Prime Minister Mark Carney and Alberta Premier Daniel Smith have jointly agreed to build a new bitumen pipeline to the British Columbia coast – a hugely important development that the federal government sees as a chance to further develop Alberta's energy sector, diversify Canada's economy and reduce dependence on the United States.
The two leaders signed a memorandum of understanding outlining how Ottawa would facilitate construction of a pipeline that would transport a million barrels of oil per day from Alberta's oil patch to an export terminal on the Pacific coast, from where the product would be shipped primarily to Asian countries.markets.
The deal is “an example of cooperative federalism; we negotiate in partnership and in a spirit of trust,” Carney said after signing the document and meeting with unionized skilled workers in Calgary.
The prime minister said several things are needed to build the pipeline, including: private sector support, partnerships and equity ownership for First Nations along the route, and an agreement that would provide “substantial economic benefits” for B.C.
“This agreement with the government is just the first step along the way, there is much more hard work to be done and trust needs to be built and earned in the partnership as we move into the next steps of this process,” Smith said at a press conference after the signing of the Memorandum of Understanding.
The agreement emphasizes that the pipeline will be privately built and financed (as opposed to the government-owned Trans Mountain system) and the intent is for some degree of Indigenous ownership.
Prime Minister Mark Carney said Thursday's agreement between the federal government and Alberta is a “first step” and added several things must happen before the pipeline is built, including private sector buy-in and a “full partnership, including equity ownership” with Alberta and the First Nations of British Columbia and the province of British Columbia.
Ottawa is poised to designate the pipeline a project of “national interest,” a mandate under the Canada Build Act, which the Carney government passed in June.
The designation means the pipeline—and potentially tankers associated with oil transportation—could be exempt from certain federal laws. These include the Fisheries Act, the Species at Risk Act and the Impact Assessment Act.
According to the memorandum, Canada is committed to “working with Alberta to ensure a clear and efficient approval process for the Alberta Bitumen Pipeline.”
Importantly, Alberta promises to “work with British Columbia to ensure that British Columbians receive significant economic and financial benefits from the proposed pipeline.”
Once First Nations consultations and negotiations with British Columbia have taken place, Alberta, as the current proponent of the pipeline, will submit its plan to the Major Projects Office (MPO) for fast-track review by July 1.
If the MPO is approved, “Canada confirms that it will allow the export of bitumen from the strategic deepwater port to Asian markets, including through appropriate adjustments to OTanker moratorium law,” the agreement says.
Even with MPO approval, Carney stressed that “unless there is a private sector champion, the pipeline will not happen.”
The intention is to begin work on the project by 2029, according to an Alberta official who spoke to reporters at the briefing.
Higher price of industrial carbon
Ottawa will also suspend the proposed federal cap on oil and gas emissions and Alberta's requirements under the Clean Electricity Regulation (CER).
But both sides are determined to raise the price of industrial carbon in the province – moving it from the current $95 per tonne to a minimum of $130 per tonne. Previously, the federal government requiredThe price is expected to rise to $170 per ton by 2030.
Both sides say they are committed to achieving net-zero emissions by 2050, even though the memorandum of understanding has the potential to speed up conventional energy production.
“We're only going to meet our greenhouse gas emissions targets and our climate goals through massive investments, and that's why we need agreements like this to incentivize those huge investments,” Carney said.
To help achieve this goal, both Canada and Alberta are implementing Pathways Plus, Alberta's carbon capture system.a recovery and storage project that could reduce the emissions intensity of the province's oil sands exports.
Smith said that because the agreement includes Pathways Plus, which both she and the prime minister have called the world's largest carbon capture and storage infrastructure project, it will make Alberta a leader in the technology.
“Alberta has a unique opportunity to show the world that the solution to reducing emissions does not mean limiting productivity, growth or innovation in oil and gas development,” she said.
“Rather, it is about using the profitability of the oil and gas sector to invest in the very technologies that will revolutionize all industries in their efforts to reduce emissions worldwide.”
When Alberta Premier Danielle Smith was asked about the power of British Columbia or First Nations to veto a potential pipeline deal, she said there was a “requirement for consultation” and “an imperative for First Nations ownership.” Smith added that she spoke with British Columbia Premier David Eby last night and said “there are a lot of issues in the agreement that we can focus on together.”
The two sides also agreed to sharply reduce methane emissions associated with the oil patch—a goal of reducing emissions by 75 percent from 2014 levels by 2035.
Conservative leader Pierre Poilievre rejected the Memorandum of Understanding, saying the pipeline would be approved immediately by the Conservative federal government.
“Prime Minister Mark Carney is standing in the way of all this with federal regulations and taxes that reduce output, lower wages and raise the cost of living,” he said.
“Today's memorandum does not promise that the pipeline will be built,” Poilievre added. “They promise that after seven months the project proposal will be submitted to the federal department for further study within two years.”
Environmental groups condemn the deal
A number of environmental groups reacted negatively to the news, with the David Suzuki Foundation saying the deal was a “devastating blow to the climate and nature.”
“The federal government cannot claim to be meeting its climate obligations under international law while at the same time committing to increased use of fossil fuels that is holding Canada back with decades of avoidable emissions,” said Sabaa Khan, the foundation's climate director.
Environment said the memorandum of understanding is a blow to Canada's climate ambitions and “a gift to the oil industry and Premier Alberta Smith at the expense of virtually everyone else.”
Rick Smith, president of the Canadian Climate Institute, said the exclusion of Alberta's Memorandum of Understanding on the Clean Power Regulations could trigger a race to the bottom on climate policy.
