Capital investment in Canada’s oilsands sector has declined sharply over the past decade, raising concerns about the country’s ability to expand oil production and achieve its energy security objectives, according to an industry group representing major oilsands producers.
The Oil Sands Alliance Inc., which includes five of Canada’s largest oilsands companies, highlighted on Monday that investment averaged $11.9 billion annually between 2016 and 2025, nearly half the $21.6 billion recorded each year from 2006 to 2015. The group attributed the slowdown to regulatory complexities, fiscal structures perceived as discouraging growth, and what it described as an “uncompetitive industrial carbon tax” – a tax framework not faced by competing heavy-oil jurisdictions globally.
The alliance pointed to the memorandum of understanding (MOU) signed six months ago between the federal government and Alberta as a potential catalyst for renewed investment, but said progress has been slow. The MOU aims to facilitate new oil pipeline development and balance resource expansion with carbon emissions control. Yet key issues remain unresolved more than a month after the April 1 deadline, including the finalization of industrial carbon pricing and a three-way agreement involving a proposed carbon capture and storage (CCS) megaproject.
According to the Oil Sands Alliance, these delays and policy uncertainties hamper the industry's ability to secure the capital necessary for new projects. “Because of complex regulatory processes, uncompetitive carbon frameworks and fiscal systems that do not incent growth, there has not been a major new greenfield oil sands project sanctioned in Canada since 2013,” the group noted.
Prices for oil plunged in late 2014, triggering a prolonged recession in Alberta and curtailing investment despite earlier growth in the sector. Additional environmental policies introduced under the Trudeau government also drew criticism from industry stakeholders who contend these measures have deterred investment. However, some economists emphasize that the decline in capital spending is consistent with global trends in oil and gas, which have not rebounded to levels seen during the early 2010s boom.
Cenovus Energy Inc. CEO Jon McKenzie echoed these industry concerns, stating that Canada’s industrial carbon tax renders the country "uncompetitive" and calling for reforms or removal of such measures to encourage capital formation and growth in oilsands production.
The Alberta government, which froze its industrial carbon tax last year, has agreed in principle to increase the effective carbon price for heavy emitters to $130 per tonne—up from the current headline rate of $95 per tonne—but negotiations with Ottawa continue. Alberta spokesperson Sam Blackett emphasized that any final agreement must preserve the competitiveness of the province’s energy sector on a global scale.
Natural Resources Minister Tim Hodgson’s office, meanwhile, stressed the importance of industrial carbon pricing as part of a broader effort to meet rising demand for low-carbon energy and materials. “Industrial carbon pricing is critical to this effort,” spokesperson Charlotte Power said, adding that the government aims to balance climate commitments with energy affordability, job creation, and long-term security.
As discussions persist, the Oil Sands Alliance reiterates its commitment to reducing emissions intensity and pursuing large-scale CCS projects, pending supportive regulatory and fiscal environments. The industry’s future investment decisions appear closely tied to the resolution of outstanding policy issues between federal and provincial authorities.