The Decibel - Carney, Smith agree to pipeline framework, as minister resigns

Episode Date: November 28, 2025

Prime Minister Mark Carney and Alberta Premier Danielle Smith have signed an agreement that sets the framework for building a new pipeline, carrying bitumen to the west coast. The deal commits to simultaneously making Canada a “global energy superpower” and reducing greenhouse gas emissions to net zero by 2050. Indigenous co-ownership is a requirement for development, as is consultation with British Columbia.In response, Liberal minister Steven Guilbeault, a former environment minister and longstanding environmentalist, has resigned from cabinet.Campbell Clark, The Globe’s chief political writer, joins the show to explain what’s in the deal, the politics involved and how likely the pipeline is to get built.Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

It's a pleasure to be here, shall I say to you for it? Do you want me to start? How do I start? You're hosting. Well, thank you to the Prime Minister for being here today. And this is a really great day for Albertans. We have been working for some time. On Thursday morning, Alberta Premier Danielle Smith

welcomed Prime Minister Mark Carney. They exchanged pleasantries. Then they got down to business. The two signed the Canada, Alberta, memorandum of understanding. They say this memo is the first step to making Canada a, quote, global energy superpower. Now, Prime Minister Mark Carney and I may not always agree on everything,

but we do share a few key beliefs. We both know that Canada can never reach its true potential as a global energy superpower without a strong and thriving Alberta energy sector at the center of that effort. Together, we will strengthen federal-provincial collaboration in the energy sector to unlock the full potential of Alberta's energy resources, to achieve net zero emissions by 2050, and in the process create not just hundreds of thousands of jobs,

but hundreds of thousands of well-paying careers. With all the talk of jobs and building out the energy sector, it may seem like this deal is an oil pipeline proposal, but it's not. However, it does lay out how a new pipeline could be built. And the last time that happened, there were protests, court cases, and a fight among the provinces. A lot is writing on this memo, from what each level of government gains and what it all means for Canada's commitment to climate change. And so, Campbell Clark is here. He's the Globe's chief political writer, and he's here to walk us through the details. I'm Cheryl Sutherland, and this is the decibel from the Globe and Man. Campbell, great to have you back on.

Thank you for having me. So top line, Campbell, what's the deal that Ottawa and Alberta have made? So it's kind of a grouping of things, but on one end, it's a pipeline in return for a Pathways Carbon Capture Project, which would reduce emissions. And on the other side, it's getting rid of a lot of the sort of Trudeau, or at least getting Alberta some exceptions to the Trudeau-era carbon regulations, like the Emissions. emissions cap on oil and gas, in return for Alberta agreeing to increase its industrial carbon tax and keep it in place over the long term. Can we talk about the timing of this agreement? Like, why is this happening now?

I mean, I think the pressure has been building for a while, and Mr. Carney has been sort of suggesting that he would support a pipeline, but not willing to, you know, say under exactly what terms. And I think this allows him also to have sort of something to say about how that path, forward might proceed so that it's not a bunch of maybe this, maybe that waffling. He can say there's something on paper. There's a way for us to proceed, and Daniel Smith can do the same. I think the federal government wanted something of a reset with Alberta so that there

wasn't this constant sort of national unity question, I guess, around relations between Alberta and Ottawa. And, you know, if you left it much longer, those questions can tend to fester and maybe some of the political support that you need falls apart. Okay, got it. Okay, so you mentioned pipeline here, and I think that's kind of like the top line news that we're here to talk about. So I want to dig into this pipeline framework.

What has to happen in order for this pipeline to become a reality? Well, a lot of things, and I think the first one is that some private company eventually has to step up and put that money into it. You heard the Prime Minister Mark Carney say today, if there's no private proponent, there will be no pipeline. What if there aren't any private sector proponents? You mention them there. If there's not a private sector proponent, there won't be a pipeline.

But there's other things, too. One is they have to figure out the route. And although the Alberta Premier said that she wants a pipeline to Northwest BC, the MOU signed today said to Asian markets to the BC coast. So it didn't say specifically Northwest BC. That could be quite relevant. It has to get the approval, or at least there has to be consultations with an accommodation of BC First Nations, because that's not just a nice to have.

have that actually a constitutional requirement. And the liberal government has said there have to be consultations with and partnership with the British Columbia government, although they've been careful in the last day or so not to say that BC can actually veto it. Okay, interesting. In return for that, Alberta is going to provide some support. We don't know exactly what yet and do a trilateral negotiation with the oil companies in the oil sands to do the carbon capture project, the Pathways Alliance, which would

collect emissions from the oil sands, pipe them down a pipeline to Cold Lake, Alberta, and sequester them, store them underground. Okay, got it. So you mentioned here that Carney was careful not to talk about, you know, the pipeline and where it would end. And there is a lot of opposition in BC to a pipeline to its northwest coast, right? And there's, of course, a federal law that forbids oil tankers from traveling up there. So did the MOU at all talk about that?

Yeah, it did say that there could be a just. to the tanker ban, where appropriate, to accommodate a pipeline. It didn't say that that will necessarily occur. And, of course, if you were going to build the pipeline to Northwest BC, you would have to lift the tanker ban, or there would be nowhere for the oil, the bitumen, to go. That is, like, a very important point, that tanker ban, because the coastal first nations are dead set against lifting it. The British Columbia government are dead set against lifting it.

And they say that it would sort of pull out the consensus of the agreement they've built with First Nations in British Columbia that underpins a lot of development projects that are already going forward. Like, as if you pull out the tanker ban, you're pulling out the Jenga piece that will make the whole thing fall apart in terms of their own development.

So they really do not want to see that tanker ban lifted. Okay. Let's talk about kind of the pros and cons here of a pipeline. Let's start with kind of the pros. What would the economic impact of a new pipeline be? Well, it sort of depends. But the first thing is that there would be some impact. economically because of the construction, right?

It costs billions of dollars to build a pipeline, so that creates jobs, construction jobs. And then if we're talking about a million barrel a day pipeline, you know, at $60 a barrel, we're talking about $60 million a day. So that is no small thing for sure. Yeah, so more jobs and a lot more money here. And the Pathways Alliance Project, which is the Carbon Capture Project, that they would have to build, you know, to capture the emissions so there aren't as many greenhouse gas emissions. That's a $17 billion project to build and probably a billion dollars

to operate every year. So, you know, that, as the prime minister said, that itself would create a new industry. Okay. On the flip side, let's talk about the negatives here. Let's talk about what the environmental cost would be. So obviously, if you build a new pipeline that's going to ship a million barrels a day, it would be more oil production. And by the way, the agreement contemplates that that one million barrels would come on top of another 400,000 barrels that would come from optimizing the existing TMX pipeline. So we're talking about another million and a half barrels and all the associated emissions. One assumes there would be that much additional production eventually.

So a lot more bitumen being produced, and that means more emissions. But again, the Pathways Carbon Capture Project would reduce that, and the industrial carbon tax that Alberta is agreeing to would presumably lead to reductions in emissions over the years. Okay. I want to turn now to regulations because the federal government agreed to remove or pause several in this MOU.

Campbell, take me through what Ottawa gave up in these negotiations. So there are a series of federal regulations on carbon in various ways. Premier Smith of Alberta has taken to calling them the nine bad laws. And the federal government has agreed to either not use

or basically scrap or exempt Alberta or find some kinds of flexibility around them. So one is the emissions cap on oil or gas, which sets a limit on the amount of carbon that can be produced out of the oil sands. And, you know, the reason that's, I suppose, important is because it sets a hard cap for the future on how much emissions can be produced.

So people who are making investment decisions in oil and gas now have to worry that at some point in the future, like, you know, when their project is built five years from now or 10 years from now, they'd hit that cap. But, you know, that has not yet been put into effect. So, you know, the agreement, the MOU that we saw sign today suggests that the emissions

cap will not go forward, that the clean electricity regulations, which require, you know, electricity production to be, you know, lower its emissions, also be put in abeyance if this agreement is finalized. Because remember, this is an MOU. It's not the final agreement. And there are other regulations. including, again, the sort of accommodations that we'd be made in the tanker ban.

So a number of those regulations which are sort of layered on top of each other would be removed or suspended or adjusted. The quid pro quo for that is Alberta will raise its carbon tax, its industrial carbon levy. And there's one other point, a technical point,

that there would be a financial mechanism to support that. And that is kind of a technical thing, but it is the linchpin that means that future government would not have an interest in undoing all that carbon tax. So it would keep it in place for the long term, make it predictable, so that companies that are reducing their emissions know that their credits that they generate

are worth something years down the road. Can you give me more details on how the Alberta carbon pricing promise would work? So there's already industrial carbon pricing in Alberta. It's called tier. And the way it works is that you are, in theory, charged, a certain amount of price for every ton of emissions that you produce. Now, there are some sort of technicalities to it that mean that the prices that you pay is not always the sort of headline price, and that is a sort of financial incentive to put investments

in technology so that you can reduce your emissions. Campbell, you also mentioned there's some sort of enforcement element all of this. What is that? So it's a potential enforcement element to keep the governments, and particularly the government of Alberta on side with the industrial carbon tax over the years. So there's a reference in this MOU to negotiating a financial mechanism to make the carbon credit markets, I think it's competitive and predictable, or something like that. And what that means, even though it's technical, is that if Alberta agrees to that and

signs what are called contracts for difference, then they would have a financial risk if they weakened their own industrial carbon tax. or carbon levy in the future. So five years from now, when this deal is sort of history, and if Alberta decided they wanted to just lower that carbon tax again, they could be on the hook for a lot of money for billions of dollars or 10 years from now or 20 years from now. So that financial mechanism would sort of be the way of creating a carbon credit market,

but also because it would be backed by the Alberta government, it would be a way of ensuring that Alberta has an incentive to stick with the industrial carbon levy. we'll be right back so both Kearney and Smith keep saying that this memo is just a first step so what details are missing

so all of them in a sense nothing has been finally negotiated and there are many things that are in the agreement that are conditional we will do this if you do that and we will work on the details to later so really nothing has been finalized here

right? There is more or less a negotiating agenda for the real agreements that are to follow, some of which, though, are on pretty short timelines, you know, by April or June next year. But they have taken big steps on the kinds of things they're willing to agree to. And, you know, if they did follow through and agree to everything that sort of matched the big words in this MOU, it would be quite a big compromise for both sides. You mentioned earlier that B.C. doesn't have a veto, but is there anything that could derail this deal? Lots of things, yeah. So, I mean, B.C. doesn't have a veto. And we knew that constitutionally because there had been Supreme Court rulings on previous pipelines. But, you know, there is still a political issue about not having political support in B.C. Both the objections of the government and, you know, the MPs in the backbench, British Columbia MPs in the Liberal Party will be concerned about losing the.

seats. But more fundamentally than that, there is a duty to consult the First Nations that are affected by this. You can't use the notwithstanding clause. It's absolutely firm. So you must consult those First Nations meaningfully, you know, early on substantively, and you must accommodate their legitimate concerns. Now, what that exactly means is something that gets worked out in the courts more than in legislation. But, you know, there is a requirement there that's not easy to just push your way through. It does, in a way, sound like a really big deal. This MOU sounds like a huge deal on paper,

but how likely is all of this to happen? I don't know. So because in some ways, there are four or five things that are interlinked here. And the pipeline is really kind of the hardest one to make happen in the end because of that, you know, if the route is going to be in northwest BC and there's a tanker ban and so on.

So some of those, things are unclear, but the official proposal for the pipeline won't even be ready for two years. Some of the other elements of this are supposed to be negotiated sooner. For example, the Pathways Alliance, the Carbon Capture Project, is supposed to be negotiated three ways between Ottawa, Alberta, and the oil companies by April 1st of next year. So less than six months. And, you know, there are other elements as well. There's an industrial carbon price agreement that has to be worked out. That $130 a ton that would be the price of carbon, well, how does that get phased in over how many years? All of those sorts of things haven't been agreed. And those

details really matter. And, you know, the other thing that matters a lot here as they work out those details is that the big problem that the agreement faces for both Mr. Carney and Ms. Smith is objections from their own constituency, from their own political parties, from their own political backers, right? Because it's a compromise where essentially the liberals are doing things that Alberta conservatives like and Alberta conservatives are doing things that federal liberals like. And that's a pretty big political divide. Well, it's creating a lot of objections within each leader's own parties. And that's the thing they're going to have to get through in order to make these deals worthwhile and make the concessions that the other side wants.

today we already saw that Mark Carney lost a cabinet minister, Stephen Gilbeau. So that's a sign that, you know, it's not going to be easy politically for Mr. Carney anyway to finalize that agreement. Yeah, on that point, Stephen Gilbo, who was the Minister of Canadian Identity and Culture and previously Environment Minister under Justin Trudeau. And he was the Quebec lieutenant in Mr. Carney's government, which in some ways is the more important position in his cabinet. So he resigned from cabinet, not from Parliament altogether, though. so this happened Thursday evening. And it's because he strongly opposes this MOU. Has Carney risked his political coalition for a deal with Danielle Smith?

So yes. Oh, interesting. He has taken quite a gamble, but remember, it's not the final gamble, right? So the MOU contains conditions. It contains things to be negotiated. And I suppose he could, you know, pull back on many of those things so that there is less of an impact on his political coalition. But there's still danger there for Mr. Carney.

I mean, I think Mr. Gilbo was probably one of the people that would have the hardest time accepting this, not just because of its contents and whether or not Mr. Gilbo could accept that. But Mr. Gilbo is kind of, he is, and I think people outside Quebec don't really understand this all. He is very much a symbolic figure of climate change activism and has been for decades, long before he was in politics. that was really his value to the Liberal Party was that he gave them sort of activist cred in Quebec on dealing with climate change. So, you know, that's kind of a symbol there. And he didn't, I'm pretty sure, didn't want to be seen as a guy who keeps supporting pipelines. Remember, there was TMX already before this.

So, like, that's a symbol that could have an impact on those people who voted for the liberals in the last election, but thought that they were going to be more active on climate. change, didn't expect them to approve or back another oil pipeline. So that's an issue. You know, in Quebec, the Black Quebecois is attacking the liberals pretty vociferously already, and they don't have to worry about getting support in Western Canada and Alberta or anything like that. And they just full on are attacking the liberals as if they've already approved a pipeline

and they're backing and supporting what they call dirty oil. So it is going to raise a lot of political risks for them. Yeah. So why did Carney do this politically? Well, look, there's some upside as well, right? And he obviously felt that this was something, a victory to be declared. Because remember, as we said earlier, the deal isn't final, right? Neither Daniel Smith nor Mr. Carney can say, look, we've got this. It's done. So they obviously had a reason that they wanted to have a signing ceremony and announce this MOU as being a big step because they think they've got some political victory out of it. Okay. So for one thing, Mark Carney has talked about building an independent economy and constant criticism has been, yes, but are you going to allow oil pipelines and are you really going to allow the development? And, you know, he probably wanted to lance that boil to a certain extent to, you know, sort of get that criticism taken away.

He probably wants to present himself as, you know, being able to muster some national purpose amongst all the premiers and getting every part of the country on side and so on. And, you know, there's a fairly broad support. for pipelines in Canada. It's just not everyone in his base or his political support. And I guess lastly, it undercuts Pierre Polyev, his main opponent. And if it remains a two-horse race, it's the problem for Pierre Pauliev, the conservative leader, because Mr. Poliyev ran against an industrial carbon tax in the spring election.

And now the conservative Alberta Premier is basically endorsing the idea and saying, yes, I'll sign on to it. And while Pierre Pauliev was saying this MOU is meaningless and won't come to anything, Daniel Smith was smiling warmly at Mark Carney and saying it's a great day for Alberta and, you know, this carbon tax could really make us more competitive in the future and so can carbon capture. And that is not a good day for Pierre Pauliap. I don't think he's going to lose all the Alberta seats, but it does undercut some of his political position. Yeah, and this warm relations between Carney and Danielle Smith definitely does not play well for Pierre Poliyev. On Daniel Smith, let's look at the consequences for Alberta, because a lot of the separatist

sentiment in Alberta has seemed to be, at least in part, because of Ottawa's regulations around oil. What impact will this have on that movement? So that's difficult to tell again because it's not finalized, right? So if you watched Danielle Smith's press conference today, she said So I would say that good policy can, and genuinely addressing the concerns of Albertans is always a pathway to have a good and solid relationship. And I think the prime minister understands that certainly based on this agreement, it shows he does, and so I'm hopeful. She also said, I guess we'll see whether I'm right that we can make this deal or whether the skeptics are right. So she left open the possibility that this still might not all come together. you know, but there could be an impact if this agreement goes through.

I mean, I think that is one of the things that is on the mind of the prime minister and presumably Daniel Smith. The resentment of federal governments, especially liberal federal governments, has often been symbolized by pipelines, even though, you know, it's more about, you know, do you have respect for us? Have you interfered with our economy? Do you allow us to govern our own affairs? And now, you know, Danielle Smith, she can say, if this MOU holds together to a final agreement,

that she's the premier who's going to manage to get a pipeline built, even when the federal liberals are in power. Or if it falls apart, I suppose she can campaign against the liberal government's betrayal. Interesting. Just to end here, Campbell, I know this agreement is bigger than just a pipeline. There's stuff in this document about energy connections between Alberta, and other provinces, methane emissions reductions, as well as nuclear power and energy for AI data centers in Alberta. But ultimately, this memo is about prioritizing an oil pipeline.

And there's so much to balance when it comes to this. There's the climate. There's the economy, energy demands, national unity. So, Camel, I just want to know, do you think Carney got the balance right on these factors? So I think that if they carried through on this. to agreement that is as big as the lines they suggested, it would be a massive and important compromise for stable energy and climate policy in Canada. I also think that the politics are going to make that very, very difficult. In particular, the tanker ban and the BC politics

are a major problem, and that's the one part of the compromise. They have not figured out unless they move that pipeline route, I don't think that's going anywhere. The pipeline is the thing that's going to be getting all the attention or getting most of the attention, both in Alberta and across the country. But those other things in that agreement, the other bucket of things where regulations will be sort of suspended or changed in return for an industrial carbon tax or industrial carbon levy that will be committed to by Alberta over the long term, that could really have a big impact. Investors will know sort of what the playing field is light. Alberta will have been signing on to a climate change, emissions, reductions, policy that will be in place for a long time. And that could be really important for both the economy and the environment over the long term in Canada. Campbell, thanks so much.

Thank you. That was the Globe's chief political writer, Campbell Clark. That's it for today. I'm Cheryl Sutherland. Our producers are Madeline White, Michal Stein, and Ali Graham. David Crosby edits the show. Adrian Chung is our senior producer and Angela Pichenza is our executive editor. Thanks so much for listening and I'll talk to you soon.