Alberta and the Canadian federal government have reached an agreement to address the gap between headline carbon prices and the actual cost paid by industry. The plan introduces a floor price for carbon credits to prevent a surplus from crashing the effective price, targeting an effective cost of 130 dollars per tonne by 2040. To encourage long term investment in decarbonization, the deal includes carbon contracts for difference. These contracts act as insurance for companies investing in emissions reduction technology, with the governments guaranteeing a minimum carbon price to protect projects from policy reversals.
