I choose to believe that in its long and often contentious relationship with the Government of Canada, Alberta has entered a new era. Certainly, the memorandum of understanding between Premier Danielle Smith and Prime Minister Mark Carney, signed earlier today, marks a significant shift in tone and, apparently, in ambition.After years of regulatory hostility, emissions caps and a perception that Alberta’s energy sector was something to be tolerated rather than celebrated, the federal government now appears ready to position Alberta as the engine of a renewed national energy strategy. On its face, that is welcome news.However, Alberta’s prosperity has always been tied to its capacity to explore, produce, and export energy. Perhaps we should be grateful for the federal acknowledgement, but while the notion that the formerly anti-oil prime minister finally wants Canada to become a global “energy superpower” has an undeniable appeal, when Alberta is allowed to get on with business, it already is. In 2024, Canada was the world’s fourth-largest oil producer, and most of it comes from Alberta.Still, today’s memorandum of understanding, the promise of expanding access to Asian markets, building indigenous co-owned pipelines, and fostering unprecedented private investment in new technologies gives Albertans a rare – and long overdue – sense of optimism. After years of uncertainty, the door to growth appears to have opened again.Cynics say a memorandum of understanding is not exactly a blood oath. Cynics are sometimes right. It is therefore equally important to note the price of admission.Central to this new arrangement is the construction of the world’s largest carbon capture, utilization, and storage (CCUS) network. Ottawa and Edmonton have jointly committed to partnering with the Pathways Alliance companies to finance and build the project.Supporters describe it as a bold step forward in reducing emissions, protecting jobs, and ensuring Alberta’s oil is among the cleanest on the planet. In theory, CCUS solves the political dilemma that has plagued oil-producing jurisdictions across the Western world: how to expand production while also achieving net-zero targets.Yet optimism must be tempered by realism, and realism starts with cost. CCUS is not cheap. It is incredibly expensive. Estimates for the Pathways project run into the tens of billions of dollars. While politicians and industry leaders speak confidently about innovation and global leadership, it is increasingly clear who is likely to underwrite the infrastructure that makes all of this possible: the taxpayer.Private companies may eventually benefit from exporting lower-emission oil to markets hungry for energy security. But they are not paying the bulk of the bill to capture and store the carbon that makes their product politically acceptable. The public is. The provincial and federal governments have now bound themselves to ensuring CCUS is built, regardless of how the economics unfold..That raises several troubling questions.First, who is the target market? Which countries share Canada’s earnest desire to emit less CO₂ and are prepared to pay the “clean oil premium”? Even Canada itself won't pay the price in the east, where Quebec and the Atlantic provinces run on 'unclean' imported oil.For the cost of producing Alberta oil will inevitably rise. Carbon capture may reduce the emissions intensity of each barrel, but it does nothing to reduce the cost of extracting it – quite the opposite, in fact.Layering a multi-billion-dollar CCUS network onto an industry already struggling with volatility means Alberta’s product will be more expensive to produce, and therefore riskier to sell. In a world where buyers are increasingly price-sensitive and competitors like the United States – and soon perhaps, Venezuela? – produce oil without comparable regulatory burdens, Alberta could find itself saddled with a premium-priced product competing against lower-cost alternatives..In other words, if CCUS infrastructure inflates upstream costs, Alberta’s long-term competitiveness becomes dependent not on global market forces but on government subsidies and carbon-tax formulas engineered in Ottawa. That is a new way to become an energy superpower.Second, the partnership model itself creates a precedent. If governments become co-builders and financiers of emissions-reduction infrastructure, industry gains the political benefit of appearing environmentally responsible without enduring the financial consequences of that responsibility. It raises the risk that taxpayers are effectively guaranteeing the next generation of private profits..None of this is to suggest Alberta should reject the path laid out in this new agreement. Realistically, it has no other path.Ottawa has made CCUS the price of market access, the price of regulatory certainty, and the price of a federal government that finally claims to value Alberta’s contribution to the nation’s economic future. For Alberta, that is a better deal than the ideological hostility of recent years, when oil was treated as a moral embarrassment rather than a strategic asset.There is, then, genuine cause for cautious optimism. For the first time in a long time, Alberta is not trying to succeed in spite of Ottawa, but alongside it. Markets are opening. Barriers are falling. A strategic partnership is taking shape.But optimism must not blind us to the risks. Becoming an energy superpower is not the same as becoming a subsidized energy experiment. If Alberta’s future prosperity depends on CCUS megaprojects financed by taxpayers rather than disciplined by markets, the province risks trading independence for dependency.Alberta may indeed be poised for greatness. The challenge for Premier Danielle Smith now is ensuring that success, when it comes, belongs to Albertans – not merely to those who handed them the bill.
