Six Million Tonnes: The Legal Significance Of The Pathways Plus Agreement

The July 2, 2026 Pathways Plus Memorandum of Understanding (MOU) has understandably attracted attention for its proposed West Coast oil pipeline, carbon capture support measures and broader federal-provincial collaboration. However, the legal significance of the agreement lies elsewhere. At its core, the MOU establishes a framework under which quantified emissions reduction commitments will ultimately be allocated among the participating Oil Sands Alliance companies and linked to both regulatory incentives and regulatory consequences.

The emissions reduction commitments

The centrepiece of the agreement is the commitment to construct carbon capture projects capable of capturing at least six million tonnes of carbon dioxide annually by January 1, 2035. The MOU also establishes targets for an additional five million tonnes annually by 2040 and a further five million tonnes annually by 2045. Importantly, the drafting distinguishes between these commitments. The initial six million tonnes is expressly tied to the construction of carbon capture projects, while the subsequent reductions may be achieved through additional carbon capture, technological innovation, production improvements or other agreed measures.

The MOU contemplates that these commitments will be allocated among the participating Oil Sands Alliance companies through Definitive Agreements to be negotiated later this year. Those agreements are expected to establish company-specific Commitment Milestones and Additional Emissions Reductions, both of which are defined terms in the MOU, together with the corresponding implementation framework.

Linking commitments to regulatory incentives

The proposed amendments to Alberta's Technology Innovation and Emissions Reduction (TIER) regime are central to that framework. Companies achieving their allocated Commitment Milestones would benefit from a reduction in the annual tightening of their Facility Specific Benchmarks from 2% to 1%, beginning when they achieve Final Notice to Proceed on their allocated carbon capture projects. For the subsequent emissions reduction commitments, the MOU contemplates progressively more stringent benchmark adjustments where company-specific commitments are not achieved, including recalculation of benchmarks using a 1.5% annual tightening rate for the 2040 commitment and a return to the full 2% annual tightening rate for the 2045 commitment. The MOU also contemplates the loss of the Stringency Incentive if previously achieved commitments are not maintained.

Many of the legal and commercial details remain to be negotiated. Nevertheless, the MOU establishes an important framework. Rather than relying solely on generally available fiscal support, it proposes a performance-based regulatory structure in which company-specific emissions reduction commitments are linked to corresponding modifications under Alberta's TIER regime. The Definitive Agreements will determine how that framework is implemented in practice.

For more information on this topic, please reach out to Bernard J. Roth, KC.

Thank you to summer law student, Ella Brown, for her contribution to this article.