Canada’s Alberta province freezes industrial carbon price, cites US tariffs

TORONTO (ICIS)–The government of Canada’s oil-rich Alberta is freezing the province’s industrial carbon price at Canadian dollar (C$) 95/tonne ($68/tonne).

The decision to freeze the price indefinitely was in response to the US tariffs, which were increasing costs, disrupting supply chains and creating uncertainty for industry, making it challenging to operate efficiently and stay globally competitive, the government said.

The freeze would provide certainty and economic relief to companies in oil and gas, electricity, petrochemical, manufacturing, cement, pulp and paper, mining, and forestry, Premier (Governor) Danielle Smith and environment minister Rebecca Schulz said in a webcast press conference on Monday.

Smith said that Canada could not get too far ahead of the US in terms of climate policies, otherwise “billions of dollars of investments” would go to the US, instead of Canada.

Schulz added that a price above C$100/tonne would make Alberta “wildly uncompetitive.”

The price had been scheduled to rise to C$110/tonne in 2026 and continue increasing to C$170/tonne by 2030 – in line with Canada’s federal industrial carbon pricing system, which sets minimum standards.

Smith and Schulz said that the government would talk to companies that have been making investments in Alberta, based on industrial carbon pricing.

Schulz added that she had already reached out to Dow, NOVA Chemicals and others to “signal” the government’s new direction, given that “it is a very different time that we are in right now.”

“It is unfair to artificially increase a carbon tax to benefit a small amount of projects and then leave the entire rest of industry in a position where they are uncompetitive,” she said.

“We can’t make the entirety of industry uncompetitive to save one specific project,” she added.

Dow announced last month that it is delaying its flagship Canada Path2Zero net zero carbon cracker and downstream polyethylene (PE) project at Fort Saskatchewan, Alberta, until market conditions improve and would not likely revisit it until the end of this year.

Trade group Chemistry Industry Association of Canada (CIAC) supports industrial carbon pricing as a tool to encourage companies to reduce emissions in a cost-effective way.

However, the trade group has suggested that in light of the ongoing trade and tariff tensions, Canada may want to review its industrial carbon pricing rules.

In related news, Alberta’s neighboring Saskatchewan province paused its industrial pricing system, effective 1 April.

($1 = C$1.40)

Additional reporting by Joseph Chang

Please also visit US tariffs, policy – impact on chemicals and energy

Thumbnail photo source: Dow