Carbon pricing deal reached to advance new oil pipeline in Alberta

Key Takeaways:

• Alberta and the federal government have agreed to a construction start date of September 2027 for a new one million barrel per day oil pipeline to the west coast.
• The federal government will scrap the proposed oil and gas emissions cap and streamline environmental reviews to provide industry with greater regulatory certainty.
• Industrial carbon pricing will be rolled back to a target of 130 dollars per tonne by 2035 with a new price floor introduced in 2030 to stabilize the TIER credit market.

The Whole Story:

Alberta and the federal government have finalized a major implementation agreement, setting a clear timeline for the design and construction of a new Indigenous co-owned oil pipeline to the west coast.

The project, which is intended to transport more than one million barrels of oil per day to Asian markets, is scheduled to begin construction as early as Sept. 1, 2027. Under the terms of the deal, the federal government has committed to a prompt review through the Major Projects Office, with a goal of designating the pipeline as a project of national interest by Oct. 1, 2026.

The agreement serves as a pivotal expansion of the Alberta-Canada Energy Agreement signed in November 2025 and introduces significant shifts in environmental and fiscal policy. Notably, the federal government has agreed not to proceed with a proposed oil and gas emissions cap and will hold the federal Clean Electricity Regulations in abeyance for Alberta.

Additionally, the province will maintain jurisdiction over methane regulation, targeting a 75% reduction from 2014 levels by 2035. These regulatory changes are designed to streamline project reviews and eliminate duplication between provincial and federal authorities.

A core component of the announcement is a restructured industrial carbon pricing framework under Alberta’s Technology, Innovation and Emissions Reduction (TIER) system. The new agreement rolls back the previous federal target of $170 per tonne by 2030, setting a lower headline price of $130 per tonne by 2035.

The price will remain at $95 per tonne through 2026 before rising to $100 per tonne from 2027 until 2030. To eliminate market volatility and attract investment in carbon capture and emissions-reduction technologies, a price floor will be introduced in 2030, targeting a consistent market price of $130 per tonne by 2040.

“Today’s agreement reinforces that Alberta and Canada are lands where the opportunities are plentiful, the rules are clear, and one project means one review,” said Prime Minister Mark Carney. Alberta Premier Danielle Smith added that the deal sends a clear message to global investors that the province is ready to expand market access and secure long-term investment. Industry leaders, including the Saa Dene Group, ATCO Ltd., and ENMAX, praised the move for providing the fiscal certainty required to advance large-scale infrastructure and double the province’s electricity generation capacity by 2050.

Main agreement actions:

• Commitment not to proceed with a federal oil and gas emissions cap.
• Abeyance of the federal Clean Electricity Regulations in Alberta.
• Agreement to advance an Indigenous co-owned oil pipeline to Asian markets.
• Agreement on more competitive industrial carbon pricing under Alberta’s TIER system.
• Agreement-in-principle allowing Alberta to continue regulating methane under its existing system while achieving a 75% reduction from 2014 levels by 2035.
• Impact Assessment Agreement to streamline project reviews, reduce duplication and reinforce provincial jurisdiction.