THE PRESS IS ECONOMIC INFRASTRUCTURE, SCAFFOLDING FOR DEMOCRACY. WITHOUT IT, POWER GOES UNCHECKED.

It’s not often that environmentalists and oil company CEOs are on the same page about anything, much less a major piece of energy policy. But when it comes to the “grand bargain” between Ottawa and Alberta, both groups have now made their disdain for the deal clear. The opposition from the oil sands sector wasn’t obvious at first. But the absence of any of its CEOs at Danielle Smith’s May 15 press conference announcing the deal — one that featured prominent business leaders like Atco CEO Nancy Southern, Tourmaline CEO Mike Rose, and Calgary Chamber of Commerce CEO Deb Yeldin — was conspicuous.

Now we know why they weren’t there. On Tuesday, at the Global Energy Show in Calgary, Cenovus CEO Jon McKenzie tore a strip off the deal in a speech. It hit all the usual notes for this crowd, from minimizing the reality of the energy transition and misunderstanding the purpose of carbon markets to blaming the federal government for an industry-wide downturn that was actually driven by the collapse in global oil prices.

But its core message to both Carney and Smith was clear: the industry intends to squeeze them. “What is missing and unclear in the MOU is the commitment to regulatory reform that would allow industry to grow production to offset the costs of the carbon capture project and fill the million barrel per day pipeline to the West Coast,” McKenzie said.

In other words, they want out from under the carbon capture and storage project they’ve been promising — and promoting — for years now. They also want to see the Impact Assessment Act and tanker ban rolled back and the industrial carbon tax eliminated, along with whatever baubles they can extract from the provincial government.

These companies clearly sense that now is the best time to apply maximum pressure to both governments. They’re probably right about that. They know public pushback from Ottawa to their demands will be spun as yet another attack on Alberta’s oil and gas industry, and they really know that the Carney government is determined to avoid that in the midst of the referendum campaign. Smith also faces some pressure here, given the unpopularity of industrial carbon pricing among the more fervent members of her base, the same people who are also frustrated with her refusal to put their referendum question to voters.

Carney surely knows he can’t capitulate to their demands, if not for obvious political reasons then at least for purely pragmatic ones. Removing the Impact Assessment Act and tanker ban wouldn’t clear the way for development, as these companies still seem to believe. If anything, it actively invites the very public and legal backlash that helped sink projects like Northern Gateway the last time a federal government tried to clear the field for pipeline development. That would mean court challenges, public protests, and years of delay — something the industry insists it can’t abide.  For all of their tactical smarts, oil sands companies still don’t seem to have much in the way of strategic intelligence.

The good news is that we can all dispense with the running fiction that these companies actually want to build carbon capture and storage projects. As the Toronto Star’s Adam Radwanski wrote in a recent column, “it’s now pretty clear, from public comments by their representatives and allies, that they’re actively opposed to the project unless government takes on all the costs and financial risks.”

McKenzie made that abundantly clear in his speech on Tuesday. “The reality is that this is a project with no revenue,” he said. “It is simply another cost burden that will be borne by industry and the two levels of government.” That’s not actually true, since companies would generate credits from the reductions made through the project. Cenovus knows this better than most, since its big oil sands projects are some of the industry’s most carbon-competitive — and already generate credit revenue for the company. But his industry’s unwillingness to live up to its promises, both to taxpayers and shareholders, is duly noted.

The Carney government should call this bluff. No, that doesn’t mean eliminating the regulations that merely formalize existing legal and social realities in key parts of British Columbia, and it certainly doesn’t mean eliminating the industrial carbon tax. For all of McKenzie’s whinging about it, there is no line item in his company’s audited financial statements related to carbon compliance costs, something the company would surely highlight if it was meaningful.

Instead, Carney could offer to drop the carbon capture and storage project if these companies can find other ways to reduce an equivalent volume of emissions. Better still, he could direct the funds that would have gone to carbon capture and storage to the development of non-combustion uses for bitumen, whether that’s carbon fibre and other advanced materials or asphalt for the roads our ever-more electrified vehicles will be traveling.

This would be a clear sign of the federal government’s commitment to helping Alberta further develop its key industry — and, more importantly, future-proof it from the inevitable decline in combustion-related oil demand. It would, if done correctly, reduce the need for diluent, which would increase the capacity of Alberta’s existing pipeline network by as much as 15 per cent. With the modest expansions to TransMountain and Enbridge’s main line already being proposed, that would more than cover any proposed increase in production.

In other words: no need for a new west coast pipeline or the bruising political and legal battles it would trigger. It would create new opportunities for building and economic growth, focus the federal government’s climate efforts on defending the industrial carbon price, and help better position the industry as the energy transition continues apace. Now that’s a grand bargain.

June 11th 2026

Max Fawcett
Lead Columnist