Canada’s role as a major global oil and gas supplier is gaining renewed attention amid geopolitical instability and shifting energy markets. However, industry leaders warn that domestic policy—particularly industrial carbon pricing—could be undermining the country’s competitive position at a critical moment.
Carbon Pricing Seen as Competitive Disadvantage
At the 2026 BMO CAPP Energy Symposium in Toronto, Lisa Baiton, president and CEO of the Canadian Association of Petroleum Producers, said Canada’s industrial carbon pricing framework is putting producers at a disadvantage compared with global competitors.
“We’re still talking about an industrial carbon tax when no other producing and exporting nation does that to their producers,” Baiton said in an interview.
While Canada has made strides in positioning itself as a reliable energy supplier—particularly to allies seeking alternatives to unstable regions—Baiton argued that added costs tied to climate policy risk weakening that momentum.
Global Instability Highlights Canada’s Role
Ongoing conflict in the Middle East has reinforced longstanding arguments from industry groups that Canada should expand production to support global energy security. Since Russia’s invasion of Ukraine, calls have intensified for Canada to leverage its vast reserves.
Baiton emphasized that Canada holds some of the world’s largest oil and gas resources and has both an economic opportunity and a strategic responsibility to develop them.
“And yet we seem to be sometimes focusing on the wrong things,” she said, pointing to policies that increase costs rather than accelerate development.
Push to Expand Export Infrastructure
The debate comes as governments and industry look to diversify Canada’s export markets beyond the United States, historically its largest energy customer.
The Government of Alberta is preparing an application for a new West Coast crude oil pipeline, expected to be submitted this summer to federal regulators. The project is intended to improve access to Asian markets, where demand remains strong.
This initiative builds on recent federal-provincial cooperation. Late last year, the Government of Canada and Alberta signed a broad memorandum of understanding covering energy development, including a proposed pipeline through British Columbia and support for carbon capture projects such as the Pathways Alliance initiative.
Unresolved Details on Carbon Pricing
Despite the agreement, key details remain unsettled. Negotiations over the structure and pace of industrial carbon pricing increases have extended beyond an April 1 deadline outlined in the accord.
Under the proposed framework, Alberta’s industrial carbon price would rise from $95 to $130 per tonne. Premier Danielle Smith has indicated discussions are ongoing regarding how quickly that increase would be implemented.
Analysis Suggests Costs May Be Offset
Some policy analysts argue that higher carbon costs may not significantly harm producers’ bottom lines. A recent assessment by Clean Prosperity found that expanded export capacity could more than offset added expenses.
The analysis examined several major oilsands operations, including projects operated by Cenovus Energy, Suncor Energy and Imperial Oil.
It estimated that under the higher carbon price, production costs would increase to between 81 cents and $3.75 per barrel, up from a current range of 53 cents to $2.46. However, improved market access—particularly via a new pipeline—could boost revenues by more than $10 per barrel as pricing gaps between Western Canadian Select and global benchmarks narrow.
The expansion of the Trans Mountain pipeline expansion has already demonstrated this effect, enabling greater access to Pacific markets and improving returns for producers.
Canada’s Resource Potential Draws Global Interest
Industry analysts say Canada remains well-positioned in the global energy landscape. According to a study by McDaniel & Associates, Alberta alone holds an estimated 177 billion barrels of proven oil reserves—ranking among the largest globally.
Executive vice-president Mike Verney said a shift in global priorities is likely to shape the sector in the coming years.
“Energy security [is] trumping energy affordability or sustainability,” he said, noting that U.S. shale production growth has begun to slow after years of rapid expansion.
With oil prices above US$70 per barrel, Verney added, Canada’s largely undeveloped reserves remain commercially attractive and are expected to draw increasing investment.
Balancing Climate Policy and Economic Opportunity
The discussion reflects a broader tension in Canada’s energy strategy: balancing climate commitments with economic growth and geopolitical opportunity.
While carbon pricing is a central pillar of Canada’s emissions reduction plan, industry leaders argue that aligning environmental policy with global competitiveness will be critical as the country seeks to expand its role in international energy markets.
As global demand evolves and infrastructure decisions take shape, the outcome of current policy debates could have lasting implications for Canada’s position in the energy sector.
