Canada abandons climate policies, Carney supports new pipeline

Canadian Prime Minister Mark Carney announced an agreement with the province of Alberta that would amount to a dismantling of the country’s most important climate policies while also paving the way for a new long-distance oil pipeline and a potential expansion of Alberta’s oil sands industry. Carney said the deal will strengthen Canadian sovereignty, but environmental organisations and First Nations called the deal a betrayal.

As part of the memorandum of understanding (MOU) between the Canadian government and the provincial government announced on November 27th, Carney agreed to drop the oil and gas sector emissions cap, delay cuts in methane emissions, and suspend clean electricity regulations for Alberta. Canada will also designate a new oil sands pipeline to the Pacific Coast to export oil to Asia as a top national priority, and the government would seek an exemption to the existing moratorium on oil tankers along the coast of northern British Columbia.

“It creates an energy transition, all aspects of energy, but really sets the stage for an industrial transformation,” Carney said. “At the core of the agreement, of course, is a priority to have a pipeline to Asia that’s going to make Canada stronger, more independent, more resilient, more sustainable.”

Carney won his national election earlier this year on a platform of protecting Canadian sovereignty and pursuing “nation building” projects, with a heavy emphasis on oil and gas production that could reach markets beyond the United States.

Over the summer, the Canadian Parliament passed legislation that would streamline permitting for big infrastructure projects deemed to be in the national interest. At the time, critics feared that the legislation would be used to fast-track new oil and gas projects, undermining Canada’s climate commitments.

But the deal in late November with the province of Alberta marks a much deeper shift away from climate policy.

In addition to scrapping signature climate policies, Carney agreed to water down existing regulations on greenwashing in advertising.

For Alberta’s part, the province will commit to increasing its industrial carbon pricing and investing in carbon capture systems.

However, tax credits intended for carbon capture are reportedly also going to be made available for enhanced oil recovery, a production process that will result in higher output and more greenhouse gas emissions.

A coalition of 41 civil society organisations signed a joint statement blasting Carney’s deal with Alberta, and singled out the prospect of another long-distance oil pipeline from Alberta to the Pacific Coast. “A pipeline makes no sense—there is no proponent, no market, no plan, and no consent from impacted Nations,” they wrote.

“This isn’t nation-building—it’s nation betraying.”

Canada not on track for emissions reductions

Steven Guilbeault, Minister of Canadian Identity and Culture, resigned from Carney’s cabinet immediately after the MOU with Alberta was announced. He was the Minister for Environment and Climate Change from 2021 through early 2025 under the previous Liberal government. He cited the lack of consultation with First Nations, the environmental damage from a new oil pipeline, and the potential environmental hazards from oil tankers on the Pacific Coast as reasons for his resignation. He also saw the tax credits for enhanced oil recovery as unacceptable.

“We have abandoned 2030 [climate targets]; there’s no way we can achieve that,” he said, according to the National Observer. Referring to claims from the Canadian government that Canada is still on track to meet those targets, Guilbeault said: “I think it lacks the honesty that Canadians deserve on this issue. It’s disingenuous.”

A recently-published report from the Parliamentary Budget Officer, an office that provides financial analysis to Parliament, concluded that Canada was not on track to reach its 2030 climate targets. By law, Canada is supposed to reduce emissions 40 to 45 percent below 2005 levels by the end of the decade, but is only on course to reduce emissions by 31.5-33.5 percent.

The oil and gas sector accounts for Canada’s largest source of greenhouse gas emissions, and while other sectors of the economy have made significant progress in reducing emissions, there has been little improvement in Canada’s oil sands. Emissions from the sector are up 7 percent since 2005, and are 77 percent higher than 1990 levels.

The emissions cap was meant to address this problem, requiring carbon pollution cuts specifically from the oil and gas sector. Carney has now abandoned that commitment. 

The MOU with Alberta appears to have been the final straw in relations between the environmental community and Carney. As a former central banker who spoke forcefully in the past about the risks to the financial system from climate change, there was some expectation that he would accelerate Canada’s energy transition and lead on climate policy, both at home and abroad.

But his first year in office has been marked by unwavering support for the expansion of Canada’s oil and gas industry.

As the Canada-based National Observer put it, since Carney became Prime Minister earlier this year, his dismantling of Canadian climate policy includes: “ditching consumer carbon pricing, energy efficiency retrofit programs, the proposed oil and gas cap, pausing electric vehicle sales mandates, announcing plans to gut anti-greenwashing rules and giving the government power to override environmental regulations and Indigenous consent to build major projects.”

He has also supported several LNG projects and long-distance gas pipelines in British Columbia.

“This deal is even worse than we had anticipated,” said Keith Brooks, programs director at Environmental Defence, a Canadian NGO. “Oil demand is expected to peak by the end of this decade. Pushing through with a new oil sands pipeline will lead to billions in stranded assets and cleanup liabilities.”

The oil and gas sector welcomed the news.

The Canadian Association of Petroleum Producers said the MOU “reflects an earnest commitment to collaborate and grow Canada’s oil and natural gas industry.”

“The elimination of the emissions cap, changes to the Competition Act, and the commitment to work together on new market access are all significant steps towards unlocking Canada’s vast natural energy resources and putting us on a path to become the world’s next energy superpower,” Lisa Baiton, CAPP’s CEO, said in a statement.

There is still some uncertainty about whether or not the industry will be able to construct a new oil pipeline from Alberta to the coast of British Columbia. The last time a private company tried, the pipeline — the Trans Mountain expansion project — had to be nationalized in order to be completed. Costs skyrocketed and construction took years longer than anticipated.

Carney says that any new pipeline would need to have the support of First Nations. Initial reactions from Indigenous leaders were not positive.

“British Columbians and First Nations have been crystal clear: crude oil tankers do not belong in the Great Bear Sea,” Grand Chief Stewart Phillip, president of the Union of BC Indian Chiefs (UBCIC), said in a statement. “The answer is still no and always will be. We will not stand idly by.”

(Writing by Nick Cunningham; editing by Sophie Davies)