June 29th, 2026

Monthly Review

Hello ATB Carbon Commentary Readers!

The 2025 compliance year wraps up on June 30th. As discussed in our February Carbon Commentary, most major emitters have held sufficient inventory to fulfill their 2025 obligations for some time now. This has left recent market activities primarily driven by small emitters topping-up against their benchmarks. As such, market volumes have been light. Recent transactions have been around the $30 mark.

While official compliance data will take some time to be released, we would like to share some preliminary colour and figures based on our estimates. Due to the TIER opt-out provisions, credit retirement from small emitters is expected to drop by approximately 1.5 million tonnes from 2024 levels, as these facilities were only required to fulfill compliance obligations up to the end of Q1 2025. This estimate is based on last year's total true-up obligation of approximately 2 million tonnes from aggregated facilities.

Meanwhile, baseline demand from other sectors is projected to remain steady. Although regulatory benchmark tightening is underway, ongoing technology improvements and lower carbon intensities across many industries are effectively offsetting these tightening rates, ultimately leaving net demand from other sectors flat. Factoring in the reduced demand from small emitters and 2025 compliance year’s credit utilization rate of 80%, we expect total credit retirements of close to 14 million tonnes this year.

On the supply side, despite the small emitter opt-outs, facilities capable of generating offset credits remain active in the TIER program. Year-to-date, close to 11 million credits have been generated (both Offset Credits and EPCs). Based on historical data from the past couple of years and the percentage of generation during the first half of the year, we estimate total annual supply will reach nearly 14.5 million tonnes. This places the 2025 compliance year in a slight surplus of approximately 500,000 credits.

Although the market is no longer producing a supply surplus on the scale of the 2021–2023 period, these older credits are not being drawn down because the market is barely consuming the newly generated supply.

This persistent supply overhang continues to weigh heavily on market sentiment. While some measures that will increase TIER stringency were introduced in the recent MOU, most of these measures will not take effect until 2030. Consequently, as we noted in our May Post-MOU Carbon Announcement, we expect near-term prices to continue trading at a significant discount to the headline price.

Other Market Developments

July 1st marks the deadline for Alberta Government to submit its West Coast pipeline proposal to the Major Projects Office. Premier Danielle Smith’s office confirmed last Friday that the proposal remains on track to meet this deadline. Following the provincial submission, the federal government is scheduled to formally designate the pipeline as a "project of national interest" by October 1st, 2026.

Meanwhile, the Pathways carbon capture project—which is mutually dependent on the West Coast pipeline—remains under negotiation. According to sources familiar with the matter, Pathways Alliance President, Kendall Dilling, noted that discussions between industry stakeholders and the government are ongoing.

Doug Fremont

Director

Environmental Products

Fixed Income, Currencies & Commodities

dfremont@atb.com

587-582-0838

Chelsey Deng

Associate

Commodities and Environmental Products

Fixed Income, Currencies & Commodities

cdeng@atb.com

368-996-6252

ATB's Carbon Trading Desk 

At ATB Financial, we actively engage with clients to navigate complex carbon markets, offering diverse solutions to meet their unique needs. Our team provides efficient, comprehensive market insights and strategic guidance, helping clients make informed decisions and capitalize on market movements to achieve their environmental and compliance objectives.

Our Strategy

• Broad Client Coverage: ATB has a wide range of clients with exposures to the Alberta TIER Market.
• Process Management and Documentation: ATB uses a Master Purchase and Sale Agreement for TIER deals, streamlining transactions and minimizing operational and legal effort for each deal.
• Price Transparency: ATB's extensive reach enables the provision of competitive pricing and market transparency for our clients.
• Trusted Name: Credit and legal risks are minimized when dealing with ATB.