Carney, Smith sign carbon price deal, suggest fall 2027 pipeline approval

The effective price refers to how much carbon credits are sold for on the market, while the headline price refers to how much companies pay the province to comply with emission limits.

Carney and Smith, meeting in Calgary, said the implementation plan shows Alberta and Canada are serious about supporting and expanding the energy sector.

“We’re much closer to attaining our joint ambition to make Canada into a global energy leader and a trusted supplier of responsibly produced lower emissions energy in the world,” Smith told reporters.

“We’ve accomplished a lot together in less than six months.”

The prime minister said the pipeline remains dependent on the Pathways carbon-capture project in Alberta.

That means the next step is reaching a mutual agreement with the Oil Sands Alliance, the consortium of major oil players behind the project.

There also needs to be consultation with First Nations on the pipeline, and Smith and Carney said they will continue engaging with British Columbia.

“Earning trust, as we all know, it requires more than just ambition,” Carney said. “It requires partnership and requires co-operation, co-operation that respects our duty to consult and ensures Indigenous economic benefits and opportunities for co-ownership exist in every project.”

The agreement also includes a commitment from Alberta to facilitate investment in renewable energy projects.

No private company has come forward or been announced to build and own the pipeline.

Smith’s government has been acting as the proponent so far and has been undertaking initial planning and consultations. Smith has said an initial proposal would be submitted to Ottawa before July.

Alberta officials said the province hopes to see oil start flowing through the pipeline in 2033 or 2034.

A headline carbon emission price of $140 per tonne by 2040 for Alberta means Ottawa is permitting a much weaker pricing scheme, as the current federal backstop price is scheduled to reach $170 per tonne by 2030.

Briefing materials shared by Ottawa said the current carbon policy in Alberta hasn’t been working effectively due to an oversupply of carbon credits.

The flooded market has led to credits trading for $40 per tonne — last year reaching as low as $17 per tonne — far below the current federal headline price of $110 per tonne.

“This $70 gap means that decarbonization is not being incentivized as effectively as it should be,” says a briefing document.

Friday’s announcement commits Alberta to bring in a minimum price for credits that companies buy and use to fulfil emission requirements. It says the minimum transfer price would be set at $60 starting in 2030 and gradually increase to $110 by 2040.

The deal is likely to force Ottawa to be more lenient with other provinces following the federal price. The Supreme Court of Canada ruled in 2021 that all jurisdictions need equal treatment for carbon pricing.

Oil and gas industry leaders have said in recent weeks that Ottawa’s carbon policy is putting Canada at a competitive disadvantage, especially compared to other oil-exporting nations that don’t have carbon pricing.

Others, including Nancy Southern, chief executive officer of ATCO, have said Canada’s industry can afford a higher price.

This report by The Canadian Press was first published May 15, 2026.

Jack Farrell and Bill Graveland, The Canadian Press

by The Canadian Press

Carney, Smith sign carbon price deal, suggest fall 2027 pipeline approval

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