Alberta Premier Danielle Smith expressed willingness to make adjustments to Alberta’s industrial carbon pricing scheme, including the current industrial carbon price set by the province. Alberta recently confirmed that it will maintain the industrial carbon price at $95 per tonne until 2026, diverging from the federal government’s backstop rate of $110 per tonne scheduled for next year.
During a media briefing in Ottawa following a meeting with Prime Minister Mark Carney, Smith emphasized that Alberta believes its carbon pricing strikes a balance between industry viability and promoting investments in green technology. She mentioned that the current $95 per tonne carbon price is subject to discussions as part of ongoing program adjustments.
Federal officials have been evasive about whether Ottawa might implement the federal backstop on Alberta if its industrial carbon pricing program fails to align with federal standards. The federal backstop rate is designed to come into effect if provinces lag behind, but there is uncertainty surrounding Carney’s intentions, especially considering no action has been taken against Saskatchewan, which eliminated its industrial carbon price earlier this year.
Carney’s advocacy for reinforcing industrial carbon pricing as a replacement for the consumer carbon price, which he repealed upon taking office, has been met with mixed reactions. Alberta introduced proposed changes to its industrial carbon pricing program, enabling companies to invest in their emissions reduction projects to avoid provincial fees. Additionally, smaller companies falling below the emissions threshold can opt out of the carbon pricing system for 2025. These changes are expected to be implemented this autumn.
While these adjustments were praised by the industry, experts caution that they might deter investments in clean growth. The uncertainty surrounding Alberta’s cap-and-trade system following the proposed changes was highlighted during a House of Commons environment committee session, with concerns raised about potential market disruptions and reduced incentives for decarbonization investments.
Carbon pricing systems like Canada’s industrial model work by setting emission caps and allowing companies to trade credits. The effectiveness of such systems hinges on credit pricing, as low prices may discourage investments in emission reductions. Smith is in discussions with Carney to facilitate the construction of a new pipeline linking Alberta to the British Columbia coast.
She has urged the federal government to lift the tanker ban off the B.C. coast, abolish the electric vehicle sales mandate, eliminate the oil and gas emissions cap, and revoke the federal industrial carbon price to grant provinces more regulatory autonomy. Smith and Carney, while sharing brief remarks before their meeting, did not disclose specific details of their discussions with the media.
Smith proposed a “grand bargain” that would advance the Pathways Alliance carbon-capture project alongside an oil pipeline to Canada’s West Coast. She aims to submit the pipeline project, currently lacking private sector backing or a defined route, for consideration by Ottawa’s Major Projects Office by next spring. Smith targets reaching an agreement by the Grey Cup in mid-November.
