoids imposing undue financial pressure on taxpayers, is imperative.
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Dr. Ron Wallace is a former Member of the National Energy Board.
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