The controversial memorandum of understanding (MOU) on fossil fuel development between the federal and Alberta governments has undergone a dramatic metamorphosis, with the fossil companies it was meant to serve fighting hard to blow it up, while climate hawks who broadly opposed it try to preserve key elements of the deal.<\/p>\n
It was a very different scene in late November, 2025, when Prime Minister Mark Carney and Alberta Premier Danielle Smith signed<\/a> an agreement that called for up to 1.4 million barrels per day of additional oil sands development, at least one new pipeline from Alberta to Canada\u2019s West Coast, and a massive carbon capture and storage (CCUS) hub in northern Alberta. The MOU also committed<\/a> the two governments to:<\/p>\n \u2022 Refer the first of \u201cone or more private sector constructed and financed pipelines, with Indigenous peoples co-ownership and economic benefits\u201d to the federal Major Projects Office<\/a> by July 1, 2026;<\/p>\n \u2022 Introduce an \u201cadjustment\u201d to the federal ban on northwest coastal tanker traffic to give the pipeline access to Asian markets;<\/p>\n \u2022 Make each of the proposed megaprojects, the pipeline and Pathways, contingent on the other;<\/p>\n \u2022 Abandon the federal government\u2019s watered-down, long-delayed<\/a> cap on oil and gas emissions, which wasn\u2019t to take effect until 2030-2032;<\/p>\n \u2022 Suspend the federal Clean Electricity Regulations in Alberta pending a new industrial carbon pricing regime that was to operate through the province\u2019s Technology Innovation and Emissions Reduction (TIER) program, aiming to create certainty for investors with a minimum effective carbon credit price of $130 per tonne (Smith moved to undercut the TIER regulation<\/a> less than two weeks after signing the MOU);<\/p>\n \u2022 Adopt a methane equivalency agreement that provides for Alberta to reduce its emissions of the climate super-pollutant by 75% from 2014 levels by 2035, five years later<\/a> and from a more forgiving baseline year<\/a> 2014 as opposed to 2012) than Ottawa\u2019s commitment at the COP28 climate summit in 2023 (Alberta took steps to weaken its methane regulations<\/a> two days after that deal was announced);<\/p>\n \u2022 Develop a nuclear generation strategy by January 1, 2027;<\/p>\n In the immediate aftermath, federal environment and climate minister and lifelong climate hawk Steven Guilbeault<\/a> resigned from Cabinet, while Carney received a standing ovation<\/a> when he showed up to discuss the MOU with the Calgary Chamber of Commerce.<\/p>\n \u2022 Build thousands of megawatts of AI computing power, while building new grid connections to Alberta from British Columbia and Saskatchewan, to \u201cstrengthen the ability of the western power markets to supply low-carbon power to oil, LNG, critical minerals, agricultural, data centres, and CCUS industries in support of their sustainability goals\u201d;<\/p>\n \u2022 Ensure that British Columbians<\/a> \u201cshare substantial economic and financial benefits of the proposed pipeline.\u201d<\/p>\n That Was Then\u2026This Is Now<\/p>\n Since then, the April 1 deadline for many of the key elements of the MOU has come and gone<\/a>, amid reports that the details of an industrial carbon price had emerged as a key point of contention between the two governments. Bloomberg News reported<\/a> in late April that an agreement was within sight, and this week iPolitics said<\/a> the federal government is standing firm against industry opposition to what it calls an \u201cuncompetitive\u201d carbon price.<\/p>\n In March, the Canadian Climate Institute calculated<\/a> that the industrial carbon price would cost oil sands companies the equivalent of one Timbit per barrel.<\/p>\n But in the months since, fossil industry voices have been in an all-out messaging campaign to cancel major elements of the MOU.<\/p>\n The most recent leading edge of that effort was a May 1 Globe and Mail op ed by Martha Hall Findlay, a former Liberal Member of Parliament and now director of the University of Calgary School of Public Policy. Hall Findlay called<\/a> for Canada to abandon the carbon capture and storage hub, recently rebranded as Pathways Plus, that was meant to be a centrepiece of the \u201cgrand bargain\u201d in the MOU, after acknowledging that she\u2019d \u201cdevoted several years of my life\u201d to building the original industry alliance that pushed the project forward.<\/p>\n Instead, she said, Canada should pursue \u201ceconomic diversification\u201d by building new pipelines and other export capacity, without the CCUS project the industry had put forward as a way to offset its emissions. It was an abrupt turnaround from her reaction when the MOU was signed.<\/p>\n \u201cThe support wasn\u2019t always there\u2026 to have those two [Carney and Smith] in those roles talk about how absolutely critical the Pathways project will be to making all of this happen, I felt like I wanted to cry,\u201d she told<\/a> CBC at the time. \u201cFor those of us who\u2019ve been working on some of these things for a long time and feeling like sometimes it was just like banging our head against a wall, or a few walls\u2026 there\u2019s a huge amount to do, but today was extraordinary.\u201d<\/p>\n Even if proponents of the carbon capture hub had been able to attract investors, rather than lobbying persistently<\/a> for ever more generous<\/a> and possibly permanent<\/a> taxpayer subsidies<\/a>, the industry never acknowledged that the technology was still expensive<\/a> and prone to failure<\/a>\u2014and that even if it worked<\/a> as advertised<\/a>, it would never touch the 80% of the emissions in a barrel of oil that enter the atmosphere after end users burn the final product.<\/p>\n In her more recent op ed, Hall Findlay left those concerns behind by arguing for a radical reframe of the MOU.<\/p>\n \u201cIt is historic and remains critical not only for our national economy but our national unity,\u201d she said of the Nov. 27 deal. \u201cSo let\u2019s build on it. Let\u2019s reframe the effort into a better version of Pathways, one that uses its public-private and federal-provincial collaborations to support more [fossil] energy production and the building, instead of a CCUS project, of a pipeline to sell more of what we have to the world.\u201d<\/p>\n The newly-rebranded Oil Sands Alliance, previously known as the Pathways Alliance after it rebranded from Hall Findlay\u2019s original Oil Sands Pathways to Net Zero Alliance, issued a statement Monday contending that progress on the MOU has been too slow, The Canadian Press reports<\/a>.<\/p>\n \u201cGlobal events over the past few months highlight the importance of affordable, reliable energy in people\u2019s lives and to the health and well-being of national economies, including Canada\u2019s,\u201d the group wrote. [No disagreement<\/a> on that<\/a>\u2014Ed.]<\/p>\n \u201cWe are at risk of letting this opportunity pass Canada by,\u201d the alliance added. \u201cBecause of complex regulatory processes, uncompetitive carbon frameworks, and fiscal systems that do not incent growth, there has not been a major new greenfield oil sands project sanctioned in Canada since 2013 and investment has dramatically declined.\u201d<\/p>\n \u2018Meaningful Action\u2019 Wanted<\/p>\n The Calgary-based Pembina Institute challenged those claims in a fact check issued Tuesday.<\/p>\n \u201cIt is simply false to claim that carbon pricing and the Canadian regulatory environment have prevented new greenfield development in the oil sands,\u201d said<\/a> Janetta McKenzie, director of Pembina\u2019s oil and gas program. \u201cThere are greenfield oil sands projects that have long since received the necessary regulatory approvals, but that companies have chosen not to take forward.\u201d<\/p>\n Oil sands producers still increased production and increased revenues, but made a \u201cstrategic choice\u201d\u2014along with the rest of the global oil industry\u2014\u201cto protect shareholders from future price disruptions by moving away from long-term projects and investments, and instead focusing on cost-cutting through layoffs, efficiency through automaton, and economies of scale through corporate mergers,\u201d McKenzie added. \u201cAs a result, Canadian oil and gas production increased by more than 47 per cent from 2012-2023, setting new records each year up to and including 2025.\u201d<\/p>\n