Alberta pioneered industrial carbon pricing. Now, Poilievre says he’d kill the federal mandate for it
Alberta Premier Danielle Smith has expressed her support for the Conservative Party of Canada’s promise to eliminate the federal backstop on industrial carbon pricing if they were to form the next federal government. The province of Alberta has had a longstanding pricing system for industrial emissions and it appears unlikely that they would abandon it altogether.
In 2007, under the leadership of Prime Minister Stephen Harper and Premier Ed Stelmach, Alberta became the first jurisdiction in North America to implement a price on industrial carbon emissions. This policy is separate from the consumer-level carbon pricing, commonly known as the “carbon tax,” that Alberta adopted in 2017 under NDP Premier Rachel Notley and repealed in 2019 under UCP Premier Jason Kenney. Following the repeal, Alberta became subject to the federal carbon tax under Justin Trudeau’s Liberal government, which has now been effectively ended by Mark Carney’s Liberal government.
Despite all the changes, Alberta’s industrial-scale pricing system has remained in place, with adjustments made over the years to align with federal requirements. Conservative Leader Pierre Poilievre has pledged to eliminate federal carbon pricing laws, including the backstop, if his party wins the next federal election, giving provinces the authority to regulate their own industrial emissions policies.
Large-scale emitters in Alberta, such as oilsands facilities and power plants, are subject to the industrial carbon pricing system. Facilities are required to pay a carbon price on emissions beyond specific benchmarks set for each facility. Credits can be earned for emissions reductions, allowing low-emitting facilities to sell credits to higher-emitting facilities to offset their carbon price.
The revenue generated from facilities paying the carbon price goes into a fund administered by a provincial agency to support projects and technologies that reduce emissions, lower costs, attract investment, and create jobs in Alberta. Alberta Environment Minister Rebecca Schulz has indicated that the province may consider tweaking the details of its industrial carbon pricing policy if the federal backstop is removed.
Alberta NDP Leader Naheed Nenshi has voiced support for the industrial carbon pricing system, stating that getting rid of it would be disastrous for both the industry and the environment. Energy and environmental economist Andrew Leach believes that Alberta is likely to maintain its system even if the federal backstop is eliminated, but the stringency of the policy may be impacted.
The Conservative Party’s proposal to shift towards tax credits for industries with lower emissions than the world average has raised concerns about the increased burden on taxpayers to fund these incentives. Critics argue that this shift could introduce uncertainty for companies making investment decisions in Canada, particularly as the country navigates a changing landscape under U.S. President Donald Trump.
Federal Energy and Natural Resources Minister Jonathan Wilkinson has warned that removing the industrial pricing system could hinder Canada’s ability to expand and diversify its trading partners, particularly with the European Union implementing border carbon adjustments. He emphasized the importance of decarbonization for long-term competitiveness, job creation, and economic growth.
Overall, while the Conservative Party’s promise to eliminate the federal backstop on industrial carbon pricing has garnered support from some Alberta leaders, there are concerns about the potential impact on industry competitiveness, investment certainty, and Canada’s ability to meet decarbonization goals. Alberta’s industrial carbon pricing system has been acknowledged for its effectiveness in reducing emissions, and any future changes to the policy will need to carefully balance environmental objectives with economic considerations.
