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Market Chatter: Alberta, Ottawa Strike Landmark Energy Pact

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Canada's federal government and the province of Alberta have reached an agreement to cap the 2040 industrial carbon price at CA$130 ($94.54) per metric ton, unlocking federal backing for a new West Coast crude oil conduit, aimed for 2027 construction launch, media outlets reported over the weekend.

The geopolitical supply shock from the ongoing closure of the Strait of Hormuz has dramatically reshaped North American midstream dynamics, resulting in a major energy pact signed Friday in Calgary by Canadian Prime Minister Mark Carney and Alberta Premier Danielle Smith, as per the reports.

The agreement establishes a mechanism to advance a new 1 million barrel-per-day crude oil pipeline from Alberta to the British Columbia coast, directly targeting supply-starved energy markets in Asia.

Building upon a November memorandum of understanding, the federal-provincial framework shifts Canada's climate-to-energy trade-off by locking in a lower-than-anticipated trajectory for Alberta's industrial carbon tax.

Under the newly formalized framework, Alberta will increase its effective industrial carbon emissions price to CA130 per metric ton by 2040, with the headline price topping out at CA$140 per ton.

Furthermore, Alberta has committed to enforcing a minimum floor price for Technology Innovation and Emissions Reduction credits starting in 2030, functioning as an investment insurance policy.

To further catalyze decarbonization capital, both governments will jointly issue 75 million metric tons of co-funded Carbon Contracts for Difference.

Premier Smith reportedly indicated that potential ownership structures would likely comprise a consortium of Indigenous groups, international oil buyers, and major midstream entities including Enbridge, South Bow, or the state-owned Trans Mountain.

The Alberta government will act as the interim project proponent during the initial filing stages. However, execution remains tied to a strict and controversial dual-track regulatory timeline, the reports noted.

The parties involved did not respond immediately to' request for comments.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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