Knighted Markets · Compliance Carbon · July 19, 2026
The read in one line: Alberta's headline carbon price is $95 a tonne. The credit that actually settles a compliance obligation has been trading around $35. If you are financing a CCUS project on the headline number, you are financing it on a price that does not exist.
Every model of an Alberta capture project starts with a carbon price. Most of them start with the wrong one.
The headline TIER price — the fund payment a regulated emitter makes for a tonne it does not abate — sits at $95/tonne in 2026, on a legislated path to $130 by 2035. That is the number in the press releases, the number in the bank models, the number a developer quotes when they pitch a project.
The traded price of a TIER offset credit — what a tonne of actual abatement fetches when it changes hands — was in the $30–40 range through Q1 2026, and has sat well below the headline for over a year. Call it $35.
That is not a rounding error. It is a 60%+ discount between the sticker price of carbon and the price of the thing a capture project actually produces. And it is the single most important number in Alberta carbon-project finance, because it is the one that decides whether a project pencils — and the one most models get wrong.
The Knighted read: I've watched people build entire project models on the $95 headline, and it tells me they've never actually had to sell a credit. The fund price isn't a market price — it's the number a big emitter pays the government when they've run out of cheaper options. It's a ceiling, not a clearing level. The real market sits underneath it, and right now it's thin: a handful of large compliance buyers, a lot of banked supply, and offer prices that say more about who needs cash this quarter than about the cost of abatement. When I quote $35, I'm quoting where paper actually changes hands — not where a press release says carbon is worth.
The traded price is low because the market is oversupplied, and the published record shows exactly how much.
In 2024, TIER-covered facilities emitted 164.7 Mt CO₂e. Against that, the true-up compliance obligation — the portion emitters actually had to settle — was only 18.6 Mt. Facilities requested 6.62 Mt of emission-performance credits, and by the end of 2025 there were roughly 25 Mt of credits sitting available in the market.
Put the demand and the supply side by side and the picture is obvious: about 18.6 Mt of obligation chasing 25 Mt of available credits, before you count the new supply arriving every year. When supply exceeds obligation, the credit does not clear at the fund price — it clears wherever the marginal seller is willing to let go. Right now that is around $35.
This is why the headline price is a ceiling, not a clearing price. No rational emitter pays $95 into the fund when they can buy a credit for $35. The fund price caps what compliance can cost; the traded price is what it actually costs.
The gap is not static. Three sourced forces push the traded price up over the next decade:
And two forces push the other way — toward continued oversupply:
The Knighted read: My base case is that this stays a buyer's market in the near term, but I don't think it stays pinned to the floor. The tightening is real, the usage limit is up at 90%, and once the oil-sands benchmarks step to 4% in 2029–2030 the obligation side starts to bite. I'd put the traded price around $80 by 2030 — clearly detached from the $60 floor and closing the gap to the headline, without getting all the way there. The Direct Investment Pathway is the thing that keeps me from going higher: every tonne a big emitter abates in-house is credit demand that never reaches my market, and that caps how tight this gets. The catalyst I'm watching is the floor regulation landing by end-2026 — until it's enacted, the downside isn't actually capped; once it's law, $60 is the floor I underwrite to and $80 is where I think it trades.
Take a representative project: a 1 Mt/year CCUS storage development, ~$120/tonne of capture capacity in capex, ~$60/tonne operating cost.
Financed on the headline $95 price, the tonne looks comfortably in the money before you even count the capital incentives. Financed on the traded $35 price, the operating margin on the carbon credit alone is negative — the project loses money on every tonne it sells into the credit market, and only survives on the rest of the stack: the federal CCUS ITC (37.5% of capex for storage), the Alberta CCIP (another 12% on the same capex base), and — if the project qualifies — CFR credits and any voluntary value.
That is the whole point of modelling the stack rather than the carbon price: the capture credit is often the weakest leg, not the strongest. The project gets built on the capital incentives and the low-risk revenue, with the credit as a swing factor — not the foundation.
The Knighted read: When I underwrite one of these, I finance it on the layers that survive a bad news day: the ITC and the CCIP, because they're capital that's already committed, and the TIER floor once it's law. That's the base. The credit revenue above the floor, the CFR credits, any voluntary value — I treat all of it as upside, never as the reason the project clears. The place the model lies to you is the amortized capex view: spread the ITC and CCIP across twenty years of tonnes and every project looks cheap per-tonne, but that's not how the capital call works. You raise the money up front, and the credit has to carry the operating cost on its own. If it can't, you don't have a project — you have a grant with a smokestack.
Here is the part a spreadsheet cannot capture. In May 2025, Alberta froze the TIER price at $95 — it had been scheduled to climb toward $170 by 2030. One decision, and roughly half the future carbon price vanished from every Alberta project model overnight. It was restored to a $130-by-2035 path only after the November 2025 Canada–Alberta MOU and the May 2026 Implementation Agreement.
That is stroke-of-pen risk, and it is the defining feature of compliance-carbon revenue. The CFR credit, the voluntary value, even the TIER price path itself — these are not market risks you can hedge. They are policy risks that move on a signature, and they move fast. Any honest model of an Alberta capture project has to flag which revenue is legislated and durable, and which is one election or one agreement away from repricing.
The Knighted read: I lived through the May 2025 freeze — one morning half the forward carbon price was just gone, and every model in the province was suddenly wrong. That's the thing you can't hedge in these markets: the biggest risk isn't the price, it's the pen. So I stage capital where I can, I want the floor regulation enacted before I commit to anything that depends on it, and I structure offtake so I'm not naked to a single program's political weather. You don't build these on the assumption the rules hold. You build them on the layers that survive when they don't.
Alberta wants to be the place CCUS gets built, and the policy stack — ITC, CCIP, CFR, a rising TIER floor — is genuinely one of the most generous in the world. But the credit at the centre of it trades at a third of its headline price, and the whole structure can move on a signature.
The projects that get financed will be the ones underwritten on the revenue that survives a bad news day — not the ones that need $95 carbon to work. Knowing the difference is the whole game.
This analysis is built on primary-source policy parameters — the Canada–Alberta Implementation Agreement (May 2026), Alberta's TIER amendments, and the 2024 compliance data published via ICAP/IETA — combined with Knighted Markets' market read. Every policy figure is sourced and dated in the underlying Alberta Stack tools. The forward price path and risk weightings are our judgment, not sourced fact.
Kiranpal Sidhu is the founder of Knighted Markets. He has traded environmental and energy commodities for 18+ years.