Leaders in Canada’s oil and gas industry are expressing concerns about the impact of an industrial carbon levy on the country’s competitive position in the global energy market. According to Lisa Baiton, who heads the Canadian Association of Petroleum Producers (CAPP), imposing a carbon tax on industrial operations puts Canada at a disadvantage compared to other oil-producing and exporting nations that do not have similar measures in place.
Baiton emphasized the importance of Canada’s vast oil and gas reserves in light of global energy demand and recent geopolitical events, such as the conflict in the Middle East and Russia’s invasion of Ukraine. She stressed that Canada has a responsibility to develop its energy resources to enhance global energy security, but highlighted the need to focus on initiatives that promote competitiveness rather than adding costs.
The discussions took place at the 2026 BMO CAPP Energy Symposium in Toronto, where industry leaders discussed the need to expedite the construction of oil and gas export infrastructure to access new markets beyond the United States. The Alberta government is preparing to submit an application for a new West Coast crude oil pipeline to the federal major projects office, aiming to accelerate the development of infrastructure deemed vital for the country’s interests.
Under a memorandum of understanding signed by the Alberta and federal governments, plans are in place for a new British Columbia pipeline project alongside an industrial carbon pricing mechanism to support initiatives like the Pathways carbon capture proposal. However, details regarding the carbon pricing and Pathways components are still being finalized, with discussions ongoing to determine the specifics of the carbon price increase.
While some analyses suggest that the added carbon costs could be offset by increased profits from expanded exports to Asia, industry leaders like Cenovus Energy CEO Jon McKenzie remain skeptical. McKenzie cautioned that imposing a carbon levy could lead to a shift in global supply away from Canada, making the country less competitive on the international stage.
Despite efforts to reduce emissions through technology and operational improvements, industry executives like Birchcliff Energy Ltd.’s CEO Chris Carlsen expressed concerns about the feasibility and cost of further emissions reduction measures, such as carbon capture and storage. The focus remains on maintaining competitiveness in the face of evolving market conditions and regulatory challenges.
Experts like Mike Verney from McDaniel & Associates highlighted Canada’s potential as a major global energy supplier, given its substantial oil reserves and strategic position in the market. However, concerns persist about the regulatory environment and infrastructure constraints that could impact the industry’s ability to capitalize on these opportunities.
Randy Ollenberger, head of oil and gas research at BMO Capital Markets, underscored the importance of creating favorable policy conditions to support the growth of Canada’s oil industry. He emphasized the need for efficient project approval processes and infrastructure development to ensure Canada remains competitive in the evolving global energy landscape.
