Alberta Premier Danielle Smith expressed willingness to make adjustments to Alberta’s industrial carbon pricing program, including the province’s industrial carbon price. Alberta recently announced that it would retain the freeze on the industrial carbon price at $95 per tonne until 2026, diverging from the federal government’s scheduled increase to $110 per tonne next year.
During a press briefing in Ottawa following her meeting with Prime Minister Mark Carney, Smith highlighted that Alberta believes its carbon price strikes a balance between industry viability and promoting investments in green technology. She indicated that the current $95 per tonne carbon price is subject to discussion as part of ongoing program adjustments.
Federal officials have been evasive regarding the possibility of imposing the federal backstop on Alberta if its industrial carbon pricing program fails to align with federal regulations. The federal backstop rate is designed to be enforced in case of provincial non-compliance, although it remains uncertain whether Carney intends to implement the higher price, particularly given the lack of action against Saskatchewan, which eliminated its industrial carbon price earlier this year.
Carney had campaigned on bolstering industrial carbon pricing as a replacement for the consumer carbon price, which he repealed on his first day in office. A study by the Canadian Climate Institute indicated that the industrial price, targeting major emitters, could lead to more significant reductions in greenhouse gas emissions compared to the consumer levy.
Alberta recently proposed modifications to its industrial carbon pricing program, allowing companies to invest in emissions reduction projects to avoid provincial fees for emissions. Additionally, smaller companies falling below the program’s minimum emissions threshold may opt out of the carbon pricing system for 2025. These adjustments are slated to take effect this autumn.
While these changes were welcomed by industry stakeholders, concerns have been raised that they might discourage investments in clean growth. Speaking at the House of Commons environment committee, a principal economist at the Canadian Climate Institute warned that the proposed changes have created substantial uncertainty in Alberta’s cap-and-trade system, potentially leading to lower future prices and hindering significant investments in decarbonization.
Carbon pricing systems like Canada’s industrial version establish maximum allowable emissions, with companies generating credits for staying under the cap, which they can sell to those exceeding it. The effectiveness of these credits in incentivizing emissions reduction hinges on their market value. Insufficient pricing may diminish the incentive for companies to invest in emission reduction measures.
Smith is in negotiations with Carney to facilitate the construction of a new pipeline from Alberta to the British Columbia coast. She has urged the federal government to lift the tanker ban off the B.C. coast, eliminate the electric vehicle sales mandate, remove the oil and gas emissions cap, and abolish the federal industrial carbon price to grant provinces more regulatory autonomy.
Smith and Carney briefly interacted before their meeting, but specific details of their discussion were not disclosed. Smith emphasized the importance of revising federal environmental policies that are deemed ineffective, citing Carney’s previous actions such as repealing the retail carbon tax and delaying the electric vehicle mandate implementation.
Furthermore, Smith proposed a “grand bargain” involving advancing the Pathways Alliance carbon-capture project alongside an oil pipeline to Canada’s West Coast. She aims to submit the pipeline project for consideration by Ottawa’s new Major Projects Office by next spring, with hopes of finalizing a deal by the Grey Cup in mid-November.
