On November 27, 2025, Canada and Alberta signed an ambitious Memorandum of Understanding to unlock the full potential of Alberta’s energy resources. Our partnership with Alberta harnesses our shared ambition to build a stronger, more sustainable, more independent Canadian economy – one that diversifies our energy exports around the world and builds a clean and prosperous future for Canadians.
Today, Canada and Alberta have delivered on those commitments by reaching an agreement to work together to grow the economy while lowering emissions.
This agreement delivers on joint action to:
- Strengthen carbon markets
- Double the electricity grid, including renewables
- Diversify global markets for Canada’s energy products
Objectives
A rapidly changing global context has underscored the need to act decisively to build a stronger, more sustainable, more resilient economy.
This agreement sets out a coordinated implementation plan to support Canada and Alberta’s shared objectives, including actions to:
- Strengthen the industrial carbon market in Alberta, and across Canada, to reduce industrial emissions and catalyse investments in clean technologies.
- Maintain momentum on electricity-sector decarbonisation by facilitating investment in low-carbon energy in Alberta, particularly renewables.
- Facilitate a doubling of the electricity grid by 2050 while maintaining affordability.
- Set the stage for near-term construction of the Pathways carbon capture and storage projects, anchoring a globally significant industry in Canada.
- Grow clean and conventional energy production to reach our export, trade diversification, and national security goals, while reducing the emissions intensity of our heavy oil production.
- Deepen collaboration to achieve net-zero emissions by 2050 through a new Canada-Alberta Electricity Working Group.
Strengthening industrial carbon markets
Reliable and functioning industrial carbon markets are critical to a more sustainable economy over the longer term, while supporting economic growth today.
The current carbon pricing market is not working – oversupply means that credits are trading at $40 per tonne, compared with the current federal headline price of $110 per tonne. This $70 gap means that decarbonisation is not being incentivised as effectively as it should be.
Today’s agreement represents a practical path to building carbon markets that work.
Key measures include:
- The headline price on carbon emissions in Alberta will rise predictably to $140 per tonne in 2040.
- The effective price – the market value of carbon credits and offsets in Alberta – will rise to $130 in 2040.
- Alberta will introduce a price floor within its industrial carbon pricing system to ensure the market price does not fall below a predetermined level over time – an important insurance policy to ensure a functioning carbon market.
In addition, in a first-of-its-kind example of federal-provincial cooperation, Canada and Alberta will jointly issue carbon Contracts for Difference (CFDs) covering 75 million tonnes of emissions reductions for projects in Alberta. CFDs provide project developers with greater certainty that carbon credit values will remain predictable over the long term, enabling investment decisions.
Doubling the electricity grid
Canada faces an enormous challenge – and opportunity – to double the size of its electricity sector by 2050. As outlined in Powering Canada Strong: A National Strategy for an Electrified Canadian Economy, Canada will significantly expand electricity generation, transmission, and system flexibility to support electrification and long-term growth through 2050.
Alberta is seizing a generational economic opportunity by attracting major industrial investments – including artificial intelligence data centres – requiring reliable and affordable electricity. At the same time, Alberta has made significant contributions to Canada’s climate change objectives through the early retirement of its coal-fired power fleet, completed in 2024.
The Implementation Agreement sets out the measures that Canada and Alberta will take together to ensure Alberta’s electricity growth results in lower emissions, affordable power, and a reliable grid. In particular:
- Canada and Alberta agree to facilitate a growing role for lower-carbon forms of energy development, such as wind, solar, geothermal and nuclear.
- Alberta will implement changes to the Restructured Energy Market to facilitate ongoing investment in renewables.
- Canada intends to extend the Clean Electricity Investment Tax Credit to support major high-voltage intra-provincial transmission lines, in Alberta and across the country. This will complement existing support for interties that connect grids across provincial and territorial borders.
- In terms of the Clean Electricity Regulations, Canada and Alberta acknowledge that the reference case on its constitutionality is ongoing. To advance continued cooperation, both governments agree to defer to the courts on this matter.
- Should the courts find the Regulations to be constitutional, Canada and Alberta will negotiate an equivalency agreement on electricity.
- Should the courts find the Regulations to be unconstitutional, they will be stood down.
- Regardless of the outcome, Canada and Alberta agree that all aspects of the Implementation Agreement will be maintained, including carbon pricing.
Diversifying Canada’s energy markets
Canada’s energy security and sovereignty have never been more important, and the global need for reliable, affordable, low-carbon Canadian energy has never been clearer.
Canada and Alberta are unlocking the power of our energy sector while continuing to make progress towards net-zero objectives. That is why Alberta's industrial carbon pricing benchmarks and stringencies will reward those who invest in reducing emissions, including the proponents of Pathways projects. The Pathways projects are also a prerequisite for the approval, commencement, and continued construction of a new bitumen pipeline to Asian markets.
Canada and Alberta have what the world needs. This agreement will enable us to meet growing global energy demand and pursue increasingly diversified export markets:
- Canada and Alberta reaffirmed their shared objective of achieving 16 million tonnes per annum (Mtpa) of emissions reductions from Pathways projects, with the first phase to be completed by 2035.
- This reflects the largest carbon capture, utilisation, and storage project in the world. Canada and Alberta are committed to further work with Pathways to finalise details soon.
- Alberta will submit a comprehensive proposal for an oil pipeline to Asian markets to the Major Projects Office by July 1, 2026.
- Canada will pursue its designation as a project of national interest, for approval under the Building Canada Act by October 1, 2026, while ensuring that all steps and decisions are fully consistent with its duty to consult Indigenous Peoples and informed by the outcomes of that consultation.
- If designated, Canada will assess the project under the Building Canada Act to determine the conditions required for construction and development of the pipeline and, provided that duty to consult obligations with Indigenous Peoples have been met, Canada intends to make best efforts to provide the conditions document by September 1, 2027, to enable commencement of construction of the pipeline.
- Canada and Alberta also reaffirmed that construction of the oil pipeline project and construction of the Pathways Project are mutually dependent.
- Canada and Alberta agree to continue engaging with British Columbia on the application and any future development and construction of an oil pipeline, on interties with Alberta, and on other projects of national interest within British Columbia’s jurisdiction.
Achieving net-zero by 2050
This agreement confirms both Canada’s and Alberta’s ongoing commitment to achieving net-zero emissions by 2050, and sets out a collaborative approach to the most consequential policies for doing so: industrial carbon pricing and clean electrification.
Canada and Alberta will also launch an Electricity Working Group to advance this joint commitment to net-zero. The Working Group will collaborate on an ongoing basis to identify policies, projects, technologies, and investments that both governments could pursue in support of this objective.