On May 27, 2026, ClearBlue Markets hosted a webinar to break down the details and implications of the newly signed Canada-Alberta Memorandum of Understanding (MOU) Implementation Agreement. The session featured commentary from Michael Berends (CEO, ClearBlue Markets), analysis from Nico Curtis (Manager of Market Analysis, ClearBlue Markets), and legal perspective from Tyson Dyck (Partner at Torys LLP). Together, they explored how the new carbon market rules will transform the Alberta TIER (Technology Innovation and Emissions Reduction) program and discussed the ripple effects this will have across Canadian carbon policy out to 2040.
Below is a summary of the insights shared during the event.
For a more detailed analysis, read: Canada and Alberta Reach Agreement on MOU Implementation, Re-Defining Carbon Pricingby Nico Curtis, May 19, 2026
The Big Picture: Why This Agreement is a "Good Deal"
Michael Berends opened the webinar by addressing the elephant in the room: the public criticism surrounding the updated carbon pricing trajectory. Berends made his position clear from the start. "This is a good deal," he stated.
While some critics view the departure from the previous $170-per-tonne by 2030 target as a step backward in climate ambition, Berends argued that the old target was functionally irrelevant without proper enforcement. "The reality is there's been a lack of certainty in Canadian carbon pricing for too long. Even though we had bold regulation from the federal government on paper, the fact is, it wasn't implemented," he explained.
Read also: Certainty Is What Actually Drives Carbon Progress,
by Michael Berends, May 14, 2026
During the webinar, Berends also emphasized that a lack of implementation and enforcement historically caused immense uncertainty, leading to delayed investment decisions for emitters across Canada,and that the previous system failed to create true market equivalency. "Equivalency doesn't just mean price, it means benchmarks, and stringencies. It means funding, and more," Berends noted, pointing out the difficulties faced by companies managing identical facilities in different provinces under different carbon rules. Ultimately, Berends views the new MOU as a first step toward creating a level playing field and providing the regulatory certainty needed to drive real market progress.
Market Dynamics and the New TIER Pricing Framework
Looking at recent market activity, Nico Curtis noted that TIER spot prices experienced a run-up prior to the MOU announcement but have since settled lower as market participants actively digest the new information.
The implementation agreement introduces a revised long-term pricing framework that completely alters the previous trajectory. The headline price will now stay at $95 for 2026, slightly increase to $100 from 2027 to 2029, and then rise to $115 by 2030, eventually cascading to $130 by 2035 and $140 by 2040.
Perhaps the most market-altering mechanism introduced is the new minimum transfer price, or "price floor". Starting in 2030, this floor will be set at $60 per tonne, increasing to $80 by 2035, and escalating to $110 by 2040. Credits used for compliance retirements must be acquired at this floor price. Credits generated prior to the enactment of the price floor regulations, specifically the 2025 and 2026 vintages, will be grandfathered in, adding another layer of strategic consideration for market participants.
Revisions to Tightening Rates and the Direct Investment Pathway
Beyond pure pricing, Curtis detailed changes to the demand side of the market via revised annual tightening rates. Previously, the tightening rate schedule was 2% for all sectors, with certain oil facilities increasing to 4% in 2029. Under the new agreement, these rates have been moderated. As an example, the high-performance benchmark tightening rate for the electricity sector has been reduced to 1% through 2040. The new, more lenient 1% rate for electricity will allow for roughly a 22% higher credit yield for zero-emissions generators like wind, solar, and hydro facilities by 2040, providing them with substantial monetization opportunities.
Curtis pointed out that under the old 2% to 4% schedules, the cumulative balance would have resulted in "substantial compliance obligations from 2030 onwards due to the compounding tightening rates".
Additionally, Curtis touched on the Direct Investment Pathway (DIP). While the program will move forward, the new agreement limits eligible investments to 50% of capital and operating expenses, net of other government grants or tax credits. The market is still awaiting the formal standard for direct investment to clarify exactly which projects and costs will qualify.
Pathways, Pipelines, and Grid Expansion
The webinar also highlighted infrastructure and economic agreements embedded within the MOU. Curtis demonstrated a strict mutual dependency established between the Pathways Project, a major carbon capture, utilization, and storage (CCUS) initiative aiming for 16 million tonnes of reductions per annum by 2045, and the regulatory advancement of an oil pipeline to Asian markets. Furthermore, the federal government is providing cost certainty for these projects by creating a 20% minimum credit rate under the Clean Fuel Regulations (CFR).
On the electricity front, the Clean Electricity Regulations (CER) will be held in abeyance pending Supreme Court outcomes, but regardless of the legal decision, both governments have committed to facilitating a doubling of Alberta's grid capacity by 2050. This expansion will rely on both renewable energy and natural gas generation to ensure baseline stability.
A Legal Perspective: Policy Shifts and Contracts for Difference
Providing a legal analysis of the MOU, Tyson Dyck echoed Michael Berends's sentiment that the agreement is a significant win for market certainty. "$170 a ton was never a realistic target for 2030. I think most people instead were very concerned by some of the uncertainty in this market," Dyck noted.
Dyck highlighted the introduction of the price floor as a shift in carbon policy philosophy. "With a price floor, I think this becomes more about incentivizing industrial emissions reductions through a price collar, with the price floor on one end and the headline price on the other," he explained, noting that the focus is moving away from simply utilizing offsets for the lowest-cost abatement possible.
The discussion then turned to the highly publicized Carbon Contracts for Difference (CfDs). The implementation agreement establishes a jointly funded program by Canada and Alberta, committing up to $1.2 billion in total liability ($600 million per party) to underwrite 75 million tons of emission reductions.
Dyck provided a grounded legal perspective on these contracts. "CFDs aren't a panacea," he cautioned. "At the end of the day, in Canada we have legislative supremacy. Our provincial and federal legislatures have broad authority to legislate away contractual liability." Despite this political risk, Dyck stressed that the $1.2 billion commitment is a genuine compromise that provides a contractual backstop to the regulatory market price.
Berends chimed in on the CFDs, adding that while they are a welcomed addition, their necessity highlights the market's historical flaws. "A well functioning carbon market should not need CFDs," Berends stated, pointing out that mature markets like the EU ETS don't rely on them because the regulatory certainty already exists natively.
Unresolved Questions and What to Watch Next
While the MOU provides a framework out to 2040, the panel agreed that the "devil will be in the details". Dyck pointed out unresolved legal and structural questions:
- Defining the "Effective Price": The agreement targets an "effective price" of $130 by 2040, but this is not strictly synonymous with the TIER offset price due to usage limits and other market factors. How this price will be manipulated and managed by Alberta remains an open question.
- Enforcing the Price Floor: Given that many TIER transactions are bilateral, over-the-counter trades with no public price discovery, how will Alberta effectively audit and enforce the minimum transfer price?
- Impact on Forward Contracts: What happens to existing long-term offtake agreements (especially in the renewable energy sector) that have committed to forward deliveries of TIER offsets beyond 2030 at predetermined prices that may fall below the new legal floor?
As the market looks ahead, all eyes are on the upcoming regulatory deadlines. Alberta is expected to enact its new regulations by December 31, 2026, and the federal government is slated to publish its updated federal benchmark by the end of 2026. Until then, carbon market participants must stay agile as the technical foundations of Canada's emissions strategy are actively rewritten.
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