Alberta Premier Danielle Smith says her government is freezing its industrial carbon price effective immediately at $95 per tonne of emissions.
Smith told reporters Monday the move is critical to keep industry competitive and defend jobs as Canada navigates a tariff fight with the United States.
"With the change in government south of the border, it is essential that we have a reasonable carbon pricing system, not one that will price our industries out of global markets," she said.
The provincially set price was to rise to $110 per tonne in 2026 and increase to $170 per tonne by 2030.
Alberta, which has had an industrial carbon tax scheme since 2007, collects the funds paid by industry and returns them in the form of grants for emissions reduction technology or industry innovation projects.
Environment Minister Rebecca Schulz said industry had warned that any carbon price higher than $100 per tonne would be detrimental.
"(It) is not a common sense approach at a time like this, where the threats from outside our borders are so great, and the world is looking for Canadian energy right now," she said.
Schulz said the freeze, which will be in place indefinitely, will benefit industries like agriculture, forestry, and petrochemicals as well as oil and gas.
Canadian Association of Petroleum Producers president Lisa Baiton said she supports Alberta's freeze, and called on the federal government to fully reset its carbon regulatory scheme.
"Changes are necessary to establish a long-term signal to lock in investments and to reduce emissions, while remaining globally competitive,” Baiton said in a statement.
Pathways Alliance president Kendall Dilling agreed, saying in an email that Canada's carbon pricing system puts industry at a disadvantage when it comes to competing with companies in other jurisdictions.
"This announcement signals recognition of the pressures on our sector’s competitiveness," Dilling said.
"Additional discussion is needed to enable an approach to carbon management that is effective and enables investment in our natural resources.”
The alliance represents Canada’s largest oil sands companies working together to provide energy alongside environmental solutions.
Smith and Schulz said they hope the freeze will prompt that very conversation with Prime Minister Mark Carney, who's set to unveil his new cabinet Tuesday after last month's federal election.
Schulz told reporters that as a result of the freeze, Alberta will remain compliant with federal carbon pricing rules until Ottawa's benchmark is increased.
The prime minister's office did not immediately respond to a request for comment.
Smith said the freeze doesn't mean Alberta is giving up on its goal of reaching carbon neutrality by 2050, but said, "We have to be working with the federal government on having reasonable time frames as well as reasonable prices."
Critics disagree.
Stephen Legault, a senior manager at the advocacy group Environmental Defence, said with less money going towards clean technology development, Alberta's emissions target only moves further out of reach.
“A lot of us would agree Alberta isn’t serious about hitting those targets,” Legault said.
He also said an indefinite freeze suggests the announcement has less to do with the economic turmoil caused by American tariffs than it does appeasing the oil and gas sector that continues to make record profits.
Janetta McKenzie from the Pembina Institute, a clean energy think tank, said she expects the freeze to lead to decreased investment in decarbonized industries.
"We are going to need a leaner, cleaner oil and gas sector that is ready to compete in global markets, especially given most of our potential trading partners other than the U.S. are preparing to introduce new tariffs on energy imports that aren't subjected to domestic carbon pricing regimes," she said.
Opposition NDP energy critic Nagwan Al-Guneid said the freeze creates uncertainty for industry rather than protect against it.
"I think the biggest threat right now to our economic competitiveness is this flirtation with the separatist agenda, and not Alberta's industrial carbon pricing," Al-Guneid said.
— With files from Lisa Johnson.
This report by The Canadian Press was first published May 12, 2025.
Comments
A big pile of climate baloney.
And a big fail for Canadian Press. The reporter fails to identify, much less challenge, any of the falsehoods in the Alberta Government's narrative.
Do any Alberta politicians know how Canada's and Alberta's carbon pricing system for large industrial emitters actually works?
1) As for the first point above, it's absolutely true. In Alberta, TIER dollars are recycled back to industry to fund carbon capture technology and research. Projects industry should be paying for in the first place. Polluter pay, remember. Emissions reduction and reducing environmental impacts are normal business costs!
"The money from facilities that do pay the carbon price goes into a fund that is administered by a provincial agency which offers grants to support projects and new technologies 'that reduce emissions, lower costs, attract investment, and create jobs in Alberta.'
"… 'Long-term competitiveness and jobs and economic growth rely on us actually moving forward with decarbonization,' [Federal Energy and Natural Resources Minister Jonathan Wilkinson] said. 'In Alberta, most of the money that comes from the industrial price is recycled to industry to actually invest in decarbonization projects.'"
"Alberta pioneered industrial carbon pricing. Now, Poilievre says he'd kill the federal mandate for it" (CBC, Mar 18, 2025)
2) Canada's Large-Emitter Trading Systems (LETS) add next to nothing to the operating costs of large emitters. The workhorse of industrial carbon pricing is the carbon market and credits system. LETS relies on the carrot, not the stick. It's carbon credits and the profits from credit trading, not the miniscule effective carbon price, that provide the incentive to cut emissions
Canada's industrial carbon pricing systems are the Swiss cheese of carbon policy.
Large emitters are subject to output-based pricing systems (OBPS), which price A SMALL FRACTION of total emissions. That translates to a low carbon price on total emissions.
The purpose of the OBPS and its provincial counterparts is not to expose heavy emitters to the carbon price, but to shield them from it, so they can remain competitive in global markets. (Caveat: not all industrial emitters are trade-exposed.)
Large industrial emitters, including in Alberta's oilsands, effectively pay a fraction of consumer rates. Under Alberta's Technology Innovation and Emissions Reduction Regulation (TIER) pricing regime, major O&G companies pay pennies on the dollar in carbon costs.
Federal and provincial industrial carbon pricing systems do not impair large industrial emitters' profits — or reduce their emissions.
Grossly under-reported oilsands emissions do nothing but climb year after year.
"Canada's biggest emitters are paying the lowest carbon tax rate" (Corporate Knights, 2022)
"Oil and gas producers pay among the lowest average carbon costs of any sector…
"There's a patchwork of OBPS policies across the country, and some provinces have implemented 'weak' or 'non-existent' systems that have let many big polluters off the hook.
"...Ottawa and most provincial governments grant heavy exemptions to a number of sectors, including O&G, chemicals, cement, steel and mining.
"But generous exemptions mean that how much of a firm's actual emissions are taxed varies widely by province, and, on average, companies end up paying for only 16% of the carbon actually produced.
"[In 2020, Suncor's] average carbon cost was roughly $2.10 per tonne, about one-14th of the full carbon price."
"The impact of a carbon price is greatly lessened by the relatively small proportion of emissions that are actually covered by the price.
"The federal OBPS and Alberta's TIER system levy the carbon price on roughly 10% of a large emitter's GHGs. At a $50 marginal price, producers pay less than $1 per tonne of CO2 equivalent on their total production." (Corporate Knights)
"Canada needs to make Big Oil pay their fair share" (Corporate Knights, March 7, 2022)
As the PBO pointed out (May 2024), the industrial carbon price applies only to 20% of emissions maximum. 80% of emissions are exempt. For some industries, only 5-10% of emissions are exposed to the carbon price. (90-95% exempt.). (CBC, 2024)
"Most big emitters pay the carbon price on anything they emit above 80% of what the average emissions are in their industry. … Industries that face more foreign competition, such as cement, lime and some fertilizers, have an even higher limit, 90 or 95% of the average.
"… In Manitoba, Saskatchewan, Ontario, and New Brunswick, big emitters accounted for about 25% of total emissions in 2019, but paid less than 10% of the carbon levies collected. Consumers and small businesses paid the rest.
"… 'The current large emitter programs provide a perverse long-term incentive,' the [2021 Canadian Climate Institute] report said.
"'They are explicitly rewarding the most emissions-intensive facilities in the country to not make the major investments needed to be prepared to compete in a carbon-constrained market.'"
"Biggest industrial emitters don't pay fair share for pollution, critics say" (CP, 2022)
Grateful to you Geoffrey for your clarity and research on this matter!