Strong carbon price momentum in Alberta slows as market awaits policy clarity

The Alberta Technology Innovation and Emissions Reduction market's upward pricing momentum has begun to slow into the end of January as participants await more clarity surrounding a November 2025 memorandum of understanding committing the province and the Canadian government to design globally competitive long term carbon pricing.

The MOU commits both governments to release policy documents on updates to the TIER system and the industrial carbon price agreement on or before April 1, 2026. Since its publication on Nov. 27, 2025, Alberta Emission Performance Credits and Alberta Emission Offset credits have risen sharply. Credit and offset prices within the scheme have jumped 105.7%, or C$21.20 per metric ton of CO2e, since Nov. 26, according to data from Platts, part of S&P Global Energy.

In the last two weeks, however, TIER pricing has begun to plateau as participants await clarifying documentation for the MOU.

Platts assessed EPCs and AEOs both at C$41/mtCO2e on Jan. 13, and thereafter the credits saw rangebound trading, both rising only 25 cents/mtCO2e to reach C$41.25/mtCO2e on Jan. 27.

One trader said the market has topped out, as bids were no longer increasing.

"[It] seems like people are waiting for that catalyst," a broker said. "My feeling is that people also kind of got their fill of what they needed past couple of months, so if there's a trade that makes sense for them, then maybe they'll engage."

The MOU commits the governments of Alberta and Canada to design globally competitive long term carbon pricing.

"The TIER system will ramp up to a minimum effective credit price of $130/tonne," the MOU document said. "The parties will conclude an agreement on industrial carbon pricing on or before April 1, 2026."

Market participants have many working theories about what the C$130/mtCO2e carbon price means for the market -- whether it is a headline price, a tradeable price, or an average price facilities pay for compliance obligations.

Participants await more answers as the market slows, with a second broker saying they were surprised the upward price momentum continued as long as it did.

"There are very few speculators in this market -- we are one of the bigger ones, so that push has stalled," the first trader said. "I think people realize it's not clearly a C$130 tradable price target anytime soon, and in the first quarter you often see annual compliance buying come in for the year, which always leads to some buying pressure. I think both have stalled or significantly slowed from their peak."

TIER awaits April 1 clarity amid mixed sentiment

Market participants had mixed expectations as to whether the provincial and federal governments would release the MOU documentation by the April 1 deadline.

"My concern with what will come from the MOU update and timing is that the governments are notoriously slow and have a tendency to 'make announcements about announcements' as opposed to actually releasing documents of substance quickly," a fourth market participant said. "Only time will tell."

However, other participants were optimistic that the governments would publish the documentation by the deadline.

The second broker said the release of the documents by the outlined deadline is an opportunity for Canada to be aggressive and timely with its policy updates.

A fifth market player agreed that while there has been mixed sentiment around the April 1 deadline, sentiment is more bullish after Prime Minister Mark Carney's speech at the World Economic Forum in Davos on Jan. 19.

"World order is shifting and new alliances are needed type of speech but positive for Canada to find new markets, other than the US," the fifth source said. "I don't see any reason to think April 1 deadline has changed."