Canada and Alberta are on the verge of a carbon pricing agreement that would raise the effective cost for the province’s industrial emitters to C$130 per metric ton, a significant jump from the current trading range of C$20 to C$40. Two sources familiar with the negotiations expect the deal to be finalized within the next two weeks, marking a critical step in balancing economic growth with climate action.
The talks, ongoing since November, stem from a joint commitment to bolster energy investment amid external pressures like U.S. tariffs. Prime Minister Mark Carney has dialed back certain climate regulations to support the oil and gas sector, while pushing Alberta to strengthen its pollution pricing framework. The province froze its carbon price last May, a move critics argue has failed to spur investment in emissions reduction technology.
A higher carbon price is seen as a prerequisite for the economics of the C$16.5 billion ($12.1 billion) Pathways carbon capture and storage project, one of the world’s largest proposed initiatives of its kind. First pitched in 2022, Pathways could slash emissions from the oil sands, Canada’s top source of greenhouse gases. However, a broader agreement on funding the project missed an April 1 deadline, casting uncertainty over its timeline.
Parallel to these efforts, Alberta is crafting a proposal for a one-million-barrel-per-day crude oil pipeline to British Columbia’s northwest coast, targeting a submission by July 1. Carney has insisted any pipeline approval hinges on simultaneous progress with Pathways. Janetta McKenzie, director of oil and gas at the Pembina Institute, warned that without immediate action on carbon capture, pipeline plans could stall.
Negotiations continue between Alberta Premier Danielle Smith’s government and the Oil Sands Alliance, representing the five largest oil sands companies. The outcome of these interlocking deals will shape Canada’s energy landscape, with the carbon pricing agreement poised to set a precedent for industrial accountability by potentially reshaping emitter costs in the near term.
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