The federal government of Canada and the province of Alberta are close to finalizing an industrial carbon-pricing agreement [1].

The deal represents a significant shift in climate policy by replacing the federal backstop with a province-specific price. This move is intended to reduce the regulatory burden on large emitters while potentially clearing the path for a new oil pipeline to the B.C. coast [1, 3].

An official announcement is expected on Friday, May 13, 2024, in Calgary [2]. Sources said the agreement would set the cost for industrial emitters at $130 per tonne by 2040 [4].

"We are very close to an agreement," a provincial source said [2].

The proposed framework is described as more lenient than the existing federal system [2]. One source said the deal would "dramatically roll back Trudeau-era climate policy" [1].

While some reports suggest the carbon-pricing deal is explicitly linked to the approval of a new oil pipeline to the B.C. coast, other reports state the negotiations have proceeded without mention of such a project [1, 3].

Negotiations between Ottawa and Alberta officials have focused on balancing provincial economic interests with federal emission targets. The shift to a province-specific price allows Alberta more control over its industrial sector, a key point of contention between the two governments for years.

“"We are very close to an agreement,"”

This agreement signals a pragmatic pivot by the federal government to secure provincial cooperation in Alberta. By lowering the stringency of carbon pricing compared to the federal backstop, Ottawa may be trading aggressive climate targets for the economic and political viability of new energy infrastructure, specifically oil pipelines to the Pacific coast.