Canada Nears Alberta Carbon Pricing Deal Tied To Pipeline Expansion Plans

Canadian Prime Minister Mark Carney is expected to visit Calgary on Friday to announce a new industrial carbon pricing agreement with Alberta, marking a significant step in balancing the country’s climate goals with energy sector expansion.

According to sources familiar with the discussions, the agreement would gradually raise the effective carbon price for Alberta’s industrial emitters to C$130 per metric ton by 2040. The plan is designed to strengthen the province’s emissions pricing system while supporting broader negotiations around energy infrastructure and export growth.

Under the proposed framework, Alberta’s headline industrial carbon price would increase from the current C$95 per ton to C$100 next year, before rising steadily to C$130 by 2036. The price would then continue increasing annually by 1.5%. Industry experts have argued that current market credit prices, trading between C$20 and C$40 per ton, remain too low to incentivize large-scale emissions reduction investments.

The agreement is also closely tied to Alberta’s proposal for a new one-million-barrel-per-day crude oil pipeline to Canada’s northwest coast. Federal officials have previously indicated that support for new pipeline projects depends on meaningful investments in emissions reduction technologies, including carbon capture systems.

Environmental groups have pushed for faster implementation, arguing that stronger near-term carbon pricing is essential to accelerate decarbonization. Meanwhile, Alberta and industry stakeholders maintain that a more gradual timeline is necessary to preserve competitiveness and support energy export growth as Canada seeks to reduce reliance on the U.S. market.

The negotiations underscore the increasingly complex balance between economic growth, energy security, and climate policy in Canada’s evolving energy transition strategy.

Tying carbon pricing to pipeline decisions illustrates the political-economy negotiation that Canadian climate policy is genuinely working through. Our climate-action and sustainability-due-diligence teams help clients evaluate what these trade-offs mean for TCFD-aligned scenario planning and transition-plan credibility.