Carney, Smith expected to unveil Alberta industrial carbon pricing deal tied to pipeline plan

Prime Minister Mark Carney and Alberta Premier Danielle Smith are expected to announce an agreement Friday on the future of industrial carbon pricing in Alberta, a move both governments have linked to plans for a new bitumen export pipeline to Canada’s West Coast.

According to a source familiar with the discussions, the agreement would see Alberta’s industrial emissions price rise to an effective rate of $130 per tonne by 2040. Alberta froze its industrial carbon price at $95 per tonne last year.

The expected announcement follows a memorandum of understanding signed by Ottawa and Alberta in November, which committed both governments to develop a carbon pricing framework and advance conditions for a proposed pipeline project. Carney has said the agreement would help move the pipeline forward, while Smith has described it as part of a broader effort to reset Alberta’s relationship with the federal government.

The source said Alberta’s headline industrial carbon price would rise to $100 per tonne by 2027 before reaching $130 per tonne by 2035. The effective market price differs from the headline rate because companies can use emissions credits to comply with provincial limits. Companies pay the headline price directly to the Alberta government, while the effective price reflects the value of credits traded on the open market.

The proposed pricing framework could also affect federal carbon policy in other provinces. In 2021, a court ruling found provinces must receive equal treatment under Canada’s carbon pricing system. Industry groups have argued federal carbon rules are making Canadian energy producers less competitive internationally, while some business leaders have defended higher pricing as manageable for industry.

Former federal environment minister Catherine McKenna criticized the expected deal ahead of the announcement, telling The Canadian Press the proposed schedule weakens Canada’s broader climate strategy. She argued oil and gas companies should continue facing stronger incentives to reduce emissions.

The announcement also comes amid political tensions over Alberta sovereignty discussions. Carney and Smith have both said economic agreements between Ottawa and Alberta are needed to address separatist sentiment in the province. Earlier this week, a judge struck down a petition seeking a referendum question on Alberta separation, ruling the province failed to adequately consult First Nations.