The memorandum of understanding charts a plan for a pipeline going from Alberta to Canada's Pacific coast, specifically to boost oil exports to Asia -- in line with Carney's goal of expanding overseas trade to offset damage from US President Donald Trump's trade war.

"At the core of the agreement, of course, is a priority to have a pipeline to Asia," Carney said ahead of the signing alongside Alberta's conservative Premier Danielle Smith.

Aside from broadening exports, the plan endorses an overall increase in Alberta oil and gas production.

The deal marked a clear pivot for Carney's Liberal Party and a departure from the policies that defined former prime minister Justin Trudeau's decade in power.

Relations between Alberta and Ottawa cratered under Trudeau.

Smith repeatedly accused him of suffocating Alberta's potential economic growth through what she termed radical pro-climate policies.

Smith took a jab at Trudeau on Thursday, saying "the last 10 years have been an extremely difficult time."

Carney, who grew up in Alberta, has worked to improve relations with Smith, repeatedly discussing his desire to make Canada an energy superpower.

In backing a new pipeline, Carney is exposing himself to accusations of betraying Canada's climate commitments, including from within his own party.

Under the plan, Ottawa also agreed to set aside an emissions cap, which has not yet come into effect.

But the prime minister -- a UN climate envoy before entering Canadian politics this year -- insisted the project will also make Canada's oil sector more sustainable.

"The way we're going to do that is in combination with the Pathways Project, which will be the largest carbon capture project in the world," Carney said.

The IPCC, the UN's expert scientific panel on climate change, says carbon capture is one option for reducing emissions, but critics slam it as an excuse to keep burning fossil fuels.

Actual construction of a new pipeline remains far off. The plan calls for a formal project proposal to be ready by July 2026.

The memorandum of understanding mandates consultation with Indigenous groups and Indigenous co-ownership of any infrastructure.

But First Nations and Indigenous groups have often opposed large-scale oil projects.

A pipeline would also have to go through British Columbia, the west coast province currently led by a left-wing government, which was not party to Thursday's deal.

- Canada stronger? -

Trump's impact on the Canadian economy loomed over Thursday's announcement.

Alberta oil exports currently go to the United States, and Canadian energy products have largely been exempted from Trump's tariffs so far.

But Trump has cut off trade talks with Canada, threatening the future of the existing North American free trade agreement.

Carney has also warned that economic relations with the United States will never return to a pre-Trump normal.

Carney said Thursday's deal came "in the face of global trade shifts and profound uncertainty."

"This is a good day for Canada," the prime minister said.

"This agreement will make Canada and Alberta, of course, more independent, more resilient (and) stronger."