In a move that could reshape Canada’s energy landscape for decades to come, Prime Minister Mark Carney and Alberta Premier Danielle Smith put pen to paper Thursday on a sweeping energy agreement that clears a path for a new oil pipeline to the West Coast one that backers say could begin construction as early as September 2027.
The deal, signed in Calgary, marks a significant thaw in what has been a long and often bitter standoff between Ottawa and Alberta over energy policy, carbon pricing, and the future of the oil sands. For Smith, it was a moment of vindication. For Carney, it was a signal to the world that Canada means business.
“This agreement clearly sets out a pathway to the construction of a new oil pipeline,” Smith told reporters following the signing, adding that the proposed line would carry more than one million barrels of oil per day to Asian markets. Officials briefed reporters ahead of the press conference that the pipeline is expected to be fully operational no later than 2034.
One of the thorniest issues in the agreement was industrial carbon pricing. Under the deal, Alberta’s effective carbon price will climb to $130 per tonne by 2040 a notably softer trajectory than the $170 per tonne by 2030 that the previous federal Liberal government had pushed for. Smith had long warned that the steeper rate would effectively cap oil and gas production in the province, and she wasn’t about to budge.
The premier framed the concession in dramatic terms, saying the lower rate could save Alberta’s industry an estimated $250 billion in compliance costs over the next two decades.
Not everyone is celebrating that math. B.C. Premier David Eby, speaking two days before the signing, raised pointed concerns about competitive fairness. If Alberta gets a special federal carbon rate while the rest of the country operates at $170 per tonne, he argued, British Columbia would be left at a disadvantage. Eby said he had raised the issue directly with Carney and was pressing for assurances that projects in his province would receive the same level of federal attention as the proposed pipeline.
The proposed pipeline comes with one notable caveat: there is no private-sector proponent yet. Smith acknowledged this, but wasn’t overly troubled by it. She suggested a company would step forward once there was enough certainty that the project would actually get built and Thursday’s agreement, she implied, was precisely the kind of certainty the market was waiting for.
Alberta plans to formally submit the pipeline proposal to the federal Major Projects Office by July 1, a step that would designate it a project of national interest and unlock a faster approval process.
Carney, for his part, leaned into the investor pitch. The agreement, he said, builds the kind of trust that markets need proof that “Alberta and Canada are reliable and attractive destinations where opportunities are plentiful, the rules are clear, and one project means one review.” He also emphasized that the pipeline’s construction would create tens of thousands of high-paying jobs and that British Columbia would share in the economic benefits.
Both leaders stressed that any pipeline project would require meaningful consultation with First Nations and Indigenous communities, and that opportunities for co-ownership and partnership would be central to the process not an afterthought.
“We will continue to consult with First Nations and Indigenous communities to ensure their rights are protected,” Smith said, “while supporting opportunities for ownership and partnership.”
Carney echoed those commitments, framing Indigenous economic participation not just as a legal obligation but as a cornerstone of how the project would succeed.
Beyond the pipeline, the agreement sets out a wider vision for Canada’s energy future. Ottawa and Alberta committed to working together to double the province’s electricity grid by 2050, with nuclear, wind, and solar all playing a role. A new joint Electricity Working Group will be struck to chart a course toward net-zero emissions in Alberta by mid-century.
The two governments will also collaborate on advancing the Oil Sands Alliance carbon capture project, and look to expand electricity supply to meet growing demand from AI infrastructure and data centres.
Finalizing agreements around clean energy regulations, the proposed oil and gas emissions cap, methane equivalency, and impact assessment cooperation are all on the agenda before the year is out.
Conservative Leader Pierre Poilievre welcomed the idea of the pipeline but wasted little time in going after the Liberals over the pace of the process.
“The industrial carbon tax should be zero,” he said flatly on May 14, arguing that even the lower rate would push up the costs of homebuilding and food production. On the pipeline itself, Poilievre said the federal government had moved too slowly no route had been chosen, no Indigenous consultations had begun, no permit had been issued.
“We want Prime Minister Carney to announce that he will permit a pipeline to the Pacific within 100 days of getting Alberta’s application, and that that pipeline will be under construction before this Christmas,” Poilievre said.
The signing marks an early test of Carney’s ability to knit together a fractious federation on one of Canada’s most divisive files. Whether the agreement holds together and whether a private proponent steps up to build the pipeline will depend on months of negotiations, regulatory reviews, and consultations that are only just beginning.
But for one afternoon in Calgary, at least, Canada’s two most powerful energy figures were standing in the same room, pointing in the same direction.
