Canada’s Prime Minister Mark Carney signed an agreement on November 27, 2025, with Alberta Premier Danielle Smith to roll back key climate regulations, aiming to attract energy investments and diversify oil exports amid US tariffs imposed by President Donald Trump.
The Memorandum of Understanding removes the planned federal oil & gas emissions cap for Alberta and suspends application of the Clean Electricity Regulations in Alberta pending a new industrial carbon-pricing arrangement.
In exchange, Alberta commits to strengthening industrial carbon pricing and advancing the Pathways Plus carbon capture and storage project, projected to be the world’s largest, targeting emissions from oil sands operations.
Economic pressures driving the shift
The US absorbs 90 per cent of Canada’s oil exports, and Trump’s tariffs threaten a $50 billion hit to the Canadian economy, equivalent to about $1,300 per Canadian household. Carney’s strategy seeks to unlock Alberta’s resources by amending the Oil Tanker Moratorium Act to enable a new West Coast pipeline for Asian markets, though British Columbia Premier David Eby opposes routing it through his province.
Federal support extends to Alberta’s nuclear power development and electricity grid upgrades for AI data centers and inter-provincial transmission lines.
Political and environmental backlash
The rollback marks a departure from policies under Carney’s predecessor, Justin Trudeau, prompting current Environment Minister Steven Guilbeault’s resignation in protest, calling it a betrayal of climate commitments.
Environmental groups criticize the move for undermining Canada’s net-zero by 2050 goal, despite retained elements like enhanced carbon pricing.
Alberta’s industry leaders praise it as essential for competitiveness, while Indigenous coalitions in British Columbia vow to block the pipeline.
Canada’s framework includes stalled measures like oil and gas methane reductions and zero-emission vehicle mandates, paused amid reviews.
Foreign direct investment declined in Q3 2025, heightening urgency for investment-friendly reforms. Carney reaffirms 2030 and 2035 emissions targets but signals flexibility on caps to balance growth and decarbonization.
FAQs
Q. What specific regulations were rolled back?
The MOU suspends (for Alberta) the planned federal oil & gas emissions cap and suspends application of the Clean Electricity Regulations in Alberta pending a new industrial pricing agreement.
Q. Why target Asia for exports?
US tariffs risk $50 billion in losses; a West Coast pipeline could redirect 90 per cent US-bound oil flows.
