Alberta Premier Danielle Smith has expressed willingness to make adjustments to Alberta’s industrial carbon pricing program, including the provincial industrial carbon price. Last month, the province announced maintaining the freeze on the industrial carbon price at $95 per tonne until 2026, diverging from the federal government’s backstop price, which is scheduled to increase to $110 per tonne next year.
During a meeting with Prime Minister Mark Carney in Ottawa, Smith stated that Alberta believes its current carbon price of $95 per tonne strikes a balance between industry viability and incentivizing investments in green technology. She emphasized that discussions are ongoing regarding potential modifications to the carbon pricing system.
Federal ministers have avoided confirming whether Ottawa will impose the federal backstop on Alberta if its industrial carbon price program fails to comply with federal regulations. The potential enforcement of the backstop rate remains uncertain, especially considering Saskatchewan’s decision to eliminate its industrial carbon price earlier this year without repercussions.
Carney, who campaigned on reinforcing industrial carbon pricing while abolishing the consumer carbon price, has yet to take action against provinces for non-compliance. Alberta recently proposed changes to its industrial carbon pricing program, allowing companies to invest in emissions reduction projects to offset provincial fees and enabling smaller companies to opt out of the carbon pricing system for 2025 if they do not meet emission thresholds.
Despite being perceived as favorable for industry, these changes have raised concerns among observers about their impact on clean growth investments. The alterations have introduced significant uncertainty into Alberta’s cap-and-trade system, potentially leading to lower future carbon prices and discouraging major investments in decarbonization.
Negotiations between Smith and Carney also involve discussions on constructing a new pipeline from Alberta to the British Columbia coast. Smith 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 revoke the federal industrial carbon price to allow provinces to self-regulate.
Smith’s proposal for a “grand bargain” includes 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 Major Projects Office by next spring, with hopes of finalizing a deal by the Grey Cup on Nov. 16.