This new energy partnership is a critical step towards achieving Alberta’s and Canada’s shared goal of turning our country into a world energy superpower and building a stronger and more vibrant economy.

The new energy agreement includes:

• A declaration by the federal government that an Indigenous co-owned Alberta bitumen pipeline to Asian markets is a project of national interest.
• Agreement that the parties will work together to facilitate the application, approval and construction of a privately financed and constructed 1 million+ barrel per day, Indigenous co-owned bitumen pipeline to Asian markets through a strategic deep-water port.
• Commitment by the federal government that it will not be implementing the federal oil and gas emissions cap.
• An immediate suspension of the federal Clean Electricity Regulations, and agreement the parties will work towards the construction of thousands of megawatts of AI computing power, with a large portion dedicated to sovereign computing for Canada and its allies.
• Commitment by both governments to partner with the Pathways companies to finance and construct the world’s largest carbon capture utilization and storage (CCUS) project for the purpose of making Alberta bitumen amongst the lowest emission intensity barrel of heavy oil in the world.
• In order to achieve net zero greenhouse gas emissions by 2050, the Alberta and federal governments will design and commit to globally competitive, long-term carbon pricing and sector-specific stringency factors by Apr. 1, 2026, for large Alberta emitters in both the oil and gas and electricity sectors through Alberta’s TIER system.
• Entering into a methane equivalency agreement by Apr. 1, 2026, with a 2035 target date and a 75 per cent reduction target relative to 2014 methane emissions levels.
• Agreement to immediately consult and work with Indigenous partners and the Government of British Columbia to ensure their peoples enjoy substantial economic and financial benefit from the pipeline.
• Significantly decrease regulatory uncertainty through a variety of changes to various legislation, regulation and policy.

The new agreement also demonstrates that both Alberta and Canada are focused on ways to increase the production and export of Alberta oil and gas, maximize growth in AI datacentre and related industries in Alberta, assist Canada in achieving its national security goals, create hundreds of thousands of new jobs, all while reducing the emissions intensity of Canadian oil, gas and electricity through the development and implementation of CCUS, nuclear and other emissions reducing technologies.

“This is Alberta’s moment of opportunity to take the first steps toward being a global energy superpower and show the nation that resource development and sustainability can coexist. There is much hard work ahead of us, but today is a new starting point for nation building as we increase our energy production for the benefit of millions and forge a new relationship between Alberta and the federal government.”

Oil pipeline

An Indigenous co-owned bitumen pipeline to Asian markets will ensure the province and country are no longer dependent on just one customer to buy their most valuable resource. It is agreed this new pipeline would be in addition to the expansion of the Trans Mountain pipeline for an additional 300,000 to 400,000 barrels per day destined for Asian markets.

This agreement also allows for needed adjustments to the tanker ban when the new pipeline to Asia is approved by the major projects office, as well as amendments that ensure Alberta’s energy companies can advertise their environmental leadership and efforts throughout the world without fear of penalty.

“This pipeline is an excellent opportunity to demonstrate partnership and progress. My hope is that it will create lasting economic benefits for First Nations and strengthen the relationships that matter most — government-to-government and community-to-community. Indigenous equity ownership is shaping Canada’s economy, and when our voices help guide every decision, we build trust and a future that will support generations to come.”

Oil and gas emissions cap

The federal government has also committed to not implementing the oil and gas emissions cap, allowing for a massive increase in oil production and private sector jobs and moving Alberta towards its goal of reaching six million barrels per day of oil production by 2030 and eight million barrels per day by 2035.

“The Energy Accord signed today by Prime Minister Carney and Premier Smith sends an important signal that Canada’s oil and gas development is integral to the economy and is open for business. This agreement shows that Canada is taking action to address regulations and policy that are impacting competitiveness and investment.”

“The Business Council of Alberta is delighted to see the removal of the oil and gas emissions cap, which was a cap on production and prosperity in Canada. Now, without the cap, Canada truly can grow energy production, export globally, and generate the investments and jobs that will help deliver a better quality of life for all Canadians.”

Clean Electricity Regulations

The agreement also includes the immediate suspension of the Clean Electricity Regulations in Alberta, which will stabilize Alberta’s power grid and enable massive investments in AI data centres in the province. Instead, Alberta will work with the federal government and industry on a new industrial carbon pricing agreement, to be administered through Alberta’s TIER program.

Pathways and emissions reduction

Both governments are committed to working together with the Pathways companies to advance the completion of the world’s largest CCUS infrastructure project.

This will make Alberta a world leader in the development and implementation of emissions reduction infrastructure – particularly in carbon capture utilization and storage. Alberta bitumen will be the cleanest heavy oil on the planet displacing heavier emitting oil from Russia, Venezuela and Iran, and bringing better environmental and geopolitical outcomes.

“The Pathways Alliance appreciates the leadership of both Prime Minister Carney and Premier Smith in entering this important Memorandum of Understanding which supports the growth of an industry that is critical to Canada’s economy. We look forward to working on the details with both the federal and Alberta governments in the coming months with our shared goal of Canada being an energy superpower.”

Energy trade with the U.S. alone is over C$80 billion more than all merchandise trade between Canada and China

Canada’s energy sector is a cornerstone of North American prosperity, but a number of federal policies have weakened its foundation over the past decade, observes a new MEI publication released this morning.

“For a century, this North American energy machine kept churning, irrespective of political winds and to the betterment of everyone on both sides of the 49^th parallel,” says Taylor MacPherson, associate researcher at the MEI and author of the report. “But we can’t take it for granted; we must be steadfast in protecting this unique, mutually beneficial relationship.”

Canada is the world’s fourth-largest oil producer, fifth-largest natural gas producer, and third-largest hydroelectric generator.

Canadian exports of hydrocarbons—commodities such as crude oil, natural gas, natural gas liquids, and refined petroleum—to the United States alone totalled C$169.8 billion in 2024. This represents 22 per cent of all goods Canada exported that year.

Canada imported C$33.4 billion in U.S. hydrocarbons, representing 4 per cent of all goods imports.

“This partnership is a genuine two-way lifeline,” said Mr. MacPherson. “In the winter, U.S. gas backs up Ontario during the frigid months, while Canadian gas feeds Californian power plants in the summer, so neither country is exposed to excessive price shocks.”

The two nations have complementary market structures: for instance, Canada produces heavy crude ideal for America’s complex refineries. In the meantime, U.S. shale fields produce light oil that eastern Canadian refineries can use.

Two-way energy trade stands at over C$200 billion annually, equalling 13 per cent of all Canadian merchandise trade. This is larger than Canada’s entire two-way merchandise trade with China in 2024, which stood at C$118.7 billion.

The energy sector accounts for 10.3 per cent of Canada’s GDP in 2023 and 3.4 per cent of employment, totalling 697,000 jobs.

Employment in the sector is among the best paid in the country, with average annual compensation in oil and gas reaching roughly C$200,000, compared to just over C$75,000 across all industries.

Total contributions to government coffers from the industry are substantial, with tens of billions of dollars collected in 2024-2025, including close to C$22 billion by Alberta alone.

“This is not just money on a spreadsheet,” says Mr. MacPherson. “It is what funds our schools, our hospitals, and the services Canadians rely on. The government risks weakening our communities with its recent actions.”

Recent legislation has made the development of the energy sector increasingly difficult, which risks undermining this integration, to everyone’s detriment.

In 2019, the Impact Assessment Act replaced earlier legislation, and uncertainty created by its adoption has been reported to be a contributor to the drop in Canadian investment.

Another emerging threat has been the federal government’s proposed oil and gas emissions cap. If Ottawa were to remove it, as has been suggested, it would be removing what has long been perceived as a production cap by the industry.

Canada’s 2019 Oil Tanker Moratorium Act bans large crude and “persistent” oil tankers from B.C.’s north coast, effectively shutting the door on any major export terminal at Prince Rupert, Kitimat, or nearby ports.

“North American energy integration is a marvel of pipelines and power lines,” says Mr. MacPherson. “A confluence of harmful legislation risks toppling Canada as an energy leader, and will leave us a far cry from becoming the ‘energy superpower’ promised by Prime Minister Carney.”

You can read the Economic Note here.

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The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.