Canada eases climate rules in energy deal with Alberta, backs new pipeline push

Canada’s Prime Minister Mark Carney has signed a politically charged deal with Alberta’s premier that relaxes key climate rules in exchange for new investment in energy production, and a renewed push to build an oil pipeline to the West Coast.

Under the agreement, the federal government will scrap its planned emissions cap on the oil and gas sector and drop clean electricity rules. In return, Alberta has committed to strengthening industrial carbon pricing and backing a major carbon capture-and-storage project.

The move, welcomed by the oil industry and fiercely criticised by environmental groups, signals a clear shift in Canada’s energy strategy toward fossil fuel expansion — and is already stirring tension inside Carney’s minority government. Steven Guilbeault, former environment minister under Justin Trudeau, announced his resignation from cabinet, warning that Canada’s climate framework is being dismantled.

Carney, walking a tightrope between climate commitments and economic pressure, is betting on energy to shield Canada from the shockwaves of US President Donald Trump’s tariffs. With 90 percent of Canadian oil exports currently flowing south, he says diversification is now essential.

At an industry event in Calgary, Carney warned that US tariffs and instability could slash $50bn from Canada’s economy, “the equivalent of $1,300 for every Canadian,” and stressed the need for major infrastructure to drive growth and reduce reliance on the US.

Central to the deal is Alberta’s ambition to build a new pipeline to British Columbia’s northwest coast, opening direct routes to Asian markets. No private company has yet committed, but Carney said the federal government would create a “clear and efficient approval process” to make the project viable.

He said the proposed pipeline would carry one million barrels of low-emission Alberta bitumen per day and prioritise access to Asian markets. As part of this, Ottawa has agreed to adjust the Oil Tanker Moratorium Act to help facilitate exports.

British Columbia Premier David Eby remains firmly opposed, insisting the tanker ban should stay. A coalition of Indigenous groups has been even more blunt, saying tankers will not be allowed on the northwest coast and the pipeline will “never happen”.

Currently, the government-owned Trans Mountain pipeline is Canada’s only direct route to Asia, after a C$34bn expansion tripled its capacity last year.

Environmental organisations warn the deal could weaken national climate standards.