Canada, Alberta and the Oil Sands Alliance have signed a trilateral memorandum of understanding that ties oil sands production growth and a new West Coast export pipeline to a schedule of emissions cuts totalling 16 million tonnes per annum on a net basis.
The MOU, effective July 2, involves Canadian Natural Resources, Suncor Energy, Cenovus Energy, Imperial Oil and ConocoPhillips. It sets four objectives, covering expanded market access through the proposed West Coast Oil Pipeline, fiscal and regulatory frameworks to enable production growth, the 16 million tonne emissions target, and early engagement with Indigenous Peoples on the pipeline and related work.
The first tranche of reductions runs through the Pathways carbon capture and storage project. Alliance members intend to cut 6 million tonnes per annum through Pathways, with the shared transportation and storage infrastructure expected to be operating by January 1, 2032, and the full 6 million tonnes completed by January 1, 2035. Captured carbon dioxide would move from multiple oil sands facilities to a storage hub in the Cold Lake area.
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Beyond that, the parties recognize a common goal of a further 5 million tonnes per annum by 2040 and another 5 million tonnes by 2045, which may come from expanding carbon capture or from other technologies that emerge.
The enforcement mechanism is Alberta’s industrial carbon price. Under the Technology Innovation and Emissions Reduction regulation, emissions intensity benchmarks tighten each year, and the MOU slows that tightening from 2% to 1% annually for companies that deliver their share of the 6 million tonnes. Members taking clear action toward the next 5 million tonnes hold the 1% rate through 2040. Those that fall short face 1.5% annual tightening from 2035 to 2040, and the full 2% rate from 2040 to 2044 if the second tranche is missed.
Ottawa has agreed to advance financing for carbon capture operating costs and to address industry concerns with the CCUS investment tax credit. Alberta will extend its Carbon Capture Incentive Program to 2035, issue a carbon sequestration agreement for Pathways, and apply a 120-day approval timeline for qualified projects.
Oil Sands Alliance President Kendall Dilling said the framework is positive for the oil sands industry and represents a step forward toward enabling production growth.
Definitive, binding agreements are targeted for signing on or before November 15, 2026.
