Discussions are intensifying regarding a potential agreement between the Carney government and Alberta's oil and gas sector. The focus is on how to transform these discussions into a tangible deal. Ottawa aims to advance the Pathways Alliance carbon capture project to help reduce emissions from the oilsands. Meanwhile, industry leaders and the United Conservative Party (UCP) government are advocating for increased pipeline construction and petroleum production.

An open letter addressed to Prime Minister Mark Carney was released on Monday, signed by 95 industry executives and groups. The letter welcomed recent federal initiatives, including the establishment of a new Major Projects Office and a list of projects slated for expedited government approval. However, industry leaders argue that these measures alone do not constitute a comprehensive agreement.

"Those steps are necessary, but they’re not fully sufficient. The policy changes that are required to stimulate investment are still there," said Rich Kruger, CEO of Suncor Energy, a member of the Pathways Alliance. He emphasized the need for a balanced approach, stating, "It’s really a three-legged stool that’s required. So any one of those legs without the other two really doesn’t achieve the objective."

The industry is calling for further changes from Ottawa to complete this framework. They are advocating for the overhaul of the Impact Assessment Act, the removal of the federal tanker ban off the northern British Columbia coast, the elimination of the industry emissions cap, and a reduction in project approval timelines from years to months.

The letter asserts, "Canada still lacks the clear, competitive and durable fiscal and regulatory policies required to achieve the so-called ‘Grand Bargain.’"

Prior to the recent federal election, a smaller group of 14 industry CEOs sent a letter to political parties with similar recommendations, urging that new pipelines be approved within six months of application. Following Carney's election victory in April, a follow-up letter was sent reiterating these requests.

Since then, the federal government has enacted Bill C-5 to facilitate nation-building projects and established a Major Projects Office in Calgary. Recently, the prime minister announced an initial list of five significant infrastructure projects to be expedited, including LNG Canada Phase 2.

Sue Riddell Rose, CEO of Rubellite Energy and a signatory of the letter, expressed cautious optimism. "We’re excited about the new initiatives that the new federal government seems to be talking about, but we still have some pretty important gaps that we think need to be addressed," she said.

The Carney government has also identified six additional projects in earlier development stages that may be referred to the Major Projects Office in the future, including the Pathways Alliance’s carbon capture network in northern Alberta. This $16.5 billion project aims to construct a 400-kilometre pipeline connecting over 20 oilsands facilities to an underground CO2 storage hub near Cold Lake, significantly reducing the sector's carbon footprint.

Despite ongoing work on the carbon capture network, oilsands producers have indicated that insufficient government support is hindering progress. The Alberta government currently offers a 12 percent grant for carbon capture projects, while Ottawa provides an investment tax credit covering up to half of the capital expenses.

However, increasing incentives may face opposition from environmental critics. Keith Stewart of Greenpeace Canada remarked, "The oil industry isn’t asking for a deal, they’re demanding unconditional surrender," highlighting the sector's significant contribution to Canadian emissions.

In response to industry concerns, Premier Danielle Smith announced changes to the province’s industrial carbon pricing program, known as the Technology Innovation and Emissions Reduction (TIER) system. Under the new rules, companies investing in emissions reduction technology will be recognized in their compliance with TIER obligations. Smith noted that this change allows companies to reinvest significant funds back into projects like the Pathways Alliance carbon capture network.

"This now allows them to recycle that $400 (million) to $500 million back into this project. So we think that should be sufficient," Smith stated.

With the oilsands industry facing substantial investments in emissions reduction without additional revenue, Smith emphasized the need for federal policy changes to facilitate the Grand Bargain. This would enable new pipelines to be constructed, fostering an environment conducive to expanded production.

Kruger added, "The federal government, provincial government and industry are on the same page about progressing Pathways. There’s still work to do in understanding the fiscal framework, who pays for what, how all that works. But it can’t be done in isolation without also working on expanded market access and then all the enabling regulations that will fill that pipeline or pipelines."