Alberta's carbon bargain

Hi there,

I’m coming off a packed week around Web Summit out in Vancouver, including Climate Global and the first Canadian Climate Capital Summit (big thanks to Hiroki, Climate Door and NorthX for the hook ups).

AI dominated just about every conversation at Web Summit: who controls it, will it be open/closed, etc. It’s also clear that AI is changing how investors think about climate tech: software moats are eroding, and capital is shifting toward hardtech and infrastructure where the winning conditions are clearer.

As one investor put it, climate is no longer just about emissions: it’s increasingly being reframed as the future of production and consumption.

OK, back to business. This week we’re looking at the new Canada <> Alberta carbon pricing deal, and whether it gives large-scale decarbonization efforts the certainty they need to go forward - or sets the floor to low to close the financing gap.

Elsewhere in climate tech:

AI insiders launch SAIG to help companies align sustainability with AI adoption
Vancouver could reverse emissions reporting for large buildings
The Better Butchers take plant-based meats public

Plus, my conversation with Jetson founder Stephen Lake on The Climate Cycle.

Canada and Alberta sign new carbon pricing deal for $130/tonne by 2040

Credit: Wolfgang Weiser

What happened: Ottawa and Alberta signed a deal to set Alberta's industrial carbon price at $130 per tonne by 2040 - well below the $170/tonne federal trajectory originally planned for 2030.

The details: Alberta will commit to an effective price of $130/t by 2040 and a floor price of $60/t in 2030, escalating to $110/t by 2040.

The deal also commits Alberta and the feds to 75 million tonnes of contracts-for-difference (CFDs) to support decarbonization projects.

What's the context: Alberta's TIER system covers roughly one quarter of Canada's industrial emissions. And while the deal may improve on the current state, it's a low bar. Alberta froze the effective price at $95/t last year and credits have been trading even lower - around $45/t.

Why it matters: For project developers, price guarantees may matter more than the headline number. Persistently low and volatile TIER credits made bankable projects hard to put together.

A price floor and CFDs build trust that credit prices will retain their value. Lenders can price in risk and investors can deploy capital into more assets.

Not so simple:

Dropping the headline price from $170 to $130/t (and a floor of just $60 in 2030) may not be enough to make projects viable
The path locks in an additional 84Mt of emissions by 2050 and puts Canada's net-zero targets out of reach
A carve out for Alberta and consultations with other provinces risks $130/t becoming the new norm across the country

The bottom line: The deal trades carbon pricing ambition for investment certainty. CFDs will need to do some heavy lifting to get large-scale industrial decarbonization projects to pencil out - and close that 84 Mt emissions gap.

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What’s your take? Will these pricing changes materially impact project economics and green-light decisions? Hit reply to let me know.

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MDS Coatings (Prince, Prince Edward Island) received $55.7 million from the Strategic Response Fund to scale production of its nanocoatings that reduce aircraft engine fuel consumption and maintenance.

Canada Growth Fund will invest $145 million into Sayona, a subsidiary of Australian miner Elevra, to expand its North American Lithium mine.

11 companies secured $10.7 million from non-profit CMC Microsystems' FABrIC network to develop edge computing solutions across energy efficiency and heat, including Blumind, SPARK Microsystems, and Ranovus.

The Better Butchers will go public on the CSE through a reverse takeover of health tech startup Health Logic Interactive.

Hydrostor announced plans to develop an advanced compressed air energy storage project in Ontario after securing municipal support.

Former Novonix CEO Chris Burns launched Dryve to develop more efficient cathode manufacturing. Novonix sold Burns the assets for Dryve for $1 and provided $2 million in seed funding for the new venture.

Nouveau Monde Graphite green-lit its Matawinie Mine graphite project in Quebec, finalizing a US$645M financing package.

Sustainable AI Group (SAIG) launched in Montreal to help companies align increasing AI adoption with sustainability goals. SAIG is led by ex-Hugging Face AI and climate lead and Salesforce's former head of AI sustainability.

Cheakamus Community Forest reported a 6x revenue jump from forest management carbon credits after BC's carbon pricing system kicked in.

EVREC filed permits for a +3GW wind-to-green hydrogen and ammonia project in Newfoundland, aiming to produce up to 1 million tonnes of green ammonia for export.

PODCAST

Closing the Heat Pump Adoption Gap with Jetson

We know heat pumps work - they’ve been around for decades - but actually getting them into homes is a challenge. The gap is structural: high upfront costs, a buying process stuck in the 90s, and a supply chain stacking layers of margin between the manufacturer and your home.

We talk with Stephen Lake, founder and CEO of Jetson, about the structural barriers keeping heat pump adoption low - and Jetson’s thesis for closing the gap; why home heating is a bigger emissions lever than switching to an EV; and how they turn one-off installations into a repeatable process.

Listen on Spotify, Apple, YouTube or wherever you get your podcasts.

Electricity strategy: Canada unveiled a new national electricity strategy aiming to double grid capacity by 2050. The strategy includes a focus on building supply chains, grid infrastructure, while also positioning natural gas to fill some baseload capacity.

The strategy is short on firm commitments and needs to go through consultation before implementation.

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Why it matters: The new strategy frames electricity as a critical economic pillar, achieving growth through abundant and affordable electricity. It also places a strong emphasis on the supply chains feeding this critical infrastructure, from energy storage to nuclear energy.

Gas ban reversal: Vancouver's Mayor moved to repeal the city's ban on natural gas heating in new buildings and emissions reporting requirements.

New power: BC will add 3,500 GWh of clean energy through four new wind projects in its latest call for power. The call received proposals for twice as much capacity as requested.

Slowing investment: Canadian VC hit the lowest quarterly deal count in Q1 of this year since 2017. Capital shifted to early stage deals and CVCA tracked only one growth-stage deal.

Hydro breakdown: A proposed hydroelectric deal between Quebec and Newfoundland and Labrador is not in NL’s interest according to a review panel. Both provinces say they want a deal to update the infamous Churchill Falls contract.

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