Alberta Premier Danielle Smith has expressed willingness to make adjustments to Alberta’s industrial carbon pricing program, including the province’s industrial carbon price.
Last month, the province announced that it would keep the industrial carbon price frozen at $95 per tonne until 2026, a move diverging from the federal government’s escalating backstop price, which is scheduled to reach $110 per tonne next year.
Following a meeting with Prime Minister Mark Carney in Ottawa, Smith stated on Tuesday that Alberta believes its current carbon price strikes a balance between being industry-friendly and fostering investments in green technology.
She mentioned that the $95 per tonne carbon price is subject to discussion, emphasizing the ongoing conversations about program adjustments.
Smith highlighted Alberta’s commitment to maintaining provincial carbon pricing, stating that the system has been in place since 2007 and has proven effective.
Federal officials have refrained from clarifying whether Ottawa will enforce the federal backstop on Alberta if its industrial carbon pricing program fails to align with federal regulations.
The federal backstop rate is intended for implementation in case provinces lag behind, but it remains uncertain if Carney intends to impose the higher price, especially as he has not taken action against Saskatchewan, which eliminated its industrial carbon price earlier this year.
Carney campaigned on reinforcing industrial carbon pricing as a replacement for the consumer carbon price, which he revoked upon taking office. A study by the Canadian Climate Institute indicated that the industrial price, targeting major emitters, would lead to significant reductions in greenhouse gas emissions compared to the consumer levy.
I think he’s [Carney’s] demonstrated that if something isn’t working, that he’s prepared to repeal or modify.– Alberta Premier Danielle Smith
Alberta recently proposed changes to its industrial carbon pricing program, allowing companies to invest in their emissions reduction projects to avoid provincial fees and permitting smaller companies below the emissions threshold to opt out of the carbon pricing system in 2025. These changes are expected to take effect this autumn.
While these adjustments were praised by the industry, experts caution that they might hinder investments in clean growth.
During a House of Commons environment committee session, the principal economist at the Canadian Climate Institute expressed concerns about the proposed changes causing considerable uncertainty in Alberta’s cap-and-trade system.
According to Dave Sawyer, who addressed the committee, future prices could drop to $65 per tonne, discouraging significant investments in decarbonization.
