Canada as an Energy Superpower – The $670 Billion Question

In November 2025, Canada and Alberta signed their first cooperative energy agreement in over 44 years. The last agreement, the 1981 revenue-sharing deal between Trudeau and Lougheed, became politically contentious, with Lougheed later saying that allowing the widely publicized “champagne toast” photograph was one of the biggest mistakes of his political career¹. This new agreement signals a reset and may represent Canada’s most important opportunity in decades to get energy policy aligned.

Between 2015 and 2025, an estimated $670 billion in Canadian oil, gas, LNG, and pipeline investment was cancelled or shelved. This wasn’t driven by market conditions, but more due to federal policy direction that limited project advancement, followed by legislation that formalized those constraints². Canada is the world’s fourth-largest oil producer³,⁴ and energy accounts for 9.8% of GDP. Despite that position, access to global markets remained constrained during a period of strong international demand, particularly in Asia.

Bill C-69 (the Impact Assessment Act) added years of regulatory delay and was ruled largely unconstitutional by the Supreme Court of Canada in 2023⁵. Bill C-48 (the Oil Tanker Moratorium Act) banned crude tankers from BC’s north coast, effectively halting projects like Northern Gateway and limiting the development of a north-coast oil export corridor to Asia⁶. The combined impact has been limited progress on new oil export pipelines to tidewater, delays to west-coast LNG projects, and continued reliance on a single primary export market, the United States, often at discounted pricing.

Prime Minister Carney won the April 2025 election declaring “Canada has a tremendous opportunity to be the world’s leading energy superpower, in both clean and conventional energy⁷,” with a target of $500 billion in private investment by 2030, built around energy security, export diversification, and net-zero competitiveness.

At CERAWeek in Houston on March 24, Minister Tim Hodgson spoke on the ARC Energy Ideas podcast about the Iran war, describing it as triggering “one of the biggest energy crises in my lifetime.” He noted that allies in Europe and Asia are all asking the same question: what does energy security actually look like? His answer:

“It looks like having a stable, reliable partner who believes in free trade, who believes in multilateralism, who when they sign a deal with you will honour that deal, who will not use their energy for coercion, but will use it to unify allies.”

Minister Tim Hodgson – ARC Energy Ideas podcast, CERAWeek Houston, March 24, 2026

On April 24, Minister Hodgson delivered a one-year retrospective at the Empire Club of Canada in Toronto, moderated by Lisa Raitt of CIBC. He confirmed agreements in principle on methane equivalency and the “One Project, One Review” framework. However, the carbon pricing equivalency agreement and the Pathways trilateral MOU both missed their April 1 deadline and remain unfinished. He also announced approval of Enbridge’s $4-billion Sunrise gas expansion in British Columbia. The project was approved without referral to the Major Projects Office, includes Indigenous ownership, and is scheduled to begin construction in July 2026. Alberta’s pipeline proposal remains on track for its July 1 milestone⁸.

The MOU structure is straightforward. Alberta commits to $130/tonne industrial carbon pricing, CCS through Pathways, and net-zero by 2050. In return, Ottawa agrees to methane equivalency, suspension of the Clean Electricity Regulations, and conditional support for a privately financed west-coast pipeline with Indigenous participation. This marks the first deal of its kind between a Liberal government and Alberta in 44 years and, unlike 1981, it looks like a genuine grand bargain – both sides gave something real⁹.

The Building Canada Act (Bill C-5, June 2025) reduces federal approval timelines from five years to two and establishes the Major Projects Office in Calgary as the single door for proponents¹⁰. LNG Canada Phase 2 was among the first eleven projects designated under this framework. However, the Oil Tanker Moratorium Act (OTMA) has not yet been included in BCA Schedule 2. As a result, no west-coast crude terminal can proceed until a Cabinet order-in-council is issued. This step does not require parliamentary approval, and it has not yet been made¹¹.

WHAT THE NUMBERS ACTUALLY SAY

TMX proves to be a useful benchmark. It added 590,000 barrels per day (bpd) of west-coast capacity in May 2024 and generated C$12.6 billion in extra oil revenues in its first year, driven by a narrower WCS–WTI price differential¹². Despite this progress, 96% of Canadian crude exports still go to a single customer¹³. Expanding pipeline access to the north would extend these benefits at a larger scale.

Table sources: TMX revenue¹²· Royalties¹⁴· $31.4B GDP / GDP growth rate¹⁵· $500–800B range¹⁶· LNG sector¹⁷

TWO THING NEED TO HAPPEN NOW

The first is to add the Oil Tanker Moratorium Act (OTMA) to BCA Schedule 2. This can be completed through a Cabinet order-in-council and does not require a parliamentary vote or new legislation. This step has not yet been taken.

The second is to make the BCA’s 2-year approval timeline permanent in statute. The Building Canada Act’s designation authority sunsets in five years. Without a permanent Impact Assessment Act (IAA) amendment, investor confidence will erode as the window closes.

The Iran war and U.S. tariff volatility have made this more urgent, not less. Canada has the reserves, the geography, and now the political mandate. What it doesn’t have yet is the legislation to provide long-term certainty.

THE SPRING ECONOMIC UPDATE – WHAT IT MEANS

In April 2026, Finance Minister Champagne tabled the Spring Economic Update¹⁸. Two elements are particularly relevant in this context:

• The CCUS investment tax credit now applies to CO₂ enhanced oil recovery (EOR). EOR injects captured CO₂ into oilfields to increase production while the CO₂ remains stored underground. The credit rate is set at half the standard CCUS rate, with 25% applied to capture equipment and 18.75% to transportation and storage, effective immediately. The Canadian Association of Energy Contractors called it a “game-changer,” noting its impact on improving competitiveness with the United States. Ottawa projects it could generate $395 million in revenue over four years, driven by increased project activity that may not have proceeded otherwise¹⁸.
• Accelerated capital cost allowance (CCA) for low-carbon LNG is back. The measure provides a 50% rate on liquefaction equipment and 10% on related buildings for certified facilities below 0.20 tCO₂e per tonne of LNG. Assets need to be acquired by end of 2034¹⁹.

In practical terms, these measures improve the economics for both Pathways and LNG Canada Phase 2 at the same time. If the carbon pricing and Pathways MOU gaps close before July 1, the tax framework to support both is already in place. That is the sequencing working as it was designed to.

A FEW THINGS WORTH NOTING

Enbridge has declined to revive the Northern Gateway project²⁰ and Coastal First Nations, including the Heiltsuk Nation, remain firmly opposed to crude tankers²¹. British Columbia Premier Eby has also indicated opposition to lifting the current ban²². An ATB Cormack survey found less than half of energy executives expect the federal government to approve a new pipeline, and at the BMO CAPP Energy Symposium in Toronto last month, one executive said flatly: “There is no way you’re going to see a northwest coast oil pipeline before you see Keystone XL²³.” Oil demand is still expected to peak in the early 2030s; however, demand is already above 105 MMbbls/day and the post-peak world looks more like a plateau than a cliff. That matters for timing, not for whether the infrastructure makes sense.

None of this makes the reform wrong, but it does increase the importance of sequencing. The carbon pricing and Pathways gaps need to close before July 1. Without them, key project preconditions are not met, and progress on pipeline development cannot move forward.

The MOU and the Building Canada Act are the bridge. Permanent reform to the IAA and the OTMA Cabinet order represent the next steps required to advance implementation. While the policy gap has narrowed in recent years, its resolution will depend on whether the July 2026 MPO deadline is treated as a firm milestone. Several April 1 commitments remain outstanding, and the industry is waiting.

SOURCES

Superscript numbers in the text correspond to the entries below.

¹ The National Energy Program – Lougheed and the Champagne Toast — CBC Alberta, n.d. https://www.cbc.ca/alberta/features/tories40/nep.html ↩

² Billions Lost in Ditched Resource Projects — ResourceWorks, January 2025 https://resourceworks.com/billions-ditched-projects/ ↩

³ Energy Fact Book 2025–26 — Natural Resources Canada, 2025 https://energy-information.canada.ca/en/energy-facts/key-energy-economic-environmental-indicators ↩

⁴ The Economic Impact of Canadian Oil and Gas — CAPP, July 2025 https://www.capp.ca/wp-content/uploads/2025/09/The-Economic-Impact-of-Canadian-Oil-and-Gas-July-25-2025.pdf ↩

⁵ Court Ruling on the Impact Assessment Act — Fraser Institute, 2023 https://www.fraserinstitute.org/commentary/court-ruling-good-step-right-direction-federal-government-wont-change-course ↩

⁶ Oil Tanker Moratorium Act – Transport Canada Briefing — Transport Canada, November 2025 https://tc.canada.ca/en/binder/15-pic-oil-tanker-moratorium-act ↩

⁷ Mark Carney’s Liberals to Make Canada the World’s Leading Energy Superpower — Liberal Party of Canada, April 2025 https://liberal.ca/mark-carneys-liberals-to-make-canada-the-worlds-leading-energy-superpower/ ↩

⁸ Minister Hodgson – ARC Energy Ideas Podcast and Empire Club keynote — NRCan / ARC Energy Institute / Empire Club https://www.arcenergyinstitute.com/this-is-our-moment-an-interview-with-the-honourable-tim-hodgson/ ↩

⁹ A New Era of Alignment: Building Canada Act and Alberta MOU — Osler LLP, March 2026 https://www.osler.com/en/insights/updates/a-new-era-of-alignment-building-canada-act-federal-alberta-mou-reshaping-canadas-energy-investment-landscape/ ↩

¹⁰ Bill C-5 (Building Canada Act) – Analysis — McMillan LLP, 2025 https://mcmillan.ca/insights/bill-c-5-fast-tracking-national-interest-projects-in-canada/ ↩

¹¹ Bill C-5 and the Future of Pipeline Approvals — Lexology, July 2025 https://www.lexology.com/library/detail.aspx?g=d9ff4000-a20a-4771-b69e-0d342cee4eca ↩

¹² Year One of TMX: C$13bn in Extra Revenues — Alberta Central, August 2025 https://albertacentral.com/intelligence-centre/economic-news/year-one-of-tmx-increased-export-diversification-disappearing-oil-discount-and-c13bn-in-extra-revenues/ ↩

¹³ Canadian Oil Exports: Facts and Statistics — Canada Action, March 2026 https://www.canadaaction.ca/canadian-oil-exports-facts-statistics ↩

¹⁴ Canadian Oil Exports – 1M bpd pipeline royalties estimate — Canada Action, 2026 https://www.canadaaction.ca/canadian-oil-exports-facts-statistics ↩

¹⁵ The GDP Payoff of Additional Oil Pipeline Capacity — ATB Economics & Studio.Energy, March 18, 2026 https://www.newswire.ca/news-releases/expanding-pipeline-capacity-key-to-improving-canada-s-economic-prospects-872424662.html ↩

¹⁶ $500–800B Cumulative GDP – Methodology Note — Author’s aggregation. Aggregates ATB/Studio.Energy pipeline GDP model ($282B, 2027–35), Conference Board of Canada LNG projections (~$11B/yr), and upstream/infrastructure multipliers over a 15–30 year full-reform horizon. No single study covers the complete scenario. ↩

¹⁷ A Rising Tide: The Economic Impact of BC’s Liquefied Natural Gas Industry — Conference Board of Canada, 2020, cited in CAPP, The Case for Canadian LNG, Oct 2025 https://www.capp.ca/wp-content/uploads/2025/11/The-Case-for-Canadian-LNG-October-17-2025.pdf ↩

¹⁸ Spring Economic Update 2026 – Canada Strong for All — Department of Finance Canada, April 2026 https://budget.canada.ca/update-miseajour/2026/report-rapport/chap1-en.html ↩

¹⁹ Budget 2025 – Accelerated CCA for Low-Carbon LNG — Department of Finance Canada, 2025 https://budget.canada.ca/2025/report-rapport/toc-tdm-en.html ↩

²⁰ B.C. Remains Opposed to a Pipeline Across North — The Globe and Mail, June 2025 https://www.theglobeandmail.com/canada/article-northern-gateway-pipeline-project-bc-alberta/ ↩

²¹ Two Key North Coast B.C. Leaders Meet With Alberta’s Premier — CBC News, November 2025 https://www.cbc.ca/news/canada/british-columbia/kitimat-haisla-alberta-oil-pipeline-9.6993855 ↩

²² The Oil Tanker Ban That Dims Alberta’s Pipeline Hopes — The Tyee, November 2025 https://thetyee.ca/News/2025/11/21/Oil-Tanker-Ban-Dims-Alberta-Pipeline-Hopes/ ↩

²³ Voices From the Oil Patch – Skepticism Growing About a New West Coast Pipeline — EnergyNow, April 2026 https://energynow.ca/2026/04/voices-from-the-oil-patch/ ↩

GDP estimates are modelled ranges. The $500–800B cumulative figure aggregates published third-party modelling (ATB/Studio.Energy, Conference Board of Canada) and upstream investment multipliers over a 15–30 year full-reform horizon; no single study covers the complete scenario – see source 16.

NOT FINANCIAL ADVICE.