Prime Minister Mark Carney is expected to unveil an agreement with Alberta Thursday which could clear the way for a new oil pipeline in exchange for stronger environmental regulations, while also walking back some of Ottawa’s climate policies.
Alberta Premier Danielle Smith has said her government has been negotiating with Ottawa a “grand bargain” which would see the proposed Pathways Alliance carbon-capture project move forward alongside a proposed oil pipeline to the West Coast.
Speaking to reporters in Ottawa on Wednesday, Carney said the memorandum of understanding with Alberta “is about much more than one thing.”
“It’s about building this economy, it’s about making Canada more independent, and it’s about making Canada more sustainable,” Carney said, adding there would be “many aspects” to Thursday’s announcement.
Carney has vowed to make Canada an “energy superpower.” Standing in the way of a pipeline to the coast is the tanker ban, a moratorium prohibiting tankers from carrying more than 12,500 metric tonnes of crude oil in areas along the northern coast of British Columbia.
The tanker ban became law in 2019 under former prime minister Justin Trudeau and has been a prime target of the government of Alberta.
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B.C. Premier David Eby has called on Ottawa to keep the ban in place. The president of the Coastal First Nations in British Columbia said Wednesday an oil pipeline to the province’s north coast “will never happen.”
Carney and his ministers have maintained no pipeline will go through B.C. without the approval of the province and First Nations.
Carney was asked Wednesday if he told Alberta that Ottawa would end the tanker ban.
“It’s a good question for tomorrow,” Carney said. “I’ll answer it tomorrow.”
Other areas likely to be addressed in the memorandum of understanding include changes to Alberta’s industrial carbon pricing system, which Smith said last month she was open to adjusting.
In September, Alberta announced it would maintain its freeze on the industrial carbon price at $95 per tonne through 2026, putting it out of step with the federal government’s backstop price, which is set to rise to $110 per tonne next year.
Carney and his ministers have for months refused to say whether Ottawa would trigger the backstop on Alberta and on Saskatchewan — which ended its industrial carbon price altogether in April.
The government’s climate competitiveness strategy, released earlier this month with the federal budget, appears to rely heavily on strengthening the industrial carbon price. It also plots a course for the price per tonne beyond 2030 and marks improvements to the carbon markets that underpin the whole system.
Carbon pricing systems like Canada’s industrial version work by capping maximum allowable emissions. Companies that come in under the cap generate credits they can sell to companies that exceed it.
The credits are meant to make it more cost-effective for companies to invest in emissions reduction than to simply buy credits when they exceed the cap — but that means how much the credits can sell for matters.
If the price is too low, there is no incentive to invest instead of buying credits.
The government’s climate strategy also opened the door to ending Ottawa’s emissions cap on oil and gas producers — something Smith and industry representatives have also called on Ottawa to scrap.
Ending the emissions cap is, however, contingent on promised improvements to the industrial pricing system, a scaling-up of carbon capture and storage technology and enhanced regulations to cut methane emissions from the oil and gas sector.
© 2025 The Canadian Press