Alberta And Canada Step Up To The Plate

On November 27, 2025, Prime Minister Mark Carney and Alberta Premier Danielle Smith signed a landmark Memorandum of Understanding (MOU) that promises to contribute significantly to Canada's competitiveness in the energy sector. This agreement comes at a pivotal moment, as Canada faces shifting global trade dynamics and rising energy demand driven in part by AI usage. The MOU reflects a shared commitment to economic growth, carbon neutrality by 2050, and national prosperity, while positioning Canada as a global leader in both conventional and clean energy.

Following the signing of the MOU, Prime Minister Carney addressed the province, including private industry, at an event hosted by the Calgary Chamber of Commerce. Premier Danielle Smith also made comments following the signing, referring to the agreement as "Alberta's moment of opportunity" to become a leader in global clean energy.

Contents of the MOU

The MOU centers on two transformative projects. The first is a proposed oil pipeline to the British Columbia coast, financed and constructed by the private sector and co-owned by Indigenous communities. The pipeline will be designed to transport one million barrels of low-emission oil per day to Asian markets. The second is Pathways Plus, which will be the world's largest carbon capture, utilization, and storage (CCUS) initiative. This project alone is expected to contribute $16 billion to Canada's GDP and create 40,000 jobs annually, establishing a new benchmark for low-carbon energy innovation. The pipeline will be integrated with Pathways Plus to ensure that Canadian exports remain competitive and sustainable.

The MOU outlines a series of additional initiatives, including:

1. The Province of Alberta (Alberta) will commit to reducing methane emissions by 75% over the next decade, collaborating with Canada on a nuclear development strategy to enable competitive nuclear power generation by 2050, and incentivizing investment in large data centres, including incentives for Canadian sovereign computing.
2. Large transmission interties with British Columbia and Saskatchewan will be developed to deliver low-cost, low-carbon power across provincial borders, including to industrial market participants.
3. Importantly, every project under this agreement will involve meaningful consultation with, and co-ownership opportunities for, Indigenous communities reflecting a commitment to reconciliation and shared prosperity.

Regulatory Commitments

A significant feature of the MOU is the co-operation between Alberta and the federal government to clarify and improve the regulatory environment related to the carbon and energy markets:

1. Alberta will raise its carbon price under the TIER program to $130 per tonne, aligning with federal goals for net-zero emissions by 2050 and departing from the previously announced provincial carbon price freeze. The two governments will collaborate to ensure the carbon market framework is efficient and reliable.
2. The federal government committed to:
   • exempting Alberta from the Clean Electricity Regulations pending a new carbon pricing agreement between the two jurisdictions, which is targeted to be completed by April 1, 2026; and
   • foregoing the Oil and Gas Emissions Cap, which was proposed by the previous federal government in November 2024, but never implemented.

Canada has also confirmed that if the new pipeline is approved as a nation-building project under the Building Canada Act and provides opportunities for Indigenous co-ownership and economic benefit, then it will provide regulatory assistance to ensure the bitumen it transports can be exported to Asian markets. Notably, the MOU indicates that this may be through an adjustment or exemption to the 2019 oil tanker moratorium. The moratorium prohibits oil tankers carrying over 12,500 metric tonnes of crude oil or persistent oil from stopping, loading, or unloading at ports or marine installations along British Columbia's northern coast. The MOU indicates that the federal government will offer support to export bitumen transported through the new pipeline from a strategic deep-water port.

Additional Comments

Prime Minister Carney emphasized, in comments made at the Chamber of Commerce, that this agreement is about more than pipelines, it is about industrial transformation and building a stronger, more sustainable economy. He highlighted the need for competitive, independent, and resilient energy systems, noting that Canada's historic reliance on US trade has become a vulnerability. The MOU promises a streamlined regulatory process for the pipeline, a clear path for private-sector investment, and a framework for Indigenous participation. These measures will be supported by expanded clean energy investment tax credits and a productivity super-deduction, reducing Canada's marginal effective tax rate for new investments to 13%, lower than both the US and other G7 nations.

The agreement also signals Canada's intent to attract global investment and diversify its energy portfolio. The announcement of a $70 billion foreign direct investment from the United Arab Emirates underscores international confidence in Canada's energy and technology sectors. Additional commitments include advancing LNG exports, developing critical minerals, and unlocking sovereign AI data centers to strengthen Canada's geopolitical position. These initiatives promise to not only drive economic growth but also ensure that Canada remains competitive in a rapidly evolving global economy.

Key Takeaways and Implications

There are several key themes embedded in the MOU that were echoed in the Prime Minister's speech. These include:

1. Pipeline Progress

The promise of a "one project, one review" approach for Alberta's portion of the pipeline signals a shift toward efficiency and predictability. This reinforces the commitment from the federal government to support pipeline development and interprovincial cooperation. The MOU clarifies that the new pipeline project would be in addition to an expansion of the Trans Mountain pipeline.

2. Capital Opportunities

The Prime Minister emphasized the federal government's commitment to tax incentives for clean technologies and carbon capture, alongside measures to attract private investment in major energy projects. These initiatives aim to encourage energy producers, infrastructure developers, and technology proponents to deploy capital toward decarbonization efforts and new infrastructure, including the proposed pipeline and Pathways Plus projects.

3. Indigenous Partnerships

Prime Minister Carney emphasized the importance of embedding Indigenous co-ownership and consultation into every major project. He highlighted the size and impact of the federal Indigenous Loan Guarantee program that is intended to support Indigenous ownership in and economic benefit from energy infrastructure projects.

4. Market Diversification

Market diversification was also highlighted as a central purpose and benefit of the MOU. Canada's strategic approach to energy infrastructure development is intended to reduce its dependence on the US market, improving resilience and prosperity. The new pipeline committed to under the MOU will prioritize Asian markets. The Prime Minister signaled potential flexibility on the oil tanker moratorium, as is also indicated in the MOU, suggesting further interest in streamlining delivery of LNG and bitumen to Asian markets.

5. Carbon Competitiveness

Decarbonization and low-carbon solutions are also core to the MOU and were a major theme of the Prime Minister's speech. The federal push for CCUS and methane reductions, as well as Alberta's commitment to raise its carbon price to federal standards, signal a competitive shift towards low-carbon markets.

6. Global Investment

The agreement between Canada and Alberta sends a strong, collaborative message to foreign investors that the country is serious about energy transformation and regulatory clarity. Combined with the foreign direct investment from the United Arab Emirates, the Prime Minister indicated that this signals positive and growing interest in Canada's energy market globally. The Prime Minister also highlighted that foreign direct investment brings key expertise in the energy industry, including in renewables, to Canada.

Next Steps

Alberta and the federal government will appoint an Implementation Committee responsible for meeting several deadlines. By April 1, 2026, we should see finalized carbon pricing and methane equivalency agreements as well as a cooperation agreement on impact assessments. By July 1, 2026, a formalized process for submitting an application to the Major Projects Office for the new pipeline project is expected to be clarified. The federal government has also agreed to provide feedback to Alberta's AI data-center policy framework, which will be finalized at the same time. Finally, Alberta's nuclear power generation strategy, in collaboration with the federal government, has a target complete date of January 1, 2027.

By combining federal and provincial strengths, engaging Indigenous communities, and attracting global investment, Canada is positioning itself as a leader in the next era of energy and industrial transformation. The Prime Minister also emphasized that Canada's economic growth will involve large amounts of investment in critical minerals, applied research, security, and social infrastructure, stating that together with Indigenous communities, we will build a stronger, more sustainable, and more prosperous economy.

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