Canada-Alberta MOU: A Grand Bargain on Climate and Pipelines?

On November 27, 2025, Alberta and Canada signed a memorandum of understanding (MOU) that includes federal support for a pipeline through northern British Columbia (BC), predicated on a collaborative framework for climate and energy regulation and project development.

The MOU advances the pipeline project important to Alberta and in return requires certain middle ground climate policies and Pathways — a major carbon capture, utilization and storage (CCUS) project. The MOU promotes pipeline co-ownership by Indigenous governments but does not require Indigenous consent.

The MOU represents a grand bargain between Ottawa and Alberta to move from conflict to collaboration on pipelines and climate. More work will be required to convince BC and Indigenous governments on the merits of another pipeline to the west coast. Without additional engagement, any new pipeline could be caught in prolonged legal challenges.

Projects

The heart of the MOU is a commitment to a new bitumen pipeline and to Pathways:

• The bitumen pipeline(s) is intended to be a privately funded and constructed oil pipeline with opportunities for Indigenous co-ownership and benefits. The pipeline would carry at least one million barrels per day to the British Columbia coast. This new pipeline is in addition to the proposed expansion of the Trans Mountain pipeline to increase capacity by 300,000-400,000 barrels per day. Alberta would act as a proponent for this pipeline. Canada would declare that the pipeline is a project of national interest and can be referred to the Major Projects Office for consideration of designation under the Building Canada Act. Canada also would exempt such a pipeline from the North Coast tanker ban under the Oil Tanker Moratorium Act if needed. Alberta commits to collaborate with BC to ensure British Columbians share the benefits of the proposed pipeline. BC’s consent is not required.
• Pathways is the world’s largest proposed CCUS project, being developed by a consortium of private companies. Alberta and Canada agree to extend their respective financial supports for CCUS, the Alberta Carbon Capture Incentive Program and the federal income tax credits (ITCs) and other policy supports to support Pathways. Alberta and Canada will work with Pathways’ private proponents to sign a tri-lateral MOU on or before April 1, 2026, to advance Pathways and related emissions reductions projects.

Alberta and Canada agree that the bitumen pipeline and Pathways are mutually dependent – neither can move forward unless both do.

The MOU also includes other projects that are federal priorities. Alberta commits to:

• Collaborate on the construction of large transmission interties with BC and Saskatchewan to strengthen the ability to supply low carbon power to critical industries;
• Construct thousands of megawatts of AI computing power, with a large portion dedicated to sovereign cloud for Canada and its allies, under a framework subject to federal comment; and
• Develop a nuclear generation strategy, in collaboration with Canada, to build and operate nuclear power generation by 2050.

Policy Changes

Underlying the MOU projects, Canada and Alberta agree to revise the framework for climate regulation in Alberta. Canada will remove several federal policies that Alberta has previously opposed:

• Canada will not implement the proposed Oil and Gas Emissions Cap;
• Canada will immediately suspend the Clean Energy Regulations¹ in Alberta pending a new carbon pricing agreement discussed below;
• Canada will remove certain of the “greenwashing” provisions of the Competition Act; and
• Canada will extend its ITCs to cover previously excluded enhanced oil recovery CCUS.

Canada and Alberta have then committed to reach agreement on industrial carbon pricing and a methane equivalency agreement, on or before April 1, 2026. These agreements will:

• Recognize Alberta’s jurisdiction over its industrial carbon-pricing system, the Technology Innovation and Emissions Reduction (TIER) program;
• Ensure that carbon prices under the TIER reach $130/tonne, an increase to Alberta’s level paused at $95/tonne but less than the federal government’s planned $170/tonne;²
• Design globally competitive, long-term carbon effective prices, carbon levy recycling protocols, and sector-specific stringency factors for large Alberta emitters in both the oil and gas and electricity sectors;
• Require a 75% reduction in methane emissions by 2035, five years later than the federal government’s current goal of 2030.

In addition to these climate matters, Alberta and Canada agree to work together to streamline regulatory process, including negotiating a cooperation agreement on impact assessments on or before April 1, 2026.

Indigenous Matters

Canada and Alberta generally commit to respect Aboriginal and Treaty rights, but specific commitments are limited:

• The bitumen pipeline must only provide opportunities for Indigenous co-ownership, not guaranteeing Indigenous equity.
• Alberta and Canada commit to utilize their respective Indigenous financing programs, the Alberta Indigenous Opportunities Corporation and the Canada Indigenous Loan Guarantee Corporation, to help backstop Indigenous co-ownership of the bitumen pipeline project and, if appropriate, Pathways.
• Canada and Alberta also agree to engage meaningfully with Indigenous Peoples in both Alberta and British Columbia on the bitumen pipeline, and to work cooperatively to consult and accommodate Indigenous peoples in Alberta on Pathways. Indigenous consent is not required.

Conclusion

A press release from the Office of the Prime Minister states that the MOU projects will only be built in consultation and partnership with Indigenous rights-holders and BC. However, BC and several communities, including coastal First Nations and Kitimat and the Haisla Nation, were not consulted prior to signing the MOU or have expressed opposition to the pipeline deal and a lack of interest in the economic opportunities presented in the MOU. Without further engagement with BC and affected Indigenous governments, there is a risk of court challenge to any new pipelines to the west coast.

Given the six deadlines in the MOU scheduled for spring and summer 2026, Alberta and Ottawa will likely be working diligently to fulfill its objectives. We expect significant engagement with BC and affected Indigenous governments in the near term. Progress on new pipeline projects and carbon pricing in Alberta will depend on it.

With extensive experience supporting multiple multi-billion dollar complex and transformational projects, the Cassels National Major Projects Team leverages the firm’s collective bench-strength to deliver results to developers, governments, investors, and communities in driving Canada’s most ambitious major projects. Learn more about our strategic counsel for nation-building projects here.

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¹ Clean Electricity Regulations, SOR/2024-263.
² Greenhouse Gas Pollution Pricing Act, SC 2018, c 12, s 186, Schedule 4.