Negotiations between Alberta and Ottawa have advanced significantly toward a carbon pricing agreement impacting major industrial emitters, with reports suggesting a price of $130 per tonne by 2040. This figure represents a compromise from initial proposals and aims to balance environmental goals with the energy sector’s economic realities.
The discussions follow a recent meeting on Parliament Hill between Alberta Premier Danielle Smith and Prime Minister Mark Carney, where both parties expressed optimism about reaching a deal soon. The agreement would build upon a memorandum of understanding signed the previous November, establishing core principles for future collaboration on energy and climate policies.
A key challenge remains settling on the industrial carbon price. The prior Liberal government set a target that would have pushed the price to $170 per tonne by 2030. However, Alberta’s leadership has pushed back against this level, labeling it counterproductive to energy sector growth. Under the emerging arrangement, the current $95 per tonne charge would rise gradually—to $100 in 2027, hold steady until 2030, and then increase annually by $3 to reach $130 per tonne by 2040. These figures have not been officially confirmed by government spokespeople.
Beyond pricing, Ottawa insists on requiring major energy companies’ participation in the $20 billion Pathways carbon capture and storage (CCS) project. This initiative aims to drastically reduce emissions per barrel from the oil sands, a pivotal condition for federal approval of pipeline construction. The pathway project represents one of the largest proposed CCS efforts in the country.
Negotiators still face hurdles related to the pipeline route. Two options are under consideration: extending to British Columbia’s northwest coast, where a federal tanker ban would necessitate extensive Indigenous consultations and regulatory hurdles, or expanding along the existing Trans Mountain pipeline corridor to Burnaby near Vancouver, which could face opposition due to increased tanker traffic near sensitive coastal areas. Both routes require meaningful engagement with Indigenous communities and navigating complex environmental assessments.
Even if the carbon price and CCS participation are agreed upon, formal approval of the pipeline will require clear commitments on the route and regulatory conditions. The federal government views the pipeline as a critical infrastructure project, but it must reconcile environmental, Indigenous, and regional concerns before construction can proceed.