There was a brief, telling moment when Prime Minister Mark Carney was onstage at a Calgary Chamber of Commerce event last year, following the announcement of a memorandum of understanding with the Alberta government for a new “private sector constructed and financed pipeline” to the West Coast. 

Deborah Yedlin, the CEO of the chamber, mentioned the agreement’s stipulation: the project needed a private proponent rather than public funding. Then she said the project required “derisking.”“Are you saying there’s no room for the government to derisk something for a period of time in order to attract private capital that’s needed for a project like that?” she asked Carney. In other words, how far was Carney willing to go to protect industry from losses?Carney listed off moves his government was making, including regulatory clarity, tax incentives and loan guarantees to move the project forward. And then he said: “In essence, the Asian pipeline will be a private sector project …”

That one word, essence, bore considerable weight. 

So too did the timing of the Oct. 1 announcement that the pipeline — now known as Pacific Link — would be the first project of national interest listed under the federal government’s sweeping Building Canada Act. It comes just over two weeks before Alberta holds a referendum on whether to hold an independence referendum, as well as a slew of questions aimed mostly at immigrants. 

From the beginning, the pipeline plan was a political one, based on a calculus that can be hard to understand outside of Alberta, where decades of government and industry messaging has succeeded in tightly weaving oil and gas into the province’s culture. 

Never has that narrative been pushed harder than by the United Conservative Party government, first under former premier Jason Kenney and now amplified even more under Premier Danielle Smith. 

Having directly linked the future of the country with deregulation for the oil and gas sector, Smith now faces the headwinds of that rhetoric in the form of a burgeoning separatist movement. It’s one she has aided to protect herself from an influential secessionist base in her party. 

It’s a situation Carney has recognized and attempted to shape, acquiescing to Alberta’s demands in an effort to shore up a united front as threats from the United States grow more stark. 

The prime minister might have promised Canadians a “private sector constructed and financed pipeline” in last fall’s memorandum. But it was clear from the beginning he was willing to pay a premium to achieve peace. 

How Alberta’s politics of wealth and alienation fuelled the Pacific Link promise

After their first meeting in March of last year, Smith threatened Carney with an “unprecedented national unity crisis” if he did not respond to a list of demands almost entirely focused on boosting the oil and gas sector. 

It was part and parcel of a wider campaign to link Alberta’s political and economic fortunes more tightly with fossil fuels, including moves to designate emissions data as critical infrastructure to prevent the federal government from accessing it and put up regulatory and economic hurdles to block renewable energy development. 

Smith’s actions are part of a long history of resentment that stretches back as far as the creation of the province, when the federal government denied Alberta control over its natural resources, a move that was later reversed. 

There’s an entire mythology of eastern Canadian domination built up around the National Energy Program introduced by Pierre Elliot Trudeau in the early 1980s, which still resonates with separatists and mainstream conservatives alike. In this century, the climate actions of his son Justin Trudeau inflamed a new sense of subjugation in the oil patch. 

Those resentments and mythologies have been curated by successive Alberta governments as an easy way to rally Albertans to their cause and help cover up internal failures, particularly when it comes to budget crashes. And now it has reached a fever pitch. 

Carney, a veteran of Brexit and big brain amidst big brain money makers, recognized the weight of Smith’s threat and an especially restless Alberta, particularly as the geopolitical landscape shifted under his feet. He wasted no time in wooing her, and her province. 

He has proven willing to deregulate and slash emissions programs and targets to help industry. Now, he’s opening the federal government’s hefty purse to buy peace. The pipeline will cost billions, without any promise that price will be enough to please Smith’s government and the powers it has unleashed. 

Pacific Link pipeline promise is rushing to meet a very specific moment

Pacific Link is moving fast, because it’s meant to meet this specific moment: oil prices are high, Alberta separation is occupying vital political real estate, and a trade war with the U.S. is both threatening Canadian well-being and galvanizing political will for big risks and fast action. 

In this rush, it’s easy to lose sight of the fact that many important details still aren’t finalized — such as the route, financing and oilsands companies meeting requirements for a massive carbon capture and storage project.

All of this makes meeting this specific moment difficult, to say the least. It will be years before the pipeline is online. 

There are also serious questions about investing billions of taxpayer dollars into a project for a sector facing possible reductions in demand and a global shift away from the uncertainty of oil markets. Not to mention concerns over the impacts of increased emissions and the reduced ambitions for carbon capture. 

Despite this announcement, the referendum will still take place. The provincial government is spending millions to tell Albertans to send Ottawa a message and stand up for a more sovereign province. Its list of demands remains, even if Smith is playing nice with Carney for the time being.

The willingness of the Alberta government to act in good faith is also questionable. Only days after it signed last fall’s memorandum with the federal government, it went ahead with changes which undermined its industrial carbon price that it promised to strengthen in the agreement. 

That’s the same memorandum containing the broken promise of a “private sector constructed and financed pipeline.” It all suggests Donald Trump isn’t the only Western leader who signs agreements in pencil. 

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Summary

• As polls suggest a majority of Canadians support building new pipelines, the Alberta government is proposing a new pipeline to the West Coast to help boost production in the oilsands.
• The terms of the pipeline proposal name Alberta and the Canadian government together as majority owners, suggesting taxpayers will foot much of the construction bill.
• Pipelines are very expensive to build. A recent analysis of the federal government’s Trans Mountain pipeline, which is already operational, showed that the pipeline’s revenues aren’t high enough to cover its construction and debt costs, making it a money-loser for taxpayers.

Pipelines, pipelines, pipelines. No matter how you feel about them, it’s hard to escape news of them lately. 

In July, the Alberta government announced it is formally proposing another pipeline to the West Coast. On the weekend, the federal government took another step towards designating the pipeline as a project in the national interest, meaning environmental assessments and other parts of the approval process could be fast-tracked.

Recent polling shows the majority of Canadians — 63 per cent according to the Angus Reid Institute in July — support that new pipeline from Alberta to B.C.

Why? Mostly for economic reasons. A majority told pollsters they were convinced by the argument that Canada needs to diversify its oil markets away from the U.S., while half said oil is just generally important to the economy. Forty-five per cent said the project would create jobs. 

The economic forecast, though, isn’t quite that simple. There’s still the question of who’s going to pay for it. A poll commissioned by the Pembina Institute and conducted by Probe Research in April found a majority of Albertans — 61 per cent — say they don’t want to spend taxpayer money on a new pipeline.

It’s increasingly clear: many Canadians say they do want a new pipeline, but they don’t want to pay for it. Companies aren’t exactly lining up to build new pipelines by themselves either. That raises a question: why?

So what are the economics of a pipeline in Canada? Do they make money? Here’s what you need to know.

How much do pipelines cost to build?

No one is going to build a pipeline on a shoestring. These are multibillion-dollar projects, often crossing multiple provinces. Even expanding an existing pipeline, or building along an existing pipeline route is a huge endeavour involving tens of thousands of people working on the project.

Take the Trans Mountain Expansion project, as an example. That increased the capacity of an existing pipeline, built in the 1950s, from Alberta to the West Coast. That expansion project ultimately cost taxpayers $34 billion — notably, that’s almost $30 billion more than initial estimates. 

The latest pipeline idea making headlines was proposed by the Alberta government, with an estimated cost pegged at between $35.2 billion and $43.7 billion. That proposal was brought forward alongside the federally owned Trans Mountain Corporation, which will lead the project, and Pembina Pipeline Corporation (which is not connected to the Pembina Institute that held the poll). 

Under the proposed partnership, Trans Mountain and the Government of Alberta — through the Alberta Petroleum Marketing Commission — would hold a majority interest. 

So who would actually own it? Well … taxpayers, in a way.

How much have taxpayers spent building pipelines in the past?

It varies. Canadian taxpayers have been on the hook for billions since the Government of Canada purchased the Trans Mountain pipeline in 2018.

And maybe that’s okay. Some would argue that pipelines are infrastructure, much like highways or railways. Others disagree that billions of dollars of public money should be put toward increasing oil and gas infrastructure.

Nonetheless, it continues to happen. TC Energy’s cancelled Keystone XL expansion was backstopped by Alberta taxpayers to the tune of $1.5 billion in 2021.

And it’s happening again. Alberta’s government has already contributed a little more than $18 million to its latest pipeline plan, saying the money went to early planning work “including preliminary engineering, cost estimates, economic modelling, early Indigenous engagement with communities and development of the proposal for federal consideration.”

The Alberta government calls it a “myth” that it will pay for the entirety of the pipeline, saying, “Now that this preliminary work is done, we will work alongside Trans Mountain and Pembina Pipeline to move this project ahead.” But Pembina Pipeline currently has only a 10 per cent stake in the project.

So, in the end, it appears if the West Coast pipeline project moves ahead, it will be governments — and taxpayers — who foot much of the bill.

“I am quite comfortable that this is a good investment for Canadian taxpayers,” federal Energy and Natural Resources Minister Tim Hodgson told CBC in July.

How does a pipeline operator make money?

Whether pipelines are owned by companies or governments (and taxpayers like you), they charge fees for companies to move their products. The fees paid to use pipelines by companies such as oil producers are called tolls or tariffs. 

The Canada Energy Regulator oversees pipeline tolls, saying it ensures “they are just and reasonable.”

According to the regulator, tolls “cover the company’s cost of service, including a fair and reasonable return to pipeline investors.” Rates vary based on many factors: whether there’s a long-term commitment to shipping, how far, what the product is and how much of it.

The Trans Mountain expansion ended up costing so much that the tolls it charges customers to move oil are higher than expected. Still, according to the International Institute for Sustainable Development, only $15.4 billion of the $34-billion cost of the pipeline is covered by the tolls it charges.

Does running a pipeline actually make money?

Let’s look at Trans Mountain Corporation as an example — that pipeline we all own together. 

The company says it is now profitable. It reported its net income for 2025 was $556 million — up from $5 million the year before.

It’s what Minister Hodgson described to CBC as “generating oodles of cash.” 

But that claim has raised some eyebrows. And untangling it is complicated. 

The Trans Mountain Corporation is a wholly owned entity of another company, Canada TMP Finance Ltd., which is itself a subsidiary of Canada Development Investment Corporation, the entity which holds the Government of Canada’s investment in Trans Mountain. Still following? 

Let’s do it in the opposite direction. The Government of Canada owns a Crown corporation. That corporation has a subsidiary, which then in turn owns Trans Mountain Corporation. Hopefully that helps.

The debt of the expansion, and the interest on that debt, isn’t paid off. But Hodgson can claim the pipeline is profitable because of the confusing corporate structure of which Crown corporation holds its construction debt and pays the interest, and which takes in the tariffs, according to a report from the International Institute for Sustainable Development.

The author of the report described Trans Mountain’s profit claims to The Tyee as a “misrepresentation of finances.”

Trans Mountain Corporation did not respond to questions from The Narwhal by publication time.

But a company’s balance books aren’t the only way of looking at it. Industry advocates argue pipelines generate money in other ways too, including tax and royalty revenues and making oil prices more competitive.

For example, a 2024 report from a group created for Alberta credit unions argued the Trans Mountain expansion project resulted in a significant increase in access to markets for Alberta oil and that access significantly narrowed the price difference between a type of Western Canadian oil called Western Canadian Select and a type sold out of Texas called West Texas Intermediate. The report estimated this had already increased revenues by about $10 billion in the first six months the pipeline expansion launched.

There’s little doubt that producing and exporting oil and gas makes money for Canada — and especially for oil and gas companies themselves. But many have argued a fuller accounting would include the significant costs of the health risks, environmental degradation and other damage that comes from increasing carbon pollution from the burning of fossil fuels.

What are the costs of carbon pollution from increasing oil production?

Fossil fuel production is driving climate change and the consequences are being felt today. Life is more expensive, cities have dirtier air from wildfires, deadly heat waves and other extreme weather are more common, First Nations are disproportionately threatened with disasters and Canadians are more at risk of poverty, heart disease, cancer and premature death.

As The Narwhal has reported, it’s possible, at least broadly speaking, to compare the economic output of fossil fuels with health costs. The federal energy regulator, for example, has reported the total value of crude oil exports from Canada was $138 billion in 2024. A Health Canada report that same year found the total cost of health impacts attributable to air pollution in 2018 was $146 billion. The cost of many foods produced here is also rising as farming becomes less predictable. 

Estimates vary, but the short answer is climate change is expensive. A 2022 report from Queen’s University projected trillions of dollars in losses in Canada due to climate change this century, with the greatest contributor to that change being the burning of fossil fuels.

Does Alberta produce enough oil to fill a new pipeline?

Trans Mountain is currently “Canada’s only pipeline system transporting oil products to the West Coast.” The company says its 1,200-kilometre pipeline network has room for 890,000 barrels of petroleum products to be shipped each and every day. 

The new pipeline proposed by the Alberta government would be capable of transporting one million barrels of crude oil per day from the Edmonton area to the West Coast.

If it goes ahead, that would significantly increase the network of pipelines leading from Alberta.

There are already several other pipeline systems in use — leading to other locations in the U.S. and eastern Canada — and according to the Alberta Energy Regulator, all of them together could carry 5.4 million barrels per day. 

Currently, Alberta produces an average of more than four million barrels of oil per day. That suggests Alberta’s oil production stands to increase substantially if a new pipeline is going to be filled each and every day. 

Meanwhile the International Energy Agency has predicted global demand for oil from combustible fossil fuels may peak as early as 2027 — raising questions about the long-term outlook for expanded oilsands production.

— With files from Drew Anderson and Carl Meyer

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Summary

• Two decades of records show Canadian politicians making big promises about carbon capture technology.
• In 2008, one government report claimed Canada could capture as much as 600 million tonnes of carbon a year — and carbon capture technology could be “implemented quickly.”
• From 2000 to 2024, a total of just 68.7 million tonnes of carbon dioxide was captured across Canada and experts say the technology has yet to be proven at scale.

It was March 2007. Apple had just debuted the iPhone. The Iraq War was raging. Al Gore’s An Inconvenient Truth had won two Oscars. And the prime minister of Canada was talking about “the exciting new technology called carbon capture and storage.”

“Instead of pumping tonnes of carbon dioxide into the Earth’s atmosphere, we may be able to collect it from our oilsands, our coal-fired electrical plants and other industrial emitters, and pump it deep underground where it will remain for eternity,” Stephen Harper told a crowd of journalists at an event in Edmonton that year.

“If we can perfect this technology, we can use it not only to curb Canada’s contribution to greenhouse gas production, but we could also export it around the world.”

It was the beginning of a long line of claims from political leaders in Canada about how carbon capture could slash planet-warming industrial emissions, including in the oilsands, the world’s fourth-largest proven oil reserve, where 159 billion barrels lie buried under Albertan sand and clay.

For close to 20 years, both Liberal and Conservative governments have talked about using carbon capture and storage technology to filter out carbon dioxide, a greenhouse gas, from exhaust streams and store it so it doesn’t get released into the atmosphere, where it traps heat and causes climate change. Yet, while oilsands carbon pollution more than doubled from 2007 to 2024 to 92 million tonnes, the ability of facilities in Canada to capture carbon from industrial sources hasn’t yet grown beyond a few million tonnes of emissions per year.

Meanwhile, the consequences of fossil fuels and climate change are being felt today. Life is more expensive, cities have dirtier air from wildfires, deadly heat waves and other extreme weather are more common, First Nations are disproportionately threatened with disasters and Canadians are more at risk of poverty, heart disease, cancer and premature death.

Around the time Harper spoke in Edmonton, mining the oilsands was thought to be generating 26 million tonnes of emissions. Since then, the federal national inventory report has recalculated historical emissions using updated methodologies and new data to find it was closer to 41 million tonnes. The petroleum in the oilsands starts as a viscous goo called bitumen, and takes large amounts of electricity, steam, fuel and heavy machinery to mine and transform into usable products. This extra activity means oilsands production has been associated with more emissions than some other oil deposits, adding to its climate impact when its end products like gasoline are eventually burned for energy.

There was also a boom happening when Harper made his remarks. Investment in the oilsands had tripled from 2003 to 2007, leap-frogging manufacturing, while oil and gas operating profits had doubled. Office space in Calgary, where many oil companies are headquartered, had dried up as the province rode a wave of record-low unemployment. By 2009, production levels from the oilsands would muscle out other forms of oil production in Canada.

Scientists agree the way to slow the chaos unleashed by climate change is to stop using so much oil, gas and coal. But Harper wasn’t about to impose strict government limits on oilsands emissions that day in 2007. Instead, he would talk about using carbon capture as a possible environmental and economic solution.

“This is a dream that could truly change the world,” he said.

“Friends, the era of empty rhetoric on the environment is over. We’re taking real action that will produce real, tangible results.”

Nineteen years later, that dream is still waiting to be realized.

From 2000 to 2024, 68.7 million tonnes of carbon dioxide was captured in the country, Environment and Climate Change Canada confirmed to The Narwhal. That means the oilsands added more emissions to the atmosphere in one year, 2024, than carbon capture equipment has ever stopped from industrial sources over roughly a quarter-century.

It’s also a small fraction of the capture amounts once thought possible. A 2008 report that came out of Harper’s announcement said Canada could theoretically capture as much as 600 million tonnes a year, and that carbon capture could be “implemented quickly, within a decade, using existing technology.”

Carbon capture and storage “is a viable way to achieve significant domestic greenhouse gas reductions,” the report stated, and is a “must-have for western Canada which relies on fossil energy.”

Instead, after tremendous attention and investment, this year Canada will be able to capture “on the order of several [million] tonnes per year,” a Natural Resources Canada spokesperson told The Narwhal. (The department declined to offer a precise figure when asked.)

Capturing this amount when the oil industry is sending so much more into the air is equivalent to taking a million cars off the highway while 30 million more drive up the on-ramp.

“Carbon capture has never, ever been proven at scale, or price. That’s just a fact,” Catherine McKenna, a former environment minister under the Justin Trudeau government, said in an interview.

“The oil and gas companies talked to me about carbon capture and storage, and made promises, for like a decade. We have yet to see anything.”

Now, like Harper before him, Prime Minister Mark Carney is putting his faith in carbon capture technology to do the heavy lifting, while he advocates for more oil production.

Carney struck a deal with Alberta that promises not to follow through with a Trudeau-era proposal for an emissions cap on the oil and gas sector.

Instead, the deal, meant to grow oil production and get a new oil pipeline to the West Coast built, includes an agreement to build a carbon capture and storage network in the province.

In July, five oilsands companies agreed to terms that envision using carbon capture to suck out six million tonnes of oilsands emissions per year by 2035. The project, dubbed Pathways, is supposed to use a “range of technologies” to eventually capture 16 million tonnes per year by 2045.

“The Alberta [deal] will build carbon capture and storage,” Carney said in Parliament in January. “It will build our future.” The deal, he told reporters in June, is about “working together, getting results for the citizens.”

His minister of energy and natural resources, Tim Hodgson, a former oilsands company board member, told a Calgary business crowd last year that the government, as much as private industry, should be pulling to get Pathways off the ground.

“All of us — governments and industry — need to get the Pathways project done. This government will not be a government of talk, but a government of action,” Hodgson said.

The federal government was boasting about being ‘a world leader in carbon capture’ in 2011

Harper’s full remarks from that day in 2007 are held at the national archives in Ottawa, where The Narwhal listened to a recording of them in June.

But plenty of other comments exist online in the public record of others talking optimistically about carbon capture to lower emissions.

In 2011, for example, Harper’s then-natural resources minister Joe Oliver said Canada was “a world leader in carbon capture and storage” and was “in an excellent position to use this technology on a wide scale.”

The next year he repeated this message: “Canada is in an excellent position to lead the world in the development, implementation and deployment of carbon capture and storage technology.”

In 2013, he said the government was “devoting significant amounts of money to carbon capture and storage, and we are doing that in co-operation with companies.”

Oliver now opposes the latest carbon capture proposal in the oilsands, in part because of the technology’s spotty track record and uncertain impact.

The trend continued after Trudeau’s Liberal government won power in 2015. Trudeau’s first natural resources minister, Jim Carr, told a ballroom full of energy analysts in New York in 2016 that carbon capture is one of “the most pressing issues of the day.”

The next year, he said carbon capture improves Canada’s “environmental performance.”

One of Carr’s successors, Seamus O’Regan, would describe carbon capture as “an integral part of lowering emissions” and said it was part of “how we get to net zero.” In 2021, he told CBC News Canada was “on the cusp of doing a lot of these things.”

François-Philippe Champagne, who in 2024 was Trudeau’s industry minister and is now finance minister, described Canadian companies then as “world leaders in carbon capture” and portrayed it as one of the “clean-tech solutions for the net-zero economy.”

(Story continues below.)

Two decades of political support for carbon capture

• Jan. 23, 2006: Harper Conservatives win minority government
• May 11, 2006 “Canada is already on the right track, particularly in research on energy efficiency, alternative energy sources and carbon capture and storage technologies. These technological advances will help us reduce greenhouse gas emissions and will enable Canada to capitalize on its huge energy potential for the benefit of all Canadians.”— Christian Paradis, parliamentary secretary to the minister of natural resources, in Parliament
• March 8, 2007 “Instead of pumping tons of carbon dioxide into the Earth’s atmosphere, we may be able to collect it from our oilsands, our coal-fired electrical plants and other industrial emitters, and pump it deep underground where it will remain for eternity. … Friends, the era of empty rhetoric on the environment is over.”— Stephen Harper, prime minister, Library and Archives Canada
• April 4, 2008 “Our government is ensuring that Canada is at the leading edge of clean technologies to reduce emissions and adapt to environmental change. That is why in Budget 2008, we announced $5 million … [to] address outstanding issues in the deployment of carbon capture and storage technologies.”— Gary Lunn, natural resources minister, press release
• Oct. 14, 2008: Harper Conservatives win minority government
• Oct. 18, 2009 “Carbon capture and storage is the most viable technology for reducing greenhouse gas emissions. Our government’s recent investment in large-scale demonstration projects further advances Canada’s leadership in this technology, while building a knowledge base to share this expertise with our global partners.”— Lisa Raitt, natural resources minister, press release
• March 16, 2010 “The $1-billion fund relating to green technology investments, including carbon capture and storage, which was set up in the 2009 budget, is not a research investment. These are demonstration projects investments. … The only known technology to abate carbon emissions from thermal coal plants is carbon capture and storage. It is the only technology that has ever been discovered that can actually abate emissions.”— Jim Prentice, environment minister, at committee
• May 2, 2011: Harper Conservatives win majority government
• June 24, 2011 “Canada is a world leader in carbon capture and storage and we are in an excellent position to use this technology on a wide scale.”— Joe Oliver, natural resources minister, press release
• March 27, 2012 “Canada is in an excellent position to lead the world in the development, implementation and deployment of carbon capture and storage technology.”— Joe Oliver, natural resources minister, at committee
• May 21, 2013 “We are devoting significant amounts of money to carbon capture and storage, and we are doing that in co-operation with companies, because that is the way to do it. Our government is a world leader in carbon capture and storage.”— Joe Oliver, natural resources minister, in Parliament
• Oct. 6, 2014 “We were proud to support the research and development of carbon capture and sequestration, and see the technology developed through commercialization at the Boundary Dam project, a technology that will reduce greenhouse gas emissions at that facility by 90 per cent. We remain committed to growing the economy and reducing greenhouse gas emissions with world-leading technologies.”—Greg Rickford, natural resources minister, in Parliament
• Feb. 19, 2015 “Since 2006, our government has made investments of over $10 billion to transition Canada toward a clean energy economy and help reduce greenhouse gas emissions over the long term. … These funds have helped establish Canada as a global leader in the research, development and demonstration of carbon capture and storage technologies.”— Colin Carrie, parliamentary secretary to the minister of the environment, in Parliament
• Oct. 19, 2015: Trudeau Liberals win majority government
• April 4, 2016 On a North American memorandum of understanding on climate and energy: “It’s an aspirational agreement that focuses our three countries on the most pressing issues of the day … [including] advancing the competitiveness of carbon capture, use and storage.”— Jim Carr, natural resources minister, prepared remarks for a speech
• Sep. 14, 2017 “Carbon capture and utilization technology creates new products and business revenue stream opportunities while improving our environmental performance, creating jobs and driving clean growth in the process.”— Jim Carr, natural resources minister, press release
• Nov. 9, 2018 About a $2-million investment in a carbon capture project: “This project leverages today’s traditional resources to deliver tomorrow’s clean energy solutions. Developing and adopting clean technologies will help Canada meet its domestic and international climate change commitments and help maintain our natural resource advantage for years to come.”— Amarjeet Sohi, natural resources minister, press release
• June 17, 2019 On signing two memorandums of understanding: “The second commits Natural Resources Canada and the Japan Coal Energy Center to work together on clean energy, including carbon capture utilization and storage technologies.”“Canada is taking a leadership role in the clean growth century by balancing the environment and economy both domestically and internationally.”— Paul Lefebvre, parliamentary secretary to the minister of natural resources, press release
• Oct. 21, 2019: Trudeau Liberals win minority government 
• June 15, 2020 “We see carbon capture and sequestration as an integral part of lowering emissions and making emissions more competitive, making our oil and gas industry more competitive.”— Seamus O’Regan, natural resources minister, at committee
• March 9, 2021 “Carbon capture technology creates jobs, lowers emissions and increases our competitiveness. This is how we get to net zero.”— Seamus O’Regan, natural resources minister, press release
• April 21, 2021 “I lead a department of scientists who are looking at things like carbon capture and storage, both onshore and offshore. … We are on the cusp of doing a lot of these things.”— Seamus O’Regan, natural resources minister, interview
• Sept. 20, 2021: Trudeau Liberals win minority government
• March 28, 2022 “We are taking bold action on climate change. … We see carbon capture and underground storage as part of the solution.”— Terry Duguid, parliamentary secretary to the minister of environment and climate change, in Parliament
• Feb. 7, 2023 “We are investing billions of dollars in climate action and into the new economy. We have eliminated six fossil fuel subsidies and are on our way to eliminating nine. We need to use every tool in the toolbox to reduce our emissions, including carbon capture.”— Terry Duguid, parliamentary secretary to the minister of environment and climate change, in Parliament
• May 8, 2024 “My colleagues are well aware that Canadian companies are world leaders in carbon capture and hydrogen fuel cell technology. That’s why we will continue to support the adoption of made-in-Canada clean-tech solutions for the net-zero economy.”— François-Philippe Champagne, industry minister, at committee
• April 28, 2025: Carney Liberals win minority government
• May 23, 2025 “We will invest in carbon capture, methane reduction and other technologies to ensure Canadian oil and gas is not only produced responsibly, but is the most competitive in the world. All of us — governments and industry — need to get the Pathways project done.”— Tim Hodgson, natural resources minister, prepared remarks for a speech
• April 13, 2026: Carney Liberals achieve majority government
• June 25, 2026 “We will deepen co-operative federalism with initiatives [like] Alberta’s proposed carbon capture and pipeline to the West Coast. … With the implementation agreement around carbon capture, [the government is] working together, getting results for the citizens.”— Mark Carney, prime minister, news conference (not online)

The Trudeau government’s emissions cap proposal came together after the Oil Sands Alliance, a group of major producers formerly known as the Pathways Alliance, had publicized a project they originally claimed could cut 22 million tonnes of oilsands emissions by 2030, with carbon capture being a central element of their plans.

The natural resources minister at the time, Jonathan Wilkinson, portrayed the emissions cap as a way to ensure the industry did what it said it could do.

Oilsands companies fought the proposal. A group of them pushed the government to delay and weaken the emissions cap’s rules, saying they needed “flexible and cost-effective” rules and a “long lead time” to prepare. By 2024, the boss of one of the country’s largest oil and gas companies was openly calling for the idea to be abandoned. Alberta Premier Danielle Smith also came out against the proposal.

Last year, after Carney won power, Canadian oil and gas executives and lobby groups called on him to “unwind the past decade” of Trudeau-era policy altogether, killing not only the emissions cap but also other environmental rules. The prime minister has ticked off several boxes on their wishlist.

The Narwhal reached out to more than a dozen current and former government officials to ask them if they stood behind their comments about carbon capture today, knowing what they know now.

Minister Hodgson’s spokesperson forwarded the questions to Natural Resources Canada. A spokesperson for his department responded that technologies like carbon capture are “important tools in Canada’s broader climate toolbox of measures to reduce or remove emissions, while strengthening growth and security.”

Carbon capture and storage “holds great opportunity to advance climate competitiveness, and is an area where Canada can lead internationally and sell components and expertise in global markets,” they said in an email to The Narwhal. It offers a “practical path to reduce emissions, protect and create jobs, sustain economic growth and keep Canadian industries globally competitive.”

A spokesperson for Champagne declined to comment. The others did not respond.

The Narwhal also sent separate questions to Natural Resources Canada directly. Another spokesperson claimed Canada’s industrial carbon capture rates will rise in the coming years.

“While Canada has already captured and stored or used significant volumes of [carbon dioxide] the sector is growing, with new projects and infrastructure expected to come online as technology improves and evolves,” the spokesperson said in an email.

There’s a “growing list of potential projects across multiple industrial sectors” today, they said, and “these projects are expected to increase capture volumes over time.”

Canada doesn’t publish an official forward-looking estimate of carbon capture potential, the department said. And the spokesperson pointed to a number of challenges with carbon capture adoption. For one, the projects are “large, capital‑intensive and technically complex.”

Carbon capture is expensive. The Pathways proposal was initially estimated at $16.5 billion and is now pegged at between $20 billion and $30 billion, despite lowering the amount of emissions it is intended to capture. At times it has seemed like it could struggle to break even, according to the Institute for Energy Economics and Financial Analysis.

The government is offering federal financial incentives for carbon capture, and Carney reversed a Trudeau-era ban on companies from accessing that incentive when they pump the captured carbon into wells to loosen up more oil for extraction.

Despite hitting record profits in recent years, oil companies have in the past largely resisted spending the billions of dollars necessary to build out carbon capture equipment across their large properties. Instead the industry spent years lobbying the government for lucrative public subsidies to install and run carbon capture systems.

Scaling up carbon capture and storage also requires building new pipelines and storage hubs. A Natural Resources Canada spokesperson said the technology continues to “evolve” and investors are looking for enough “market demand for low‑carbon products,” which the government believes has been bolstered with the Alberta deal.

Globally, the technology has underperformed, according to the International Institute for Sustainable Development. One of Canada’s own flagship projects captured less carbon than initially thought. In 2022, more than 400 academics wrote an open letter to Canada saying carbon capture was “neither economically sound nor proven at scale,” despite decades of research.

Carbon capture used to secure social licence for pumping more oil

When it comes to techniques for keeping carbon out of the atmosphere, using carbon capture technology on industrial sources is only one approach.

Other types of technologies, collectively called carbon removal, can draw existing emissions from the atmosphere or store carbon permanently in other forms like rock.

There are 11 million tonnes worth of annual permanent carbon removal capacity in the planning stages in the country, according to Carbon Removal Canada, an independent non-profit. Those plans are for new projects such as direct air capture or carbon mineralization, but not industrial carbon capture.

The Intergovernmental Panel on Climate Change, the United Nations body that provides governments with climate science, has said carbon capture and carbon removal technologies will have to be part of the mix of techniques that countries use to slow the rise in planetary temperatures causing climate change.

It’s a point Steven Guilbeault, who served as another environment minister under Trudeau and helped develop the emissions cap proposal with Wilkinson, raised several times in Parliament. Canada needed to look at every possible technology that could help reduce emissions, he argued.

But the United Nations panel was also clear these kinds of technologies are not a substitute for a “substantial reduction in fossil fuel use,” rather something to be used alongside those efforts.

In an interview with The Narwhal, Guilbeault said Canadian politicians have often misunderstood the difference, seeing carbon capture as “a way to continue pumping oil and gas in Canada.”

“It’s a technology we will need, but it’s not in lieu of reducing emissions, and unfortunately it seems that a lot of people haven’t understood that,” he said.

The technology “is a very convenient, theoretical, technical fix to a larger problem,” Guilbeault said. “We humans tend to look for easy fixes, sometimes, to complex problems.”

Evidence also suggests carbon capture has been popularized by the oil and gas industry to shield itself from criticism. In 2022, a U.S. Congressional probe found oil companies were talking about carbon capture publicly as a way to mitigate their climate impact, but internally were discussing it as a way to secure “social licence” to continue producing fossil fuels.

In June, the investigative outlets ProPublica and Drilled published evidence the oil company BP helped shape an academic paper that oversold carbon capture’s readiness, while the oil and gas industry funded research at universities that boosted the technology.

Guilbeault said he has “always been skeptical” of the oil industry’s carbon capture proposal in Alberta.

His skepticism is shared by former oilsands executive and former member of Parliament Martha Hall Findlay, who helped develop the industry’s initial Pathways carbon capture proposal. She now argues Canada should “postpone” the project and focus on other priorities.

Federal Conservative Leader Pierre Poilievre is also skeptical of Carney’s plan.

A former Harper government minister of democratic reform, and employment and social development, Poilievre has supported subsidizing carbon capture in the oil and gas industry in the past. In 2022, shortly after becoming leader, he said the Canadian energy industry was “leading in the world” on carbon capture, and accused the Trudeau government of being “slow to support it and insufficient in that support.”

In 2023 he asked, “Why do we not use technology instead of taxes to fight climate change? Why do we not support our energy sector in pumping the carbon back into the ground through carbon capture and storage?”

More recently, Poilievre has criticized Carney’s deal with Alberta for committing billions of dollars to a “money-losing carbon capture project that has never been proven anywhere.”

Asked by The Narwhal why he’s soured on support for carbon capture, Poilievre said he only sees value if it’s used to extract more oil.

“When you pump carbon back in the ground and pressurize the geology, and you can bring up more oil, they can then go out and make the world a better place,” he said.

“The other is just pumping air into the ground and getting nothing in return. … How’s it going to make money?”

Updated on July 22, 2026, at 11:48 a.m. ET: This story was updated to include the latest figure for 2007 oilsands emissions from the national inventory report. While a report from Alberta published in 2008 put the figure at 26 million tonnes, the national inventory report has recalculated historical emissions figures with updated methodology and additional data, putting it at 41 million tonnes of emissions.

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Summary

• Alberta’s plan to build a pipeline to B.C.’s south coast includes a new terminal capable of servicing supertankers sailing into the Salish Sea.
• If the project goes ahead, very large crude carriers (VLCCs) capable of carrying up to 2.2 million barrels of oil could be loading up at Roberts Bank in the Fraser River estuary.
• A major expansion of the Roberts Bank superport is already in the works with potentially catastrophic impacts on local endangered species.

At the mouth of B.C.’s largest river, industrial development has encroached on important ecosystems for decades. Now, Canada’s plans to boost shipping infrastructure and create a new terminal for oil tankers could increase stress on endangered species and critical habitat.

The Fraser River is truly vast. Its tributaries carry water from nearly one-quarter of B.C., and its delta — the area where the river’s waters mingle with the Salish Sea — stretches from the Vancouver neighbourhood of Point Grey to the American settlement of Point Roberts.

In between, there are mudflats, sandy beaches, eelgrass beds and salt marshes that provide critical habitat for young salmon, migrating birds and countless other species.

“These are really productive environments for fish, for shellfish, for mammals, for birds,” Misty MacDuffee, a salmon biologist and director of Raincoast Conservation Foundation’s wild salmon program, says. 

Freshwater from the Fraser pushes all the way out to the Gulf Islands and the tidal flow from the Salish Sea can make its way all the way to Mission, MacDuffee told The Narwhal. That mingling of freshwater and saltwater creates crucial habitat for young salmon as they make the transition from river living to ocean swimming.“We’ve got all five species of salmon going into the Fraser. It’s Canada’s most productive salmon system — our largest Chinook producer — and it’s really important for the rearing and the migrations of adult and juvenile salmon.”This region has long been subject to development, from canneries and agriculture, to airports and port infrastructure. But now the pressure is ramping up. 

The pipeline pivot to Roberts Bank

On July 2, Prime Minister Mark Carney announced federal support for $10 billion in infrastructure upgrades at the Roberts Bank superport as part of a memorandum of understanding with B.C. 

In the agreement, the federal government also pledged to preserve the ban on oil tankers transiting the waters near B.C.’s North Coast. Keeping the tanker ban in place “without alteration, suspension or narrowing of scope,” as the agreement states, removed the port at Prince Rupert as an option for the terminus of Alberta’s proposed pipeline. Prince Rupert is Canada’s deepest natural harbour, capable of accommodating very large crude carriers (VLCCs), huge tanker ships capable of carrying up to 2.2 million barrels of oil — three times as much as the largest oil tankers currently servicing the Trans Mountain pipeline.

Later the same day, Carney and Alberta Premier Danielle Smith announced plans for a new West Coast pipeline (funded primarily by state-owned pipeline company Trans Mountain), which would follow the same route as the current Trans Mountain pipeline with one key difference: it would detour further south to end at Roberts Bank, instead of in Burnaby. 

Alberta’s submission to the federal Major Projects Office includes a two-berth terminal able to serve very large crude carriers. These ships are 330 metres long — that’s more than three World Cup soccer pitches laid end to end — and have a fully loaded draft of 20 metres. To reach water deep enough for these massive vessels to float in, the terminal’s causeway and jetty would extend about five kilometres out into the Strait of Georgia.

If the project goes ahead, it would be the first time that oil tankers of this size have ever docked in B.C. The largest tankers that can fit beneath the Second Narrows bridge to service Westridge Marine Terminal — the current terminus of the Trans Mountain pipeline — are Aframax tankers, which have a maximum capacity of 800,000 barrels of oil. Currently, even those tankers can only be filled to about 80 per cent, so the port authority has applied to dredge Burrard Inlet to make room for larger loads (a plan the Tsleil–Waututh Nation is fighting). 

On land, the proposed oil terminal would take up 260 hectares — nearly two-thirds the size of Stanley Park. About half of that space would be covered with 15 storage tanks capable of holding 6.5 million barrels.Roberts Bank’s location — hemmed by wetlands, Tsawwassen First Nation treaty lands, parcels in the Agricultural Land Reserve and residential neighbourhoods — raises questions about whether there is enough room for Alberta’s proposal. The Major Projects Office did not respond when asked whether any assessments about fitting the proposed tanker terminal in that location have been completed.A question about whether the oil tanker terminal could be built in conjunction with the proposed port expansion or would have to wait until Roberts Bank Terminal 2 is complete also went unanswered.

The Fraser River estuary has lost 85 per cent of its salmon habitat to the effects of development and there are already plans to double the size of the terminal.

MacDuffee described the estuary as an “incredible natural asset” that has economic and environmental value.

“It supports these vibrant ecosystems that people are travelling from all over the world to visit, to see the Salish Sea, to see whales, to see birds, to see these migrations, to see these special places and here we are moving to take this incredible asset and turn it into an industrial sacrifice zone.”

Tanker terminal piles risk on top of risk

Roberts Bank Terminal 2, as the $3.5-billion planned port expansion is known, would increase the port’s container capacity by 50 per cent. The 2020 federal assessment of Roberts Bank Terminal 2 concluded the expansion’s impact on wetland function, Chinook and chum salmon and southern resident killer whales “is high in magnitude, permanent and irreversible.” In 2023, the federal cabinet concluded the public interest in the port expansion superseded those impacts and approved the project, subject to nearly 400 conditions.

In 2025, the Vancouver Port Authority submitted Roberts Bank Terminal 2 to the Major Projects Office, hoping to see it designated a “nation-building project” and fast-tracked for final approvals. That designation would mean streamlined regulatory processes and assessments.

Alberta’s proposal will also be evaluated by the Major Projects Office. The office did not respond to a question about whether the tanker terminal will be assessed to determine the potential cumulative effects of the project on the Fraser River estuary and Salish Sea.

The proposal to add another terminal and introduce oil supertankers to the Fraser estuary is raising concerns amongst B.C. environmentalists.

“This is supercharging the impact in case of an accident,” Anna Barford, Stand.earth’s oceans campaigner, said. “If we have a spill, if there is a critical problem, if one of these ships loses power and runs aground, we’re looking at incredible devastation in an area that is wildly biodiverse … at the mouth of a very important salmon-bearing river.”

The logistics of bringing such large vessels into the crowded waters of the Salish Sea is also a concern, Barford added.For MacDuffee, the tanker terminal proposal flies in the face of the federal government’s acknowledgement of the Fraser estuary’s importance. With more than $2 million in federal funds, Raincoast has been working to restore salmon habitat degraded by marine infrastructure.

“We’re allowing the flow of water — of nutrients, of sediment, of fish, of everything — back onto Sturgeon Bank, trying to restore the function of this estuary and the opportunity for rearing salmon,” MacDuffee told The Narwhal.

Port expansion poses significant risk to endangered species and critical habitat

Even without adding an oil tanker terminal to the mix, Roberts Bank Terminal 2’s impact on endangered species could be catastrophic, Barford said. 

“We’re looking at increased underwater noise, which we know is very difficult for fish and for creatures like southern resident killer whales that use echolocation to find their food.” 

More than 100 species in the Fraser River estuary are at risk of local extinction by 2045, a 2022 study found. At-risk species include the southern resident orca, whose population was just 74 individuals as of last year’s census. 

Many migrating bird species, including the western sandpiper, could also be negatively impacted by the terminal expansion. During their annual migration from Peru to Alaska, western sandpipers stop in the Fraser estuary, where they fuel up on biofilm, communities of microorganisms that flourish on the estuary’s mudflats. Losing access to this crucial food source would be a significant blow to western sandpipers and the many other migratory bird species.

“Roberts Bank is critical habitat,” Barford said. “Just because it looks muddy … doesn’t mean that it isn’t a paradise for endangered and migratory species.”

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What a week. Amidst the blur of World Cup shenanigans and Canada Day festivities, politicians dropped not one, not two, but three massive pipeline announcements. 

First, there was the multibillion-dollar federal commitment for infrastructure projects in B.C. What does this have to do with pipelines, you ask? Well, the agreement also included a promise to maintain the federal oil tanker ban off B.C.’s North Coast and $10 billion to upgrade the Roberts Bank export terminal (that’s the huge shipping terminal you can see from BC Ferries as you approach Tsawwassen, FYI). 

That brings us to the second announcement, which came just a few hours later when Prime Minister Mark Carney and Alberta Premier Danielle Smith announced a plan for a southern route for a new oil pipeline to the West Coast that would largely follow the right-of-way for the Trans Mountain pipeline, except — surprise, surprise! — it would end at Roberts Bank. This theoretical pipeline would be planned and built by the federally owned Trans Mountain Corp., with Pembina Pipeline Corp. taking a 10 per cent stake in construction. Oh, and it would cost between $35 billion and $44 billion (mostly in taxpayer money).

As if that wasn’t enough to process, on Monday Ontario Premier Doug Ford and Smith proposed another pipeline called Northern Shield, which would take oilsands bitumen to refineries in Sarnia, Ont. There’s also no private backer for this pipeline and, notably, no formal federal support. The chief of Aamjiwnaang First Nation, meanwhile, says the nation hasn’t been consulted on the proposal thus far and notes it’s still in the midst of a benzene crisis and dealing with the fallout of a March 2026 pipeline spill.

The headlines have been coming so fast and furious, it’s been tough to keep up. I spent the week scouring the internet, trying to get my head around it all. Some of the most insightful commentary I came across was from Amy Janzwood, an assistant professor in political science and environment at McGill University — so I called her up to pick her brain on, well, all of it. 

This interview has been edited and condensed for length and clarity.

What have you noticed about the pipeline discussion in the media over the last week? 

All the media coverage I saw has been stenography, basically. Just regurgitating all of the talking points of [Minister of Energy and Natural Resources Tim] Hodgson, Carney and Smith. It’s been extremely uncritical coverage. The kind of making of a pipeline out of literally nothing other than taxpayer dollars has been quite dizzying and shocking to see. 

The questions I was asked a year ago about pipeline politics are very different than the questions I get now. Before I’d get asked: “What’s the prospect of another major oil pipeline? Is this a political fantasy?” But now there’s a slippage into engaging on the terms of the Smith government. The lack of context I’ve seen in the reporting on this is in part because of the firehose of announcements, and media outlets are just not able to keep up.

You have noted before that legacy media often uncritically repeat the narratives of the oil industry. It sounds like you’re still seeing that? Are any particular examples coming to mind? 

Hodgson has basically become the voice of the industry and I see that repeated verbatim, without any kind of interrogation. One very clear example I see over and over again is the profitability narrative around the Trans Mountain pipeline when we know this is actually not a profitable pipeline. You could argue there are good reasons to have it and we can have that debate, but [federal politicians] like to say that this is a profitable pipeline, which is straight up not true, so that’s one example of things that I see kind of repeated very uncritically.

Given that it’s not a profitable pipeline, what are the real reasons you think we’re seeing such broad political support for it in this moment?

There has been incredibly powerful messaging from the Carney government that we can have it all. We’ve seen this misconstrual of economic anxiety, sort of pinned on the hopes of another pipeline, which couldn’t be further from the reality. 

Pipelines have become kind of a stand-in for the future of oil and gas. It’s become a stand-in for a lot of really difficult conversations.

Canadians are still broadly supportive of climate action and renewable energy, but they’re also more supportive of pipelines now than they have been for at least the last decade. What do you make of that contradiction? 

As political scientists, we’ve long known that public opinion can largely be shaped by our political elites. I’m not surprised when I hear things from our prime minister and minister of natural resources around the need to build more pipelines, that there is this slippage or confusion that this is going to reduce our reliance in any way on the U.S. If you’re not following this closely, then that sounds great, if you’re being told this is what we need to keep Canada prosperous and strong. 

But as someone who has studied pipelines for over 10 years, those are promises new pipelines will not be able to deliver on. I think the public has largely forgotten the cost and divisiveness about Energy East, about Northern Gateway, about Trans Mountain. Unless you’re directly affected and witnessing and experiencing the impacts of these projects, those costs to you, those environmental risks are not salient. It has long been difficult for folks to make that connection when we’re told this is necessary for our economy, and when the economic benefits are as overstated as they often are.

Canadians are repeatedly told that pipelines are what’s needed to keep Canada prosperous and strong. What are political leaders misrepresenting when they say that? 

Fundamentally when we’re talking about major new pipelines, you’re going to need significant greenfield oilsands expansion to fill it. [A greenfield project is a new project built on undeveloped land.] We’ve seen the economics of the oilsands have not been trending towards that for the last several years to decades. Investors in the oilsands were really pressuring companies to deliver on their dividends. There was not an appetite for massive new expansions; it was not economic and it still is not. It would actually harm the industry if they can’t fill the pipeline. 

If we’re now talking about a hypothetical West Coast pipeline, the volatility and the reliance on global oil prices and very uncertain demand … there is not a long-term case to be made for increasing oil expansion to the degree that would be required for a major new pipeline.

This is not economic for the industry, so this will be taxpayer-funded. And there’s no certainty about demand for this hypothetical oil that the industry does not seem willing to produce, although Smith has alluded to doing whatever she can to stimulate further oilsands production with additional provincial support. 

It’s quite misleading to suggest we would need a new pipeline to diversify away from the U.S. I do think we do need to have important conversations about how to become more resilient in light of having the Trump administration. But spending billions of dollars for a pipeline that we don’t think the industry can fill is not the way to do it. 

Politicians also increasingly claim that Canada can indefinitely expand oil and gas production while meeting our climate commitments. Is that actually possible?

The short answer is no. This myth was alive and well under the Trudeau government. The Trudeau government really pioneered this narrative that we can have Trans Mountain and the oil expansion that comes with it and meet our climate targets and use the money from Trans Mountain to pay for the clean energy transition.

The latest iteration of this argument is this promise of carbon capture and storage. My take is that this is something the industry has never really been serious about doing.

Since Pathways Alliance [now called Oil Sands Alliance] announced its carbon capture and storage project in 2022, we’ve seen absolutely no significant investment of any kind in this project. And we know that they’ve just quietly stepped back from the amount of emissions reductions they’re promising.

It’s been quite troubling to see the Carney government so unquestioningly provide this narrative that we can have decarbonized oil — which is, of course, a contradiction.

You have described expanding fossil fuel exports as like saving for retirement by doubling down at the casino. Can you explain why that is?

Let’s not forget that oil and gas is a relatively small part of Canada’s GDP … but looking at the media coverage, you would not know that. 

The conversation we’re having right now is a federal government that has continuously found new and ever-creative ways to subsidize fossil fuel expansions, whether that’s LNG [liquefied natural gas], oilsands or carbon capture and storage, and telling the public that this is necessary. 

Let’s set aside LNG for now (the economics of LNG are a bit different), but about oil specifically, this is an industry that’s had record profits that’s been unwilling to pay for its own pollution — it is a cost the industry has very successfully avoided, whether that’s orphan wells and cleanup or carbon. 

We’re told we need to double down and it’s necessary for economic prosperity. But what we’re seeing is the bill that’s racking up that taxpayers are on the hook for — when there’s an industry that can very well pay for it, and is unwilling to because they know they have a government that will backstop it. They now have a government that will buy a pipeline and that now has a state-owned pipeline company that is promising to be a backer for another new pipeline, which honestly, if you had told me that even 12 months ago, I would not believe you. It is absolutely mind-boggling. 

The Narwhal is going to be following all of these issues closely. If you have thoughts or a story tip email editor@thenarwhal.ca

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Prime Minister Mark Carney is preparing to weaken proposed industrial pollution limits and loosen restrictions on subsidies for the Alberta oilpatch, as part of a major realignment of climate policy he unveiled Thursday alongside Alberta Premier Danielle Smith.

The memorandum of understanding between the two governments, billed as a “grand bargain,” is focused on boosting the production of Alberta oil and gas and planning for future projects such as a new pipeline, data centres or transmission lines. 

All of this, Carney and Smith said Nov. 27, would occur while the two aim to reach carbon neutrality by 2050 and provide opportunities for Indigenous consultations, ownership and partnerships.

“This is Canada working, this is co-operative federalism, this is Canada building,” Carney said as he shook hands with a beaming Smith in Calgary.

“In effect, it creates an energy transition — all aspects of energy — but really sets the stage for an industrial transformation.”

But the deal proposes rolling back several environmental initiatives that had been proposed by the federal government under former prime minister Justin Trudeau, including on clean electricity, methane, clean technology and carbon pricing.

It also commits to helping out a proposed megaproject in the oilpatch, the feasibility of which has yet to be proven. And it lends political support to a new Alberta pipeline to the West Coast, an idea that has been vigorously opposed by First Nations and the B.C. government, even as they point out how there isn’t a concrete plan for such a pipeline yet.

It’s a lot to sort through all at once. Here’s a look at seven key environmental policies the Canada-Alberta deal proposes to change.

1. Weakening rules on methane for Alberta’s oil and gas industry

The Canada-Alberta deal commits to an agreement by next April that would allow the province to delay cutting its oil and gas methane emissions by five years compared with proposed federal restrictions.

Methane, an invisible, odourless gas is the second most common greenhouse gas in Canada, after carbon dioxide, and comes mostly from the fossil fuel industry. It’s a potent driver of climate change and an air pollutant that contributes to smog and respiratory health complications. Years of scientific studies have shown how previous published figures on the extent of methane from the oil and gas industry have underestimated reality.

The new federal rules, proposed in December 2023, would require slashing oil and gas methane emissions 75 per cent from 2012 levels by 2030. The deal signed Thursday between Carney and Smith would allow Alberta to achieve the cuts in 2035 instead, and be based on 2014 levels.

“Delaying the methane reduction target for Alberta’s oil and gas industry to 2035 is unwise,” Chris Severson-Baker, executive director of the Pembina Institute, said in a statement.

“It is unacceptable that Alberta should be held to a lower standard than other provinces on this; both the climate and Alberta’s economy will ultimately feel the impacts.”

It wouldn’t be the first time Canada and Alberta have weakened their own methane rules. In 2017, the fossil fuel industry persuaded the provincial government to delay and weaken its methane rules, which were then accepted by the federal government in 2020 as being in compliance with its own.Rick Smith, president of the Canadian Climate Institute, also said delaying the methane deadline was unnecessary. “If there is one no-brainer of climate change policy, it is enhanced reduction of methane emissions from oil and gas,” he said in a statement.

2. Pushing for that Alberta pipeline plan

The “grand bargain” commits to constructing a large oil pipeline from the Alberta oilpatch to the West Coast, with an application ready to go by July. The pipeline would take “a route that increases export access to Asian markets as a priority.”

Canada would declare an oil pipeline to Asian markets as a “priority” and offer “opportunities for Indigenous co-ownership and economic benefits.” The federal government would refer the project to its fast-tracking office for consideration to be deemed in the “national interest.”

Oil lobbyists say Canada needs another oil pipeline to export more petroleum to places other than the United States, as trade tensions continue under President Donald Trump. While the federally owned Trans Mountain pipeline, which was recently given a $34-billion overhaul that almost tripled its capacity, carries crude oil from the oilsands to the West Coast where it can be loaded on tankers and shipped overseas, no private sector proponent has stepped up to propose another new oil pipeline.

But the economics of the industry might delay the prospects of any new oil pipeline. Oil prices are low compared with a few years ago, forcing the industry to cut costs and pare back spending, while green energy sources like solar power and wind power are becoming ever cheaper. Canada’s oilsands produce oil that is heavier and full of more sulphur than other blends around the world, meaning it’s more complex and expensive to refine and so must compete with lower-cost operations.

Meanwhile, building a new oil pipeline from Alberta to B.C. would result in higher emissions than a scenario where no pipeline is built, even if it’s paired with a carbon capture project like Pathways Alliance is proposing, according to a report from the Pembina Institute.

3. Supporting Pathways Alliance and its pricey carbon capture plan

The Canada-Alberta deal commits both parties to working with the Pathways Alliance, a lobby group made up of six large oilsands companies, to enter into a three-way deal by April to create “a set of emissions-savings projects” focused on carbon capture and storage or other technology. 

In fact, the proposed pipeline is contingent on the Pathways project moving forward.

For several years, the lobby group has proposed a carbon capture and storage network in Alberta that would theoretically capture a portion of the roughly 90 million tonnes of greenhouse gases the oilsands create per year, and transport the carbon in a new pipeline to rock formations deep underground. 

The companies involved in the Pathways Alliance have spent years lobbying the federal and provincial governments to put public money toward their proposal, which they once pegged at $70 billion, and to delay or weaken proposed restrictions on the oilpatch while they gear up to build.

At the same time, Pathways Alliance companies have not committed to paying for the proposal themselves — even though they are posting big profits this year. Suncor, for example, reported $1.62 billion in profits over the third quarter, a three-month period, while Cenovus made $1.29 billion in profits. The other members similarly reported hundreds of millions of dollars in profits over the quarter. 

Their plan has also been criticized as a form of greenwashing because it does not account for the emissions created when the oil companies’ products, like gasoline, are burned. It only proposes to draw down the emissions created during the process of digging up more oil.

The Carney-Smith deal said the lobby group’s projects will be built “in a staged manner between 2027 and 2040.” Constructing a carbon capture network that large would be unprecedented. Canada currently captures 4.4 million tonnes per year; scaling up to capture tens of millions of tonnes will require a massive buildout — and that’s if the technology works properly. 

That’s not to mention the concerns locals have about the safety of storing carbon underground in such large amounts.

4. Loosening restrictions on tax breaks for clean technology

Canada is preparing to loosen the restrictions on the tax breaks it has offered for companies to install carbon capture equipment, in a bid to encourage more oil drilling, according to the deal.

It commits to extending federal investment tax credits “and other policy supports” that encourage investments in carbon capture, and indicate these could be applied to “enhanced oil recovery.” 

That’s an industry term for taking the carbon that’s been captured from exhaust sources, and instead of burying it in rock formations underground, injecting it into wells so more oil can be recovered.

The most common use for carbon capture operations in Canada so far has been enhanced oil recovery — but when Canada introduced tax breaks for carbon capture equipment, a key provision in the rules banned their use for this purpose.

Hours after the bargain was made public, Steven Guilbeault resigned as Carney’s Canadian identity and culture. Guilbeault was environment minister in the Trudeau government, when he said the restriction was important to differentiate between providing support for the oil and gas industry to decarbonize, and providing other incentives to encourage more oil production.

“We’ve been asked, and we have resisted, and we have refused to include, for example, the use of carbon capture and storage under the tax credit for enhanced oil recovery,” he told a Parliamentary committee in 2022.

Keith Stewart, senior energy strategist for Greenpeace Canada, said allowing carbon that is captured to be used to “pump more oil out of the ground” would suggest there’s “no net benefit” to that activity. 

Along with the methane and other rule changes, he described the deal as “a betrayal of Canada’s climate commitments” and said it “makes a mockery of our commitment to reconciliation with Indigenous people.”

5. Making exceptions in the oil tanker ban on the West Coast

Canada and Alberta said any future oil pipeline would be “private sector constructed and financed,” and “with Indigenous Peoples co-ownership and economic benefits.”

“At the heart of this is co-operation and partnership with Indigenous Peoples — in Alberta, in British Columbia — as they’re affected. Unprecedented opportunities for Indigenous ownership, partnership, economic benefits, as well as substantial economic benefits for the people of British Columbia,” Carney said Thursday.

Even so, First Nations and the B.C. government have been saying no from the start. B.C. Premier David Eby panned the idea as one that “doesn’t actually exist” and said it was “unacceptable” that Carney and Smith were meeting without B.C.’s input.

Marilyn Slett, president of the Coastal First Nations-Great Bear Initiative and elected Chief of the Heiltsuk Nation, said the nation continues to oppose a new oil pipeline after seeing the agreement. 

“Today’s [memorandum of understanding] does nothing to increase the chances of a pipeline project to the northwest coast ever becoming a reality,” she said in a statement. 

“We have made repeated calls to the federal government to uphold Bill C-48, the Oil Tanker Moratorium Act, as it is foundational to the vibrant and growing conservation economy we have built on the North Coast.”

Slett says they have “zero interest” in co-ownership or economic benefits stemming from the proposed pipeline.

Since 1972, the federal government has had a moratorium on oil tankers along the north coast of B.C., and signed a voluntary agreement with the U.S. in 1988 creating an oil tanker exclusion zone. 

The purpose is to protect coastal waters from the risk of pollution from an oil spill. The ban was formalized in legislation by the Trudeau government in 2017 when it passed the Oil Tanker Moratorium Act.

Coastal First Nations and the province of B.C. also signed a North Coast Protection Declaration on Nov. 5, which calls for the tanker ban to be upheld.

Thursday’s “grand bargain” says if a new oil pipeline is approved under federal fast-tracking legislation, Canada would commit to allowing tanker exports through “a strategic deep-water port to Asian markets” — including, “if necessary,” by amending the Oil Tanker Moratorium Act.

Carney has said “all stakeholders have to agree” before a pipeline is built, including the government of B.C. and First Nations.

6. Giving clean electricity regulations the boot

One big win for Premier Smith is the immediate suspension of the federal government’s Clean Electricity Regulations. 

The province, which operates one of the highest-emission grids in the country due to its reliance on natural gas instead of hydroelectricity, has pushed back against the regulations ever since they were proposed. 

But the Smith government has gone even further by restricting a booming renewable energy sector and incentivizing new natural gas generation. 

Suspension of the regulations means it will not have to move fast to bring emissions down. 

A potential compromise offered by the agreement is a push to increase what are known as interties with B.C. and Saskatchewan — essentially, stringing wires between the three provinces to help ensure consistent generation. 

B.C.’s wealth of hydroelectricity can be a cleaner source of regular power to offset intermittent renewables, although Saskatchewan, which still burns some coal for electricity, isn’t likely to help reduce Alberta’s power emissions. 

It’s unclear whether this suspension will apply across the country. Most provinces easily meet the requirements thanks to hydroelectricity, but Saskatchewan and Alberta have chafed at the timeline for cleaning up their fossil fuel-reliant grids. 

“Exempting Alberta from these regulations yet again sends the signal that Alberta is closed for business to renewable electricity developers, an industry which has already suffered under Alberta’s erratic electricity policy changes over the last two years,” Severson-Baker said.

7. Adding flexibility to Alberta’s industrial carbon pricing plan

The federal government will still require a commitment to industrial carbon pricing from Alberta, but the new deal shows it comes with caveats. 

The agreement acknowledges Alberta’s provincial system and calls for increases in the carbon price, which the province froze this year at $95 per tonne through 2026. The freeze meant Alberta would have been out of step with the federal benchmark as of next year.

The deal says the two governments will work to ensure “the application of Alberta’s carbon pricing system (including pricing and stringency) is adapted to the specific circumstances of the electricity sector, the oil and gas sector and other large emitters such as fertilizer and cement sectors.”

In other words, some large polluters will be allowed to operate under special rules. It’s unlikely those carve-outs will be more severe. 

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