The memorandum of understanding between Canada and Alberta on energy was intended to strike a grand bargain: Alberta would gain a path toward increased oil export capacity, potentially including a west coast pipeline, while Ottawa would secure a climate framework it could defend. On paper, it seemed like a win-win scenario. However, the reality of turning this broad political agreement into tangible industry support has proven challenging.
Two key sticking points
As negotiations enter their final stages, two issues are causing the most friction. The first is the industrial carbon price. The second involves a three-way agreement among Ottawa, Alberta, and oilsands companies regarding the Pathways carbon capture project.
Pathways project rebranded
The industry group formerly known as Pathways Alliance has rebranded as the Oil Sands Alliance. The carbon capture project itself retains the Pathways name, but the group's identity has shifted. Despite the rebranding, the project remains central to the MOU. Ottawa insists that pipeline expansion and emissions reductions must proceed in tandem, providing a rationale for how increased oil export capacity can align with Canada's climate objectives.
However, industry representatives are pushing back on the associated costs. The Oil Sands Alliance argues that Canada can become an energy superpower only if governments establish predictable, durable, and competitive regulations.
Carbon price tensions
The carbon price appears to be the sharpest point of contention. The agreement between Prime Minister Mark Carney and Alberta Premier Danielle Smith includes a potential minimum carbon price of $130 per metric tonne of carbon dioxide equivalent, but the timing and structure remain under negotiation. Industry stakeholders are wary of the financial implications.
Closed-door talks took a turn this week when the Oil Sands Alliance issued a public statement expressing frustration over the pace of negotiations. The group warned that the opportunity for a pipeline deal could “pass Canada by” if progress continues to stall.
These developments raise questions about the future of the MOU and the prospect of a pipeline reaching the British Columbia coast. The outcome will hinge on whether the parties can bridge their differences on carbon pricing and the Pathways project.
