Alberta and Ottawa have agreed on a new pipeline deal that includes an industrial carbon emissions credit price of $130 per tonne. However, there is a discrepancy in how the two governments are interpreting this figure, leading to confusion and questions about their alignment.
Prime Minister Mark Carney views the deal as a significant increase in carbon pricing, while Energy Minister Tim Hodgson believes it surpasses the current market price in Alberta, which is around $20 per tonne. On the other hand, Premier Danielle Smith and her team compare the $130-per-tonne level to the existing $95-per-tonne price that the province charges large emitters.
The memorandum of understanding specifies the federal government’s interpretation as more accurate, although the provincial government’s cited numbers are also valid. The discrepancy arises from discussing two different but interconnected carbon prices: the “headline price” and the “market price.”
The headline price is what polluters pay directly to the Alberta government under its industrial carbon pricing system, currently set at $95 per tonne. Conversely, the market price refers to the cost of carbon credits traded on the open market, currently averaging below $20 per tonne.
The oversupply of credits in the market, coupled with regulatory changes and renewable energy expansion, has led to a decrease in the market price. To address this, the federal government aims to stabilize carbon credit prices to support initiatives like the Pathways carbon-capture project.
The MOU outlines plans to enhance credit prices through sector-specific measures and potential financial mechanisms. These details are expected to be finalized by April 1, 2026, with a focus on strengthening carbon pricing policies to drive emission reductions effectively.
Overall, the MOU signifies a step towards bolstering Alberta’s industrial carbon pricing system and supporting projects like Pathways, emphasizing the importance of aligning carbon prices to achieve emission reduction targets effectively.
