Premier Danielle Smith believes a framework for a federal-provincial agreement on ramping up Alberta’s industrial carbon price has largely been reached with Prime Minister Mark Carney — one that could be unveiled as early as this week.
And she believes the prime minister wants to see a new oil pipeline to the Pacific Coast go forward.
“Yes, absolutely,” Smith said in an interview.
“We’ve made our case that if we want to have an advantage in accessing Asian markets, then the best way to do that is to build a pipeline that is the shortest route to those Asian markets . . .
“If we are going to open up those markets and demonstrate that Canada works and demonstrate the partnership, it kind of makes sense for us to build a made-in-Canada pipeline, so I feel very confident.”
Alberta’s premier and the prime minister sat down Friday for a 45-minute chat in Ottawa, discussing their joint federal-provincial energy accord, which was signed five months ago.
Under the memorandum of understanding (MOU), Ottawa committed it will declare Alberta’s proposed bitumen pipeline to the Pacific Coast a project of national interest. It can be referred to the Major Projects Office, where it will be considered for expedited federal approval.
However, a new pipeline to the British Columbia coast depends on the massive Pathways carbon capture project in the oilsands advancing, a proposal that has not received the green light from members of the Oil Sands Alliance.
As part of the MOU, the province agreed to negotiate a new industrial carbon price agreement under its Alberta’s Technology, Innovation and Emissions Reduction (TIER) system, increasing the levy on large emitters to an effective rate of $130 per tonne, but the pact didn’t spell out when the level must be hit.
The price is currently frozen at $95 a tonne, although carbon credits trade at a much lower level.
The debate over the pace of the increase has led to protracted discussions, and the two sides missed an initial deadline of April 1 for a carbon price accord.
Related
One source told the Herald that the federal and provincial governments have now agreed Alberta’s effective carbon price needs to reach $130 a tonne by 2040, with stages and steps to reach that level.
The two governments are discussing the details of potential financial mechanisms — including a possible floor price and a contract for difference — in support of stabilizing the TIER carbon trading market.
Smith wouldn’t comment on the 2040 timeline or on specifics of the talks.
But she indicated the two sides made “substantial” advancements Friday and thinks they have the framework of an agreement on industrial carbon pricing.
“I would say yes, I think we do,” the premier said.
“We’re still inking the deal, and we just have to make sure that some of the undertakings that the prime minister and I had are worked out . . .
“We’ve given some direction to our various officials to finalize things and so we’ll just have to let that play out over the course of the next week.”
An information booth for the Pathways Alliance at the Oil Sands Trade Show in Fort McMurray on Sept. 10, 2025.
The broader MOU covers an array of energy and environmental issues, such as methane regulations, consideration of a new oil export pipeline to the Pacific Coast, and advancing the Pathways carbon capture project.
The decarbonization initiative, estimated to cost about $20 billion, would connect various oilsands facilities in northern Alberta to an underground CO2 storage hub near Cold Lake.
“In the face of global trade shifts, (Alberta’s premier) and I are working to build a stronger, more independent, and more sustainable economy,” Carney wrote Friday on social media.
“We met in Ottawa today to discuss how we can unlock the full potential of Alberta’s resources (and) lower emissions.”
Alberta hopes to submit its proposal for a new Pacific Coast pipeline to the federal Major Projects Office by the end of June.
“I feel with these final pieces that we’re working on, that both the prime minister and I realize the urgency, that industry is losing confidence. Albertans are losing confidence. We missed the deadline. It’s now almost six weeks after,” Smith added.
“And if we want to let people know that this new approach we’re taking to co-operative federalism works, then we have to have an agreement. And so, I think the prime minister shares my urgency.”
Once an industrial carbon price agreement is reached, it’s expected the two levels of government will turn to trilateral negotiations with the Oil Sands Alliance — a group of five of the largest oilsands operators, including Cenovus Energy, Canadian Natural Resources and Suncor Energy — on the proposed Pathways project.
Smith indicated the pipeline proposal will be given to the Major Projects Office next month, even if a deal on Pathways isn’t reached by that point.
“We’re going to put the major projects proposal in, but we are very conscious of the fact that the MOU links those two things, and so there’ll be an urgency.”
The negotiations continue as business leaders have pressed the federal government recently to streamline regulatory processes for project approvals, and to ensure industry can attract necessary investment needed to boost oil production.
“One of the goals of the current (federal) government is to increase exports to other jurisdictions,” Canadian Natural Resources executive chair Murray Edwards said in an interview last week.
“We’re supportive of a new pipeline, but to do that new pipeline, (it) is only required to the extent we can grow production. If we can’t grow production, we don’t need a new pipeline. If we can’t grow production, we don’t need Pathways. So, they all fit together.”
Canadian Natural Resources executive chairman Murray Edwards speaks to shareholders during the company’s annual general meeting at the Telus Convention Centre on Thursday, May 8, 2025.
On Friday, the energy industry saw some progress on the regulatory reform front.
The federal government released discussion papers that aim to overhaul the approval processes for new developments, saying these potential changes “would ensure federal reviews and decision-making timelines take no longer than one year, once all information from the project proponent has been received.”
Lisa Baiton, CEO of the Canadian Association of Petroleum Producers, welcomed the announcement, saying it has the potential to improve timelines, provide more certainty and simplify processes.
Business Council of Alberta president Adam Legge said the federal proposals should help restore investor confidence. He applauded the idea to put the Canada Energy Regulator in charge of making decisions over new pipelines, transmission lines and offshore energy projects.
“This puts Canada back in the game,” Legge said. “This gets us so much closer to where we can compete.”
The changes are positive, but governments still need to resolve outstanding policy issues, said Heather Exner-Pirot, director of natural resources, energy and environment at the Macdonald-Laurier Institute.
“That’s why I think you’re seeing this urgency and frustration. We are in purgatory until you know what the carbon price framework is going to be,” she said.
“This is going to be very tricky for Smith. It’s going to be hard to satisfy everyone, for Carney to satisfy everyone. So, I’m very curious how they solve it.”
Chris Varcoe is a Calgary Herald columnist.