Last week, Canadian Prime Minister Carney and British Columbia Premier Eby announced that Canada and British Columbia have signed the Canada-British Columbia Cooperative Prosperity Agreement. The agreement is a wide-ranging economic and energy framework that accelerates major energy and trade corridors across the province, sets out a series of environmental commitments, and, most consequentially for carbon market participants, formalizes B.C.'s acknowledgement of the proposed trans-provincial pipeline to the coast and commits both governments to negotiating a compensation arrangement tied to the revised federal industrial carbon pricing benchmark.
The agreement follows the recent Canada-Alberta Implementation Agreement and the subsequent ECCC update to the federal headline price trajectory. Where the Alberta agreement re-defined the TIER framework and set the national headline price, this B.C. agreement addresses the downstream consequences for a province that had already aligned its Output-Based Pricing System (OBPS) with the previous, steeper federal schedule. The deal is structured around cooperative federalism, pairing federal financial support for B.C. infrastructure, clean electricity, and trade-exposed industries with B.C.'s good-faith participation on the pipeline file and continued alignment of its carbon pricing system.
Carbon Markets
The following is the Carbon Markets section of the Cooperative Prosperity Agreement, reproduced in full:
The transition to a low carbon economy creates new categories of economic value – in protected forests, restored watersheds, clean energy systems and nature-based solutions that store carbon at scale. The commitments in this section reflect both Parties’ shared interest in developing the carbon market infrastructure needed to unlock that value and attract private sector investment in climate action.
- National Carbon Credit Framework: British Columbia and Canada will work with other provinces and territories to explore options for developing a National Carbon Credit Framework, including the use of credits generated through consumer sustainability choices, such as retrofits and EVs, and nature-based solutions.
- Carbon Pricing: British Columbia made significant and good-faith adjustments to align its carbon pricing system with the federal benchmark. As the federal government recalibrates that benchmark, Canada commits to working with B.C. to quantify the fiscal impact of the revised benchmark and to negotiating a funding agreement that fairly compensates B.C. accordingly.
The National Carbon Credit Framework is a forward-looking commitment. It is not a defined program with rules or timelines, but an agreement to work with the provinces and territories to explore options. The scope reaches beyond industrial compliance credits to consumer-driven and nature-based credits, retrofits, EVs, and nature-based solutions, pointing to a broader, pan-Canadian credit architecture. This tracks the theme from the Alberta Implementation Agreement, where Ottawa stated plainly that Canada's carbon credit markets are not working.
The Carbon Pricing commitment is the more material item near-term. B.C. moved in good faith to match the previous federal benchmark, and Ottawa has since reset that benchmark lower. The effect is fiscal: a lower headline price means less compliance-charge revenue under the B.C. OBPS. The wording of the agreement, a commitment to work with B.C. to quantify the impact of the revised benchmark and to negotiate a funding agreement that fairly compensates B.C., suggests the two governments intend to offset at least part of that shortfall, though the mechanism and quantum remain to be negotiated. It reads as a template other aligned provinces may look to as the benchmark reset filters through their own systems.
The revenue effect is amplified by the structure of the B.C. OBPS itself. From 2026 onward, the program caps the use of offset units and earned credits at 30% of a facility's compliance obligation, with the remaining 70% met through direct payments at the prevailing carbon price. Because the large majority of each obligation is settled in cash at the headline rate, a lower price schedule flows almost directly through to lower program revenue. The gap between the old CAD 170-by-2030 path and the revised CAD 115-by-2030 path is therefore not marginal, it materially reduces the direct-payment revenue B.C. would have collected, which is precisely the shortfall the compensation arrangement is meant to address.
Energy Development
The Energy Development section addresses the trans-provincial pipeline contemplated under the Canada-Alberta agreement. The framing is candid: although B.C. does not seek this project, it recognizes its constitutional obligations and commits to acting in good faith on routing and permitting within its jurisdiction, provided a set of reciprocal commitments from Canada are met. This resolves an open question left by the Alberta MOU and Implementation Agreement, where B.C.'s role in the west-coast pipeline had been flagged for trilateral discussion but not secured. As Premier Eby put it, B.C. will not go to court to fight the project, pipelines are federal jurisdiction, but the agreement ensures the tanker ban stays in place and that B.C. is fairly compensated for the environmental risk it takes on.
B.C.'s participation is conditional on four reciprocal commitments from Canada:
- North Coast tanker ban maintained: Canada will maintain the federal North Coast tanker ban without alteration, suspension, or narrowing of scope.
- First Nations consultation and equity: early, consistent, and meaningful consultation upholding Aboriginal and Treaty rights under section 35 of the Constitution Act, 1982, plus loan guarantee support for First Nations communities along the route to acquire equity in the pipeline.
- A legally binding economic and revenue framework for B.C.: grounded in the principle that B.C. must share meaningfully in the economic upside. Mechanisms to be discussed include an annual royalty payment to B.C. by the pipeline operator and an environmental liability and emergency response fund held in trust and accessible by B.C. and First Nations.
- "One project, one review": reciprocal assessment and permitting cooperation for projects within federal jurisdiction assessed under the Impact Assessment Act and the Canadian Energy Regulator Act.
The tanker ban commitment is the pivotal item, and its significance goes well beyond B.C.'s own waters. The federal North Coast tanker ban, the Oil Tanker Moratorium Act, restricts large oil tankers from loading along B.C.'s northern coastline. Confirming it stays in place, unaltered, effectively removes the North Coast as a viable terminus for the proposed Alberta pipeline. This is a shift from the Alberta MOU, which had left open that adjustments to the moratorium might be made if necessary; the B.C. agreement instead locks it in. Prime Minister Carney was explicit that the moratorium will be maintained in accordance with any proposed pipeline route, which market commentary read as taking the wind out of a northern route.
This matters directly for the Alberta file. Documents previously reported in the press had identified several candidate routes to B.C.'s North Coast, plus a southern alternative; with the northern coastline now foreclosed by the ban, a southern route becomes the more likely path, though southern options carry their own routing, tidewater, and consultation challenges.
The timing of the B.C. agreement is not coincidental. Under the Canada-Alberta MOU and the May Implementation Agreement, Alberta committed to submitting its pipeline application to the federal Major Projects Office (MPO) by July 1, 2026. Alberta, acting as the early-stage proponent, is expected to provide details of that submission in a separate announcement later today, a proposal for a one-million-barrel-per-day bitumen pipeline to the West Coast, covering the general path and size of the line, market demand, economic viability, Indigenous engagement, and the national-interest case. The public announcement was moved to July 2 from the July 1 deadline owing to the Canada Day holiday.
The agreement also addresses the existing Trans Mountain system. B.C. recognizes Canada's interest in optimizing Trans Mountain to raise throughput from 890,000 to 1,190,000 barrels per day, via drag-reducing agents and mainline optimization, and commits to supporting that work, subject to federal support for verified B.C. capital costs and a renegotiation of Condition Five so that British Columbians receive a fair share of the additional benefits. On coastal protection, Canada commits to renewed investment in a world-leading coastal spill-response regime and to protecting the Southern Resident Killer Whale habitat through the Whales Initiative.
Implementation Committee and Timelines
Delivery of the agreement is assigned to a jointly appointed Implementation Committee responsible for turning the commitments into measurable progress and serving as the central forum for coordination and troubleshooting. The committee will work according to the schedule set out in Annex A, which sorts commitments into immediate, end-of-2026, and mid-2027 tranches.
For carbon market participants, the single most important dated item is that, on or before December 1, 2026, the Implementation Committee is to deliver "a compensation arrangement related to the updated industrial carbon pricing benchmark." This is the concrete deadline attached to the Carbon Pricing commitment discussed above, and it places the B.C. compensation mechanism on the same near-term footing as several of the agreement's largest financial files.
Other Agreement Items
Beyond carbon and the pipeline, the agreement funds roughly CAD 3.9 billion for the North Coast Transmission Line (backbone of a clean-energy corridor with proposed Yukon and Alberta interties) and supports priority LNG projects (LNG Canada Phase 2, Ksi Lisims, Cedar, Woodfibre). On trade, it transforms the Port of Vancouver-Roberts Bank corridor, provides up to CAD 3 billion for the George Massey Tunnel, and advances the Ports of Prince Rupert and Stewart. A Northwest Critical Mineral and Conservation Corridor pairs a CAD 500 million Red Chris Mine expansion with 30x30-aligned conservation. Rounding out the deal are trade-exposed industry measures (steel, softwood lumber), environmental protections (CAD 250 million Whales Initiative, Oceans Protection Plan), and skills/childcare investments (up to 100,000 Red Seal trades workers; over CAD 630 million for child care).
ClearBlue is assessing the implications for the B.C. OBPS and the national carbon pricing landscape, keep clients informed. For information about our market intelligence services for Canadian markets participants, please contact us.