Canada to drop oil & gas emissions cap, build new West Coast oil pipeline
28 November 2025
Canada’s Prime Minister Mark Carney and Alberta Premier Danielle Smith have signed a memorandum of understanding (MOU) that could bring a new direction to the country’s energy and climate policy. While re-stating the goal of net-zero GHG emissions by 2050, the MOU includes provisions to strengthen Alberta’s oil & gas industry by relaxing several environmental laws that the Province of Alberta has taken issue with in recent years and to expand the exports of Alberta oil to Asian markets.
“Alberta and Canada will work together to achieve the shared objective of establishing Canada as a global energy superpower, unlocking the growth potential of Western Canada’s oil and gas (including liquified natural gas (LNG)), renewable energy, critical minerals, and other resources that the world needs,” states the MOU.
Under the MOU, the Canadian federal government and the government of Alberta will work together to develop a new privately-funded bitumen pipeline—with Indigenous Peoples co-ownership—through northern British Columbia. The pipeline would have a capacity of at least 1 million barrels per day and “a route that increases export access to Asian markets as a priority.” The MOU does not specify the exact route of the new pipeline. If the pipeline is approved, Canada will enable the export of bitumen from “a strategic deep-water port” to Asian markets.
The MOU also provides that Canada will not implement the Oil and Gas Emissions Cap regulation and will suspend the federal Clean Electricity Regulations (CER) in Alberta pending a new carbon pricing agreement. The regulations have been opposed by the industry and have been characterized as “bad laws” by the Alberta Premier Smith.
The projects envisioned by the MOU include a carbon capture, utilization, and storage (CCUS) project Pathways—described as the world’s largest—including CO2 capture and storage facilities and a CO2 pipeline. While the MOU is not specific about the CO2 utilization methods, the government of Canada commits itself to policy support for both CCUS and for enhanced oil recovery (EOR), which suggests that EOR could be one application for the CO2 captured by the Pathway project.
A large part of the MOU is devoted to power generation and electrical grids. The key power system projects would include construction of “thousands of megawatts” of power for computing data centers—with a large portion dedicated to sovereign cloud for Canada and its (unnamed) allies—and large transmission inter-ties with British Columbia and Saskatchewan.
The new energy sector MOU, including the pledge for an oil pipeline, was criticized by the Premier of British Columbia, while other Canadian provinces supported the proposals.
Source: Prime Minister of Canada