Output-Based Pricing Systems Explained

This week on the podcast, Jackie and Peter are joined by Marcus Rocque, Vice President of Research at the ARC Energy Research Institute. This episode focuses on Canadian federal carbon policy, including a discussion of the carbon pricing policy for large industrial emitters and the recently finalized methane regulations, which target a 75% reduction by 2030 (relative to 2012). The discussion centers on how these policies affect competitiveness, investment, and infrastructure development in Canada's natural gas and oil sector. 

They start by discussing Prime Minister Carney’s recent speech at Davos. Next, they review recent developments in Canadian carbon policy, including the Canada–Alberta Memorandum of Understanding (MOU) signed on November 27, 2025, in which both governments agreed to work toward an oil pipeline to reach Asian markets. The MOU also outlines a plan to develop a revised industrial carbon pricing policy and methane regulations by April 1, 2026. Not long after the MOU was signed, in December 2025, Environment and Climate Change Canada (ECCC), a federal agency, issued final methane regulations that conflict with the MOU, with one requiring an end date of 2030 and the other 2035.  Further to this, ECCC released a discussion paper in December titled “Driving Effective Carbon Markets in Canada”, asking for feedback by January 30, 2026, on potential changes to Canada’s carbon markets, which are also being modified as part of the Canada-Alberta MOU by April 1. 

Jackie, Peter, and Marcus discuss what “carbon competitiveness” means and how Canadians should think about it in a changing global energy landscape. They also share concerns about the carbon market discussion paper and new methane regulations. 

Content referenced on this podcast:

• Discussion Paper: Driving Effective Carbon Markets in Canada. Send your feedback to ECCC before January 30, 2026, by emailing: tarificationducarbone-carbonpricing@ec.gc.ca 
• Final Methane Regulations: Canada Gazette, Part II, Volume 159, Number 27 

Please review our disclaimer at: https://www.arcenergyinstitute.com/disclaimer/ 

Check us out on social media: 

X (Twitter): @arcenergyinst
LinkedIn: @ARC Energy Research Institute 

Subscribe to ARC Energy Ideas Podcast
Apple Podcasts
Amazon Music
Spotify