Prime Minister Mark Carney shakes hands with Alberta Premier Danielle Smith in Calgary on Friday.Jeff McIntosh/The Canadian Press
Thomas Gunton is the director of the resource and environmental planning program at Simon Fraser University.
The Friday agreement by Alberta Premier Danielle Smith and Prime Minister Mark Carney on industrial carbon pricing fulfills one of the key conditions in the Ottawa-Alberta deal signed in November, 2025.
But while the announcement is a step forward in meeting the conditions to allow a new oil pipeline to British Columbia’s coast, it is a major step backward in climate policy and does not address the primary obstacles to pipeline construction.
The Friday agreement continues the Carney government’s retreat on climate policy by setting the effective industrial carbon price at $130 per tonne. While that is framed as an increase to Alberta’s carbon price, it is a climbdown from the $170 the previous Liberal government had set. The agreement also delays the implementation date to 2040 from a previous 2030.
Modelling by the Canadian Climate Institute shows emissions being about 84 million tonnes higher by 2050 than they would be if the $130 price was implemented in 2030 and increased to $288 by 2040, as originally planned. This is equivalent to about a 13-per-cent increase in Canadian emissions from current levels.
The Prime Minister states that we will still meet our 2050 net zero target. But this commitment is not supported by any plan to achieve net zero and is contradicted by the continued weakening of climate policy, including the suspension of the clean electricity regulations and zero-emission vehicle mandates. Canada is already falling far short of meeting its 2035 targets and Mr. Carney’s climate commitment sounds increasingly hollow.
To help meet the November memorandum of understanding’s objective to build a new pipeline to the B.C. coast, the Prime Minister has enacted legislation such as the Building Canada Act that allows the government to bypass regulatory review requirements. Mr. Carney is also proposing additional legislative changes that will expedite the approval process.
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Weakening environmental review to accelerate approvals creates obvious risks: inadequate spill prevention, weaker safeguards for species at risk such as killer whales and insufficient assessment of climate impacts.
The real obstacle facing the proposed Alberta pipeline is economics, not regulation. The growth in global oil demand is slowing down. The International Energy Agency forecasts that, if there are no changes to current government policies, demand will continue to grow to 2050, but at a much slower rate than previously forecast.
If announced government policies are implemented, oil demand will peak around 2030 and then begin to decline. If net-zero policies were adopted, oil demand is forecast to decline by about 75 per cent by 2050.
The Canada Energy Regulator’s 2026 report forecasts that the change in the volume of Alberta’s oil exports from 2025 to 2035 range from a decline of 25,000 barrels per day to an increase of 777,000 bpd.
Two pipeline companies – Enbridge Inc. and Trans Mountain Corp. – are able to expand their existing pipeline systems by 1.1 million bpd, and a third proposal to complete the partially constructed Keystone XL could add another 1.1 million bpd.
The Enbridge and Trans Mountain expansions alone are more than enough to accommodate even the most optimistic energy regulator forecast increase of 777,000 bpd, and at a much lower cost than building Alberta’s proposed one-million-bpd pipeline.
The Alberta pipeline proposal makes little to no sense. That is why no private company has come forward to build it.
And if it ended up being built, the tolls required to cover the costs would be significantly higher than the existing pipelines, and the returns to oil producers, Alberta and Canada would therefore be lower.
The need to build the Alberta pipeline to diversify export markets is another rationale that does not stand up to scrutiny.
The advantage of shipping to new markets is minimal because oil prices are set in a world market that moves oil around to smooth out any price differences. And any short-term price advantages in Asia that may appear are more than offset by the higher costs of transport for Canadian producers. That is why a large proportion of Trans Mountain exports go to the United States instead of Asia.
There might be a geopolitical argument for diversifying, but the proposed Trans Mountain expansion already provides this option without a new pipeline.
Constructing a new pipeline when there are lower-cost options is not a smart way to build. And continuing to weaken climate policies in a rapidly warming world is a decision we will all regret.