Canada and Alberta Lock in $130/tonne Carbon Price by 2040 with 75 Million Tonnes of CFDs

The federal and Alberta governments announced the agreement on May 15, 2026, building on a memorandum of understanding signed the previous November. That earlier MOU pledged to strengthen industrial carbon pricing, attract private investment in clean technologies, and create a credible national carbon market. By setting a clear price trajectory, the two jurisdictions hope to overcome the current oversupply of low‑cost credits that has weakened incentives to cut emissions.

The headline carbon price will reach $115 per tonne by 2030, $130 per tonne by 2035, and $130 per tonne by 2040, with an eventual increase to $140 per tonne by 2040 under the agreed benchmarks. Ottawa and Edmonton will co‑issue 75 million tonnes of carbon contracts for difference, splitting the cost equally, to finance projects that lower greenhouse‑gas emissions. Prime Minister Mark Carney said the arrangement shows Alberta and Canada have abundant opportunities, clear rules, and a streamlined review process, aiming to build a prosperous, sustainable, resilient economy for all.

Analysts expect the higher carbon price to make fossil‑fuel‑intensive operations more expensive, thereby encouraging adoption of low‑carbon technologies such as carbon capture, hydrogen, and electrification. The CFDs will provide a guaranteed floor price for emission reductions, giving developers confidence to invest in large‑scale clean projects without fear of market volatility. Together, these measures are designed to create a stable, predictable carbon market that can attract the capital needed to meet Canada’s net‑zero goal by 2050. Watch for the first CFD auction later this year and any adjustments to the annual stringency rates under Alberta’s TIER system.