Alberta Premier Danielle Smith announced on 12 May 2025 that the province will freeze its industrial carbon price at CAD 95 per tonne, effective immediately. The decision halts a previously scheduled increase to CAD 110 in 2026 and a continued escalation to CAD 170 by 2030, as outlined in the federal carbon pollution pricing benchmark (‘federal benchmark’). This move comes in response to increasing concerns from industry, who argue that escalating carbon costs would undermine Alberta’s global competitiveness, especially amid increasing trade tensions with the U.S. The freeze will remain in place indefinitely and is tied closely to ongoing engagement with industry.
Premier Smith has called Alberta’s TIER system a balanced and effective framework but warned that further price increases would undermine its benefits. Environment Minister Rebecca Schulz noted that additional changes are likely, based on ongoing industry feedback.
The decision to freeze the carbon price reflects growing provincial concerns with the federal plan to raise the national price to CAD 170 per tonne by 2030. Alberta argues that this approach overlooks regional economic realities and creates inconsistencies across provinces, highlighting, for example, that carbon prices in Quebec currently trade below Alberta’s. Notably, TIER compliance credits are currently trading at approximately CAD 31 per tonne, well below the TIER fund price.
Some companies, including Dow, Shell, and Air Products, had made investments assuming Alberta would follow the federal pricing schedule. Smith acknowledged these concerns and pointed to federal support tools like Carbon Contracts for Difference (CCFDs) and the Alberta Carbon Capture Incentive Program (ACCIP) as ways to ensure project viability. The recent Entropy Inc. deal with the Canada Growth Fund, which sets a 15-year carbon credit offtake at an initial price of $86.50 per tonne, is cited as an example of support aligned with market needs.
Minister Schulz defended the freeze as necessary to avoid distorting the market in favour of select projects while leaving broader industry exposed to higher costs. Alberta’s strategy emphasizes innovation over pricing alone, with continued investment in technologies like small modular nuclear, geothermal, and direct air capture.
While the freeze may reduce revenues to the TIER Fund, investment prioritization will target the province’s most pressing technologies. The money available in the TIER fund already fluctuates based on credit usage. In addition to the price level, Alberta is reviewing credit availability and market structure, with further amendments expected. The province continues to advocate for a pragmatic, industry-led path to net zero by 2050.
It is important to note that Alberta’s TIER system, along with all provincial industrial emitters' systems (including the federal OBPS), is scheduled for a review by the end of 2026. Prime Minister Carney aims to refocus the federal benchmark criteria used to evaluate industrial emitter programs and will engage with the provinces and territories to ensure all systems across Canada are stringent, fair, and effective. The federal government has stated that in the interim, all existing industrial carbon pricing systems that currently align with the benchmark will be considered ‘sufficiently stringent’ if no significant design changes are made. Therefore, it is expected that no immediate changes to industrial carbon pricing programs will be required from the federal government until the legislated review is complete.
Alberta’s decision to freeze its industrial carbon price diverges from the federal benchmark criteria, which require a steadily escalating price for explicit price-based carbon pricing systems. This follows a move by Saskatchewan, which recently eliminated its industrial carbon tax altogether. However, Danielle Smith views the freeze as a starting point for a broader conversation with the federal government. Alberta is seeking flexibility on timelines and pricing structures to ensure that the transition to net-zero remains economically viable. The hope is that the federal government will recognize the increased need for regionally tailored solutions that reflect the different roles provinces play in Canada’s energy landscape. Meanwhile, Prime Minister Carney and his new cabinet are being sworn in today.
ClearBlue will continue to monitor developments across provincial industrial emitter programs and provide updates to clients as they become available.