Tensions between economic development and climate mitigation policies reflect climate mitigation’s changing status as a national policy priority. 

Most countries face a policy and cost tension between investments in climate change versus economic development. Canada is no different. On November 7, Prime Minister Carney confirmed that Canada’s economic development priorities involve over $1 trillion over the next five years, which Canada can control, for example, by investing in Canada to boost productivity and by diversifying trade partners abroad to create more opportunities and greater independence. In June, the One Canadian Economy Act was passed to remove federal barriers to internal trade and fast-track approvals of nation-building projects. In October, $60 billion was allocated to nuclear power, LNG, carbon capture, critical minerals, and new trade corridors. Plus, Canada’s Climate Competitiveness Strategy is to drive investment in nuclear, hydro, wind, storage, and grid infrastructure to position Canada to lead in the low-carbon economy. 

November 27, when Alberta’s new Memo of Understanding (MOU) endorsed a pipeline signed with the federal government to balance Alberta’s economic growth, energy security, and climate action through a series of trade-offs and joint projects. An MOU is a framework agreement outlining shared goals, serving more as a statement of mutual intent and setting the stage for future, more detailed agreements without creating an immediate legal obligation. As a dual strategy, the purpose of the MOU is to increase oil and gas production while simultaneously achieving carbon neutrality by making the extraction process cleaner. Projects include:

1. one or more pipelines, with at least one million barrels a day of low-emission Alberta bitumen to export to Asian markets, in addition to expanding the Trans Mountain pipeline for an additional 300,000 to 400,000 barrels per day for the same. 
2. construction of the world’s largest carbon capture, utilization, and storage project, making Alberta oil among the lowest carbon intensity produced barrels of oil globally. 
3. construction of thousands of megawatts of AI computing power, and large transmission interties with B.C. and Saskatchewan to strengthen the supply of low-carbon power to oil, LNG, critical minerals, agricultural, data centre, and carbon capture industries, supporting their sustainability goals. Visit https://www.pm.gc.ca/en/news/backgrounders/2025/11/27/canada-alberta-memorandum-understanding. 

Critics such as Clean Energy Canada argue that the federal government eliminated its planned oil and gas emissions cap in the MOU, instead relying on Alberta to strengthen its industrial carbon pricing system. It allows Alberta to delay implementation of federal methane regulations by five years, and the agreed-on $130/tonne industrial carbon price for Alberta is lower than Canada’s planned federal trajectory and is unenforceable by a set date. iPolitics reports Alberta is urging Ottawa to terminate the West Coast oil tanker ban that protects the coast from oil spills. CBC reports affected First Nations and B.C. must “consent” before the pipeline gets the green light — language not in the MOU. MIT states that the energy resources required to power the artificial intelligence revolution are staggering. The International Energy Agency predicts greater oil demand won’t likely materialize through the 2030s or beyond. Carbon capture’s effectiveness has already been debated in a previous post. IISD points out that it is expensive, energy-intensive, slow to implement, and unproven at scale, making it a poor strategy while allowing continued oil and gas production.  

To date, three environmental champions see the federal government, THROUGH THE MOU, as taking apart various elements of Canada’s climate action plan. MP Steven Guilbeault, the recent Canadian Identity and Culture Minister, resigned from cabinet after the acceptance of the MOU pipeline, and Ottawa suspended the proposed federal oil and gas emissions cap for Alberta and removed Alberta’s requirements under the Clean Electricity Regulations in the MOU – both introduced while Guilbeault was Environment Minister. Two government climate advisors – Catherine Abreau and Simon Donner resigned as well, both indicating the MOU decisions make it highly unlikely Canada can meet its 2030 and 2035 climate targets. CTV quote – “The MOU was the final straw, absolutely, but this wasn’t the first step we’ve seen toward the suspension, the delay, the dismantling of climate policy in Canada,” said Catherine Abreau of the International Climate Politics Hub and former member of the expert-appointed body advising Canada on the path to net-zero emissions. Donner wrote publicly that the MOU “sacrifices climate policies” and “would have Canada double-down on fossil fuels while the world moves towards clean energy”.

Ways to bridge barriers that prevent climate mitigation policies from more fully supporting economic development should include:

Clearer regulations and financing to support just transition jobs, workplaces, research, and green solutions that align with climate concerns, more extensive collaboration among governments and Indigenous Peoples, and stronger efforts to keep businesses in Canada while maintaining international competitiveness.

This post was submitted by Climate Scorecard Canada Country Manager, Diane Szoller