Carney, Smith reach energy agreement that could see pipeline construction start in 2027

The federal and Alberta governments have advanced a climate and energy agreement that could see construction on an oil pipeline to the West Coast start as early as September 2027.

Prime Minister Mark Carney and Alberta Premier Danielle Smith made the announcement on Friday in Calgary. The agreement, which builds on the memorandum of understanding that the Alberta and federal governments signed in November, includes a plan to increase Alberta’s industrial carbon price, though at a slower pace than previously projected.

The agreement would see Alberta submit a proposal for a new oil pipeline to the major projects office by July 1, and the federal government designate it as a project of national interest by Oct. 1.

The Alberta government says design and construction “may commence as early as Sept. 1, 2027.” Both governments said that the process will respect Canada’s duty to consult with Indigenous peoples, and that they will engage with British Columbia in discussions on the pipeline application.

Carney and Smith both offered remarks during a signing ceremony in Calgary, but neither took questions. Instead, the two leaders held separate news conferences later in the afternoon where they took questions from reporters.

WATCH | West Coast pipeline build could start by September 2027, Smith says:

West Coast pipeline build could start by September 2027 under new deal with Ottawa: Smith

Alberta Premier Danielle Smith said her government’s new climate and energy agreement with Ottawa ‘clearly sets out a pathway’ for construction of a new oil pipeline to the West Coast that could begin as early as fall 2027. ‘We’re much closer to attaining our joint ambition to make Canada into a global energy leader,’ Smith said.

Smith said the signing of the agreement meant it was a “good day for Alberta and a good day for Canada.”

“It means we’re much closer to attaining our joint ambition to make Canada a global energy leader,” Smith said. “We’ve accomplished a lot together in the last six months.”

In his own remarks, Carney said the agreement was about “trust.”

“Today is also about building trust in a Canada that works. A Canada rooted in co-operative federalism where we build together, pragmatically and ambitiously, to achieve our shared ambitions. A Canada where our differences are strengths to be nurtured and respected,” the prime minister said.

There is no private sector proponent or route for a possible pipeline. The Alberta government says it will act as the project’s proponent in submitting the proposal to the federal government’s major projects office.

Asked if he’s confident that a private proponent would come forward, Carney said he would “leave it” to Smith’s government to say.

“Certainly their expectation — and it shows in terms of the effort that’s been put into the agreement, the specificity that’s been put into the agreement, the timelines for the agreement — the expectation is that that will be the case,” he said following the signing ceremony.

An official speaking on background at a technical briefing Friday said the Alberta government expects the pipeline could start carrying oil no later than 2033 or 2034.

Friday’s agreement follows the memorandum of understanding between the two governments last November that included a carbon price plan and a path toward building a pipeline.

Last week, the federal government proposed sweeping changes to speed approvals for major projects such as pipelines by cutting regulatory timelines and streamlining assessments.

WATCH | Ottawa plans sweeping changes to accelerate approval for pipelines:

Ottawa moves to fast-track major projects as talks with Alberta advance

The federal government is proposing sweeping changes to speed approvals for major projects such as pipelines by cutting regulatory timelines and streamlining assessments. The move comes as Alberta says it is close to a deal with Ottawa on an energy MOU.

The agreement also reaffirms both governments’ commitment to the Pathways Project, a proposed carbon capture, utilization and storage project, and says that the construction of the Pathways and pipeline projects are “mutually dependent.”

But the new agreement suggests that the goals of the Pathways Project have been reduced. The project initially proposed to capture 4.2 megatonnes per year by 2030, scaling to 62 megatonnes by 2050. Friday’s agreement says the project is aiming to capture six megatonnes per year by 2035, with the aim of reaching an overall emission reduction of 16 megatonnes by 2045.

Carbon price to rise

As CBC News and others reported earlier this week, the agreement also sets out a plan to increase the effective industrial carbon emissions price in Alberta to $130 per tonne by 2040, and the headline price to $140 by that time.

Last year, Alberta froze its industrial carbon emission price at $95 per tonne.

The difference between the effective carbon price and the headline price is the way in which companies accumulate credits to comply with their emission limits. 

The effective carbon price — the market price — is the price at which credits are bought and sold on the open market.

The headline price is what companies pay the Alberta government to reach compliance. The money goes into a general fund to invest in emissions reduction technology.

Friday’s agreement also sees Alberta commit to a minimum floor price for those credits beginning in 2030.

The agreement appears to put Alberta’s target below the national carbon price that is supposed to apply to all provinces and territories. The headline price was supposed to rise to $170 per tonne by 2030.

During her news conference after the signing ceremony, Smith said the agreement on the carbon price means the industry will save “billions” in compliance costs. But she also characterized the agreement as “a pretty big concession” on Alberta’s part.

“‘If I had my druthers on what it would be set at, it would probably be somewhere around $50 a tonne,” she told reporters.

“But those are the things we have to negotiate.”

WATCH | Carbon fee ‘a pretty big concession on our part’ in Ottawa-Alberta deal, premier says:

Carbon fee ‘a pretty big concession on our part’ in Ottawa-Alberta deal, premier says

Alberta Premier Danielle Smith said her government made concessions in Friday’s climate and energy agreement with Ottawa, which set her province’s effective industrial carbon emissions price at $130 per tonne by 2040. ‘If I had my druthers on what it would be set at, it would probably be somewhere around $50 a tonne,’ Smith said.

The lower price would force the federal government to be more lenient with other provinces that follow the federal price. A judge ruled in 2021 that all jurisdictions need equal treatment for carbon pricing.

Carney said during his news conference following the ceremony that he’s talking to other provinces about changing the national price, “with the intention of having consistency” across the federal backstop.

It’s not clear how the agreement will impact the federal government’s emission reduction targets.

WATCH | Ottawa seeking carbon pricing consistency for all provinces, Carney says:

Ottawa seeking carbon pricing consistency for all provinces following Alberta deal: Carney

After reaching an agreement with Alberta to update their emissions price increase to $130 per tonne by 2040 from the national schedule of $170 per tonne by 2030, Prime Minister Mark Carney said the federal government has started consultations with other provinces ‘with the intention of having a consistency across the federal backstop.’

A number of environment groups criticized Friday’s agreement. The Pembina Institute said the deal will “undermine clean energy investment, and accelerate climate change.” while the Canada Climate Institute said it will “put Canada’s target of net zero by 2050 well out of reach.”

Carney dismissed those concerns, arguing that the federal and Alberta governments had agreed in writing to reaching net zero emissions by 2050, and that deal “more than compensates” for the potential emissions increase from a new pipeline.

“This is climate action. This is investment, this is moving forward,” he said.

‘Stop rewarding bad behaviour’: B.C. premier

While a potential route for a pipeline hasn’t been finalized, it would have to go through British Columbia to reach tidewater on the West Coast.

B.C. Premier David Eby, who has been a vocal opponent of a new pipeline to the coast, said the federal government is “rewarding bad behaviour” in light of a potential secessionist referendum brewing in Alberta.

“It cannot be the case that the projects that get prioritized in Canada are those where a premier threatens to leave the country,” Ebay said in a statement.

Smith said Friday that she “supports sovereignty within a united Canada,” adding that Friday’s agreement is an indication that “the country can work better.”

“I think this will go a long way to demonstrating that the new prime minister approached the issue of co-operative federalism in a very different way than the previous prime minister has,” Smith said, referring to former prime minister Justin Trudeau.

Carney said he’ll meet with Eby next week to talk about a way forward for the project, among other topics.

Opposition parties blast Carney

Conservative Leader Pierre Poilievre praised Smith’s efforts but criticized Carney for moving too slowly on building a pipeline.

“Conservatives want a pipeline without a carbon tax, not a carbon tax without a pipeline,” Poilievre said in a written statement. The Conservative leader said he would instead scrap the industrial carbon price, and argued that pipeline construction should start this year.

NDP Leader Avi Lewis blasted Carney, saying the agreement marks the prime minister’s “official surrender to the oil and gas lobby.”

“While the rest of the world races ahead on renewables, building the economy of the future, the Liberal government is taking us backwards, locking us into more pipelines, more fossil fuel dependence, and more handouts for some of the richest corporations on earth,” Lewis said in a written statement.

Clean electricity regulations

The agreement also says the clean electricity regulations will remain in abeyance in Alberta pending the outcome of a legal challenge.

If the rules are upheld, Canada and Alberta will enter negotiations on an equivalency agreement under the regulations. If the regulations are found to be unconstitutional, the federal government would repeal them.

On Thursday, Carney announced a new national strategy to double the capacity of Canada’s electrical grid by 2050, which would include an expanded role for natural gas power.

Article source: https://www.cbc.ca/news/politics/carney-smith-energy-announcement-mou-9.7200652?cmp=rss