Contributed by Robert Lyman © 2025. Robert Lyman’s bio can be read here.

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Four months ago, the Friends of Science published an article I wrote entitled The Climate Gordian Knot. In it, I tried to assess the likelihood that the Mark Carney government would accede to the demands of Premier Danielle Smith of Alberta for changes in federal government climate policies and laws so as to facilitate the growth and prosperity of the oil and gas industry, notably by permitting the construction of new pipeline and port infrastructure that would give access to non-United States markets. The purpose of this article is to assess whether those prospects have improved.

What the Alberta Provincial Government Wants

Premier Smith’s demands are that the federal government:

  • Eliminate the planned cap on greenhouse gas (GHG) emissions from oil and gas;

  • Guarantee Alberta “full access” to oil and gas transportation corridors to the Pacific, Arctic and Atlantic coasts;

  • Repeal the Impact Assessment Act, the so-called “no-more-pipelines Act”;

  • Lift the ban on the movement of oil tankers off the coast of northern British Columbia;

  • Scrap the Clean Electricity Regulations that require the cessation of all hydrocarbons-based electricity generation by 2035;

  • Return oversight of the industrial carbon tax (the Output-Based Pricing System) to the province;

  • Abandon the mandate that all light-duty vehicles sold in Canada be zero-emission by 2035;

  • Halt “federal censorship of energy companies”, which presumably refers to the recent legislation that imposes penalties on companies that make undocumented claims about their GHG emissions;

  • Place no export taxes or restrictions on Alberta’s oil and gas moving to the United States;

  • End the prohibition of single-use plastics; and

  • Amend the Equalization Program so that Alberta is no longer required to “subsidize” other large provinces that are able to finance themselves.

In a subsequent statement, Premier Smith referred to “nine bad laws” that are inhibiting investment in the oil and gas industry. Presumably, she was referring to the conditions she had previously stated.

At the heart of the “grand bargain” Premier Smith envisages is the federal government lifting its planned cap on oil and gas sector greenhouse gas (GHG) emissions, providing financial concessions (i.e. increased taxpayer subsidies) for carbon dioxide capture and storage infrastructure (i.e. the “Pathways project”), granting regulatory approval for construction of an oil pipeline from Alberta to the Pacific coast and port facilities there, and removing the federal government moratorium on oil tanker traffic off the northern British Columbia coast, all in return for increased Alberta subsidies to the Pathways Project and, one might assume, other provincial concessions.

In my previous article, I speculated on the possibility of compromises that might be made once actual negotiations began. I noted that the negotiations would take place against the background of the ongoing (eventual?) negotiations between Canada and the United States on trade and tariff issues.

What, If Anything, Has Changed Since Then? 

On October 1, Premier Smith announced that her government will work with the assistance of a technical working group composed of industry and indigenous representatives to develop an oil pipeline proposal that could be submitted to the federal government for consideration as a “nation-building project” as soon as May, 2026. In effect, the province will facilitate government-industry efforts to complete the first stage of a planning process to develop a “concept pipeline” proposal. The proposal would have enough details on design, routing and costs to determine whether or not it will be approved by the federal Major Projects Office and the federal Cabinet. The clear presumption is that, once that approval is given, a private sponsor will come forward to develop a detailed proposal that could be submitted to regulatory bodies for approval.

At first sight, Alberta’s initiative appears to be an effective way of getting around a “chicken and egg” problem. No major pipeline company has indicated a willingness to sponsor a new west coast oil pipeline project. Enbridge, a potential sponsor, issued a written statement that it would explore market-diversifying projects, provided the demand is there from customers. It would also take “real provincial and federal legislative change” around climate policy, regulatory timeliness and Indigenous participation. “We will be there to build what is needed for our shippers, for Alberta and for Canada — that’s our job, our mission as a company — but only when the conditions make sense and the right framework is in place,” Enbridge said.[1] In other words, policy and legal changes must precede the development of a project proposal, not follow it.

Unfortunately, other developments call into question the province’s likelihood of success.

There has been no movement in terms of Canada-US trade discussions. The Canadian government appears to be playing a waiting game, to which end is not clear. This has added uncertainty that makes business investment decisions more difficult.

Prime Minister Carney has stated that his government has no intention of removing the planned cap on GHG emissions from oil and gas or of rescinding the Impact Assessment Act.

He also has indicated that any of the nation-building infrastructure the government will accelerate must be acceptable to the provinces and the affected indigenous groups, which implies that many parties would have potential veto rights.

The federal government has given no indication of its intention to repeal the Clean Electricity Regulations.

Premier Eby of British Columbia has stated that, in the absence of an actual pipelines proposal, he thinks it is too early for the federal government to be considering removing the tanker ban. His comments were supported by Chief Marilyn Slett, President of the Coastal First Nations[2]. The decision on this lies entirely in the hands of the federal government. It seems highly unlikely that environmental risks would justify the continued imposition of the moratorium (if they ever did)[3]. Nonetheless, it seems unlikely that the federal government would ignore or override provincial and indigenous views.

The Carney government recently reiterated its commitment to the “Net-Zero” climate policy by 2050, but it has seemingly opened the door to minor revisions in its programs and deadlines. It announced a “pause” in the implementation of the electrical vehicle sales mandate for 2026 and its intention to review other aspects of the EV mandate. Prime Minister Carney’s comments before and after the forthcoming United Nations meetings and the COP 30 conference in Brazil in November will bear watching for indications as to whether he is softening or hardening his commitment to rapid decarbonization of the Canadian economy. This will be made clear months before a “concept pipeline” proposal is submitted.

Conclusion 

The Smith government should be congratulated for taking a clear and logical step to advance the prospects for construction of a new oil pipeline.

Sadly, however, there are very few reasons for increased optimism that the “Gordian Knot” that now snarls future development of Alberta’s hydrocarbon resources will be untied, or better yet, cut altogether. As time goes on, failure to resolve these issues in a timely way will have more and more serious implications for oil and gas industry investment and for the ability of oil sands producers in particular to meet the federal government’s requirements for emissions reductions without curtailing production. One wonders how long the differences of position and interests can remain unresolved before the Alberta government is forced to take whatever retaliatory action is available to it.

[1] https://globalnews.ca/news/11261093/alberta-bc-oil-pipeline-discussions/

[2] https://nationalpost.com/news/canada/b-c-premier-eby-urges-carney-to-look-west-but-wont-budge-on-tanker-ban

[3] https://financialpost.com/opinion/opinion-its-safe-for-oil-tankers-to-go-back-to-b-c-s-north-coast