Canada and Alberta Sign Landmark Energy Collaboration MOU

Yesterday, the Government of Canada and the Government of Alberta have signed a major Memorandum of Understanding (MOU) outlining a joint plan to pursue common federal–provincial objectives in the areas of oil and gas, electricity, carbon capture, utilization and storage (CCUS), Indigenous economic participation, and regulatory reform consistent with achievement of net-zero greenhouse gas emissions in Canada by 2050. The MoU specifically seeks to advance four projects—one or more new pipelines and increased export capacity through the TMX pipeline for oil exports into Asian markets, construction of the Pathways CCUS project, construction of thousands of MWs of new electricity generation to provide AI computing power, and construction of new large transmission interties with B.C. and Saskatchewan.

Below is a high-level summary of the commitments and implementation timelines.

1. Market Access & Energy Infrastructure for Alberta Bitumen

• Joint priority to advance a new Indigenous co-owned Alberta bitumen pipeline to Asian markets.
  • Sets the goal that the pipeline would carry at least one million barrels a day of low emission Alberta bitumen;
  • And would be in addition to the expansion of the Trans Mountain pipeline for an additional 300,000 – 400,000 barrels a day.
• Canada declares it a project of national interest and will support designation under the Building Canada Act. Alberta commits to submitting an application to the Major Projects Office by July 1, 2026.
• Canada commits to enabling bitumen exports from a deep-water port, including a possible adjustment to the Oil Tanker Moratorium Act, subject to Indigenous Co-ownership and shared economic benefits.
  • Commits Alberta and Canada to collaborate with the B.C. Government on Indigenous consultation and on sharing economic benefits with B.C. but does not specify any obligation for B.C.’s support or formal approval of the project.

2. CCUS

• Joint commitment to deliver the Pathways initiative, positioned as the world’s largest CCUS project, and agreement that approval and commencement of Phase 1 Pathways projects will be a precondition for starting the approved bitumen pipeline.
• Alberta commits to extend incentives under the Alberta Carbon Capture Incentive Program (ACCIP) and to build out sequestration permitting capacity.
• Canada commits to extend the CCUS ITC and other financial tools to support CCUS, and related supply chains.

3. Electricity

• Goal of a net-zero electricity grid by 2050, with stability and affordability preserved.
  • Canada and Alberta will work collaboratively to design policy supports that enable deployment of nuclear technology, CCUS and energy storage to enable decarbonization of the electricity system.
• Canada immediately suspends Clean Electricity Regulations (CER) in Alberta, pending a redesigned carbon-pricing framework through Alberta’s Technology Innovation and Emissions Reduction (TIER) system, which includes the electricity sector, to be negotiated by the parties on or before April 1, 2026.
• New Alberta nuclear strategy to be co-developed, with completion targeted for January 1, 2027.
• Large-scale AI computing and sovereign cloud infrastructure encouraged through a new Alberta policy framework (due July 1, 2026).
• Expanded transmission interties between AB–BC–SK to support low-carbon electricity availability and industrial growth.

4. Regulatory Efficiency & Investment Certainty

• Shared commitment to a maximum 2-year timeline for major project approvals, with an aim for shorter timelines.
• Development of a single-window federal–provincial impact assessment process.
• Commitment to reduce regulatory duplication and provide long-term certainty for investors.

5. Carbon Pricing

• Canada and Alberta will introduce:

A carbon pricing equivalency agreement grounded in Alberta’s TIER system. A requirement for TIER to ramp up to a minimum effective carbon credit price of $130 per tonne.An agreement on industrial carbon pricing to be concluded on or before 1 April 2026.A commitment that Canada will not implement an Oil and Gas Emissions Cap if this and other MoU commitments are successfully implemented.6. Methane Equivalency Agreement.

• A methane reduction agreement targeting a 75% cut from 2014 levels by 2035.
• Agreement to be reached on or before April 1, 2026.

5. Indigenous Economic Participation

• Both governments will use federal and provincial Indigenous loan-guarantee tools to support Indigenous co-ownership of the bitumen pipeline and potentially the Pathways project.
• Commitment to meaningful consultation and partnership across all project areas.
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Key Implementation Dates

April 1, 2026

• Carbon pricing equivalency agreement
• Methane equivalency agreement
• Trilateral MOU with Pathways companies Federal–provincial cooperation agreement on impact assessments

July 1, 2026

• Alberta’s pipeline application ready for submission
• Alberta’s AI/data-centre policy framework completed

January 1, 2027

• Alberta nuclear strategy finalized

Analysis

This MOU marks a major shift in the Government of Canada’s approach to the oil and gas sector, set against a backdrop of economic uncertainty driven by U.S. tariffs and broader geopolitical instability.

It signals a new alignment between Canada and Alberta on increased petroleum production and exports, strengthened industrial carbon pricing (with many details to be worked out), and increased electricity production and transmission interties to support AI infrastructure.

While the MOU sets out a framework to de-risk investment in new energy development, questions remain on the potential challenges to the construction of pipelines from British Columbia and Indigenous nations.

Although the MoU indicates a joint commitment to net-zero greenhouse gas emissions by 2050, it indicates that the Pathways project will only proceed if a new pipeline is built and assumes that a strengthened industrial carbon pricing system will help drive enough investment in CCUS (beyond the Pathways project) to offset incremental emissions resulting from the increased bitumen production required to support a new pipeline.