Canadian Energy Centre
Proposed emissions cap threatens critical Canada-U.S. energy trade
From the Canadian Energy Centre
The vast majority of Canadian oil exports to the United States are processed in Midwest states. Above, the Cushing Terminal near Cushing, Oklahoma is Enbridge’s largest tank farm and the most significant trading hub for North American crude.
Canada and the United States share something that doesn’t exist anywhere else. A vast, interconnected energy network that today produces more oil and gas than any other region – including the Middle East, according to analysis by S&P Global.
It’s a blanket of energy security researchers called “a powerful card to play” in increasingly unstable times.
But, according to two leaders in governance and energy policy, that relationship is at risk.
Analysis has shown that the federal proposal to cap emissions in Canada’s oil and gas sector would result in reduced production. That likely means less energy available to Canada’s largest customer, the United States.
Jamie Tronnes, executive director of the Center for North American Prosperity and Security, is a former Canadian political staffer born in northern Alberta now living in Washington, D.C.
Jamie Tronnes
Heather Exner-Pirot is a prominent energy policy analyst and senior fellow with the Ottawa-based Macdonald-Laurier Institute.
Heather Exner-Pirot
Here’s what they shared with CEC.
CEC: The U.S. is one of the world’s largest oil and gas producers. Why does it need imports from Canada?
HEP: It’s because all oil is not the same. The United States developed its refinery industry before the shale revolution, when they were importing heavier crudes. Canada has that heavier crude. They are now exporting some of their sweet light oil and importing Canadian crude because that’s what their refinery mix requires.
What’s interesting is that we have never exported more Canadian crude to the United States than we are right now. Even as they have become the world’s largest oil producer, they’ve never needed Canadian oil more than today.
They also import a ton of natural gas from us. They have become the world’s biggest gas producer and the world’s biggest gas exporter, but part of that, and having their LNG capacity being able to so quickly surpass Qatar and Australia, is because some of the production is being backfilled by Canada.
CEC: Will the incoming new administration (either Democrat or Republican) impact the Canada-U.S. energy relationship?
JT: I don’t see a big change happening in such a way as it did when the Biden administration came in with the axing of the Keystone XL pipeline. Now that Russia has invaded Ukraine, the global energy market has changed radically.
On the Republican side, Trump often repeats the phrase “drill, baby drill.” The issue is that the U.S. is already drilling about as much as demand allows.
I don’t think a Harris government would move quickly to limit oil and gas production without having a strategic alternative in place. It simply would make her look very weak, and she has explicitly said that she would not ban fracking.
In the post-COVID world, I believe that the Democrat side of the aisle is coming to the view that it was a geopolitical mistake in terms of securing North American energy dominance to cut the Keystone XL pipeline.
The reality is that being able to export refined Canadian feedstock is key to keeping the U.S. as an energy superpower.
The U.S. government continues to offer and subsidize tax credits for investment in carbon capture technology. Even though Trump has said that he would end all of those carbon capture credits and subsidies, it still would not stop the U.S. from importing Canadian oil and gas.
That’s only going to grow as things like AI continue to create more demand for energy. A huge amount of the United States electrical energy grid is powered still by natural gas, and that’s going to take decades to change.
CEC: Would a reduction in Canadian production from the federal government’s proposed oil and gas emissions cap impact the United States?
HEP: Yes, and we should be raising the alarm bells. The federal government has said it is a cap on emissions, not a cap on production, but all the analysis that Alberta and the oil and gas sector have done is that it will create somewhere between 1 million and 2 million barrels of production being shut in.
Well, 95 per cent of our exports are to the United States. If we are shutting in 1 million barrels or 2 million barrels, that all comes out of their end just when their shale oil is expected to plateau and decline.
A cap would also tap down natural gas production and LNG capacity. If you’re Japan or South Korea and you’re looking to secure 20 years of supply, the cap creates a lot of uncertainty with that Canadian supply. There’s zero uncertainty with Qatar’s supply. If you’re Japanese, these are not pleasant conversations. This is not giving you confidence. And if you don’t have confidence in LNG, you’re going to burn coal.
In a perfect world, Canada would supply LNG to Asia, the United States would supply it to Europe, and we’d be a pretty energy-independent Western alliance.
I wish we would be honest that we need a different way to reduce emissions that does not take away from production, because that capacity is a big part of what we offer our allies right now.
JT: It threatens the security of North America in a big way because the energy dominance of the United States is tied to Canada. Especially with what’s going on in Russia and other countries, it behooves us as Canadians and me as an American to remember that security is not freely granted.
We have to make sure that we are thinking more holistically when we think of things like emissions cap legislation that’s going to have knock-on effects and may even increase emissions. If you’re trying to replace that feedstock, it’s got to come from somewhere.
From the Canadian Energy Centre
‘We are excited to bring this made-in-Canada innovation to the world’
To the naked eye, it looks about as exciting as baking soda or table salt.
But to the scientists in the University of Calgary chemistry lab who have spent more than a decade working on it, this white powder is nothing short of amazing.
That’s because the material they invented is garnering global attention as a new solution to help address climate change.
Known as Calgary Framework-20 (CALF-20 for short), it has “an exceptional capacity to absorb carbon dioxide” and was recognized in connection with the 2025 Nobel Prize in Chemistry.
A jar of CALF-20, a metal-organic framework (MOF) used in carbon capture. Photo courtesy UCalgary
“It’s basically a molecular sponge that can adsorb CO2 very efficiently,” said Dr. George Shimizu, a UCalgary chemistry professor who leads the research group that first developed CALF-20 in 2013.
The team has been refining its effectiveness ever since.
“CALF-20 is a very exciting compound to work on because it has been a great example of translating basic science into something that works to solve a problem in the real world,” Shimizu said.
Advancing CCS
Carbon capture and storage (CCS) is not a new science in Alberta. Since 2015, operating projects in the province have removed 15 million tonnes of CO2 that would have otherwise been emitted to the atmosphere.
Alberta has nearly 60 proposed facilities for new CCS networks including the Pathways oil sands project, according to the Regina-based International CCS Knowledge Centre.
This year’s Nobel Prize in Chemistry went to three of Shimizu’s colleagues in Japan, Australia and the United States, for developing the earliest versions of materials like CALF-20 between 1989 and 2003.
Custom-built molecules
CALF-20 is in a class called metal-organic frameworks (MOFs) — custom-built molecules that are particularly good at capturing and storing specific substances.
MOFs are leading to new technologies for harvesting water from air in the desert, storing toxic gases, and capturing CO2 from industrial exhaust or directly from the atmosphere.
CALF-20 is one of the few MOF compounds that has advanced to commercial use.
“There has been so much discussion about all the possible uses of MOFs, but there has been a lot of hype versus reality, and CALF-20 is the first to be proven stable and effective enough to be used at an industrial scale,” Shimizu said.
It has been licensed to companies capturing carbon across a range of industries, with the raw material now being produced by the tonne by chemical giant BASF.
CO2 pipeline at the Quest CCS project near Edmonton, Alta. Photo courtesy Shell Canada
Carbon capture filter gigafactory
Svante Inc. has demonstrated its CALF-20-based carbon capture system at a cement plant in British Columbia.
The company recently opened a “gigafactory” in Burnaby equipped to manufacture enough carbon capture and removal filters for up to 10 million tonnes of CO2 annually, equivalent to the emissions of more than 2.3 million cars.
The filters are designed to trap CO2 directly from industrial emissions and the atmosphere, the company says.
Svante chief operating officer Richard Laliberté called the Nobel committee’s recognition “a profound validation” for the entire field of carbon capture and removal.
CALF-20 expansion
Meanwhile, one of Shimizu’s former PhD students helped launch a spinoff company, Existent Sorbents, to further expand the applications of CALF-20.
Existent is working with oil sands producers, a major steel factory and a U.S.-based firm capturing emissions from other point sources, said CEO Adrien Côté.
“The first users of CALF-20 are leaders who took the risk of introducing new technology to industries that are shrewd about their top and bottom lines,” Côté said.
“It has been a long journey, but we are at the point where CALF-20 has proven to be resilient and able to survive in harsh real-world conditions, and we are excited to bring this made-in-Canada innovation to the world.”
Construction of an oil sands SAGD production well pad in northern Alberta. Photo supplied to the Canadian Energy Centre
From the Canadian Energy Centre
The facts about one of Canada’s biggest industries
Alberta’s oil sands sector is one of Canada’s most important industries — and also one of its most misunderstood.
Here are five common myths, and the facts behind them.
Myth: Oil sands emissions are unchecked
Steam generators at a SAGD oil sands production site in northern Alberta. Photo courtesy Cenovus Energy
Reality: Oil sands emissions are strictly regulated and monitored. Producers are making improvements through innovation and efficiency.
The sector’s average emissions per barrel – already on par with the average oil consumed in the United States, according to S&P Global – continue to go down.
The province reports that oil sands emissions per barrel declined by 26 per cent per barrel from 2012 to 2023. At the same time, production increased by 96 per cent.
Analysts with S&P Global call this a “structural change” for the industry where production growth is beginning to rise faster than emissions growth.
The firm continues to anticipate a decrease in total oil sands emissions within the next few years.
The Pathways Alliance — companies representing about 95 per cent of oil sands activity — aims to significantly cut emissions from production through a major carbon capture and storage (CCS) project and other innovations.
Myth: There is no demand for oil sands production
Expanded export capacity at the Trans Mountain Westridge Terminal. Photo courtesy Trans Mountain Corporation
Reality: Demand for Canadian oil – which primarily comes from the oil sands – is strong and rising.
Today, America imports more than 80 per cent more oil from Canada than it did in 2010, according to the U.S. Energy Information Administration (EIA).
New global customers also now have access to Canadian oil thanks to the opening of the Trans Mountain pipeline expansion in 2024.
Exports to countries outside the U.S. increased by 180 per cent since the project went into service, reaching a record 525,000 barrels per day in July 2025, according to the Canada Energy Regulator.
The world’s appetite for oil keeps growing — and it’s not stopping anytime soon.
According to the latest EIA projections, the world will consume about 120 million barrels per day of oil and petroleum liquids in 2050, up from about 104 million barrels per day today.
Myth: Oil sands projects cost too much
Heavy haulers at an oil sands mining operation in northern Alberta. Photo courtesy Suncor Energy
Reality: Operating oil sands projects deliver some of the lowest-cost oil in North America, according to Enverus Intelligence Research.
Unlike U.S. shale plays, oil sands production is a long-life, low-decline “manufacturing” process without the treadmill of ongoing investment in new drilling, according to BMO Capital Markets.
Vast oil sands reserves support mining projects with no drilling, and the standard SAGD drilling method involves about 60 per cent fewer wells than the average shale play, BMO says.
After initial investment, Enverus says oil sands projects typically break even at less than US$50 per barrel WTI.
Myth: Indigenous communities don’t support the oil sands
Chief Greg Desjarlais of Frog Lake First Nation signs an agreement in September 2022 whereby 23 First Nations and Métis communities in Alberta acquired an 11.57 per cent ownership interest in seven Enbridge-operated oil sands pipelines for approximately $1 billion. Photo courtesy Enbridge
Reality: Indigenous communities play an important role in the oil sands sector through community agreements, business contracts and, increasingly, project equity ownership.
Oil sands producers spent an average of $1.8 billion per year with 180 Indigenous-affiliated vendors between 2021 and 2023, according to the Canadian Association of Petroleum Producers.
Indigenous communities are now owners of key projects that support the oil sands, including Suncor Energy’s East Tank Farm (49 per cent owned by two communities); the Northern Courier pipeline system (14 per cent owned by eight communities); and the Athabasca Trunkline, seven operating Enbridge oil sands pipelines (~12 per cent owned by 23 communities).
These partnerships strengthen Indigenous communities with long-term revenue, helping build economic reconciliation.
Myth: Oil sands development only benefits people in Alberta
The Toronto Stock Exchange (TSX) on Bay St. Getty Images photo
Reality: Oil sands development benefits Canadians across the country through reliable energy supply, jobs, taxes and government revenues that help pay for services like roads, schools and hospitals.
The sector has contributed approximately $1 trillion to the Canadian economy over the past 25 years, according to analysis by the Macdonald-Laurier Institute (MLI).
That reflects total direct spending — including capital investment, operating costs, taxes and royalties — not profits or dividends for shareholders.
More than 2,300 companies outside of Alberta have had direct business with the oilsands, including over 1,300 in Ontario and almost 600 in Quebec, MLI said.
Energy products are by far Canada’s largest export, representing $196 billion, or about one-quarter of Canada’s total trade in 2024, according to Statistics Canada.
Led by the oil sands, Canada’s energy sector directly or indirectly employs more than 445,000 people across the country, according to Natural Resources Canada.
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