Canada’s federal government and the oil-producing province of Alberta aren’t expected to reach a deal on carbon pricing by their self-imposed April 1 deadline amid complicated negotiations, sources in the industry have told Reuters.
Canada’s Prime Minister Mark Carney last year rolled back some of the climate policies of Justin Trudeau as the new government sought to prioritize economic growth and energy exports amid strained relations with the United States under President Trump.
Canada’s federal government last autumn vowed to prioritize effective carbon markets, enhanced methane regulations, and technologies such as carbon capture and storage as the primary means to reduce oil and gas emissions.
Carney’s government signaled it would scrap the Trudeau’s controversial emissions cap plan.
The Carney government’s Climate Competitiveness Strategy in Budget 2025 acknowledged the need to reduce emissions from the oil and gas sector to ensure Canada has access to markets that prioritize sustainability.
Carney’s climate strategy is “based on driving investment, not on prohibitions, and on results, not objectives,” the plan says.
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Yet, talks on an agreement on stronger industrial carbon pricing policy with Alberta could extend beyond the April 1 deadline amid challenging negotiations.
Some big oil sands producers are reportedly pushing back against some of the points in the federal government’s plan, according to Reuters’ sources.
Canada’s Minister of Energy and Natural Resources, Tim Hodgson, has acknowledged that an agreement could face minor delays.
“As we all know in doing deals, sometimes deals come right up to the deadline. Sometimes they go a little bit over the deadline,” Hodgson has said, as carried by Reuters.
The uncertainty is delaying investments in carbon capture initiatives in the oil sands.
One of the biggest producers, Canadian Natural Resources, early this month said it would defer its US$6 billion (C$8.25 billion) Jackpine project for carbon capture at the oil sands mine expansion at Albian, “due to the lack of finalization of government regulatory policies as it relates to carbon pricing and methane, which creates uncertainty and economic burden for long-term growth investments.”
“Once there is more certainty on these regulatory policies, approval timelines and egress, we will reassess the viability of this project,” Canadian Natural Resources said.
By Charles Kennedy for Oilprice.com
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