Carney scraps the consumer carbon tax and plans to raise industrial levies, sparking concerns in Alberta
Alberta Premier Danielle Smith has called for an immediate election following Prime Minister Mark Carney's decision to eliminate the consumer carbon levy while pledging to increase industrial carbon pricing.
Smith, who has long opposed the consumer levy, expressed concern about its potential impact on Alberta's oil and gas sector, according to The Canadian Press.
“Every time I have heard the new prime minister speak, he has said that he doesn't think (industrial) prices are high enough,” Smith stated on Friday in Calgary.
“I don't think it does Alberta any good if we end up seeing massive increases to industrial carbon taxes.”
Carney, sworn into office earlier that day, issued an order-in-council removing the consumer carbon tax, a move he had promised during his leadership campaign.
The final rebate payment will be made in April, coinciding with the scheduled increase of the levy from $80 to $95 per tonne of greenhouse gas emissions.
Scrapping the consumer charge will lower gasoline prices by 17.6 cents per litre and reduce the cost of natural gas by slightly more than 15 cents per cubic metre.
However, Carney's commitment to increasing the levy on industrial polluters raises uncertainty about its interaction with Alberta's existing industrial carbon tax, known as the Technology Innovation and Emissions Reduction (TIER) system, which has been in place since 2020.
According to Alberta Environment and Protected Areas, the TIER system applies to facilities emitting 100,000 tonnes or more of carbon dioxide equivalent annually, encouraging investment in emissions reduction and clean technology.
“That's why we need an election—to get some clarity on just how badly he's going to punish the oil and gas sector and what that new industrial pricing scheme he talked about during the leadership race is going to look like,” Smith said.
Historically, Smith and her predecessor, Jason Kenney, have blamed the federal carbon pricing system for rising costs, particularly in Alberta.
In 2019, the province challenged the levy in court, but the Supreme Court ruled in Ottawa's favour in 2021.
As per CBC News, last fall, Smith's government launched another legal challenge, arguing that the exemption granted for home heating oil, used mostly in Atlantic Canada, was unconstitutional.
“The federal carbon tax has always been unfair, but the selective way it's being applied now is also unconstitutional, and the impacts on Albertans will only get worse as the costs continue to increase,” Smith said at the time.
She had also pressed Ottawa to exempt farmers using propane to dry grain and natural gas to heat barns.
Saskatchewan Premier Scott Moe, another critic of the levy, did not immediately respond to Carney's decision. His government previously lost a Supreme Court challenge against the tax in 2021.
Last year, Saskatchewan stopped remitting carbon levies on natural gas after former Prime Minister Justin Trudeau's Liberal government exempted home heating oil users.
According to Global News, the province later reached an agreement with Ottawa to pay half of what was owed until the dispute is resolved.
Saskatchewan NDP Leader Carla Beck supported the federal move, stating, “Great. Finally.”
In related developments, the federal Conservative Party has pledged to abolish Canada's industrial carbon pricing system if elected, arguing that it harms business competitiveness.
However, the impact of such a move would depend on whether provinces maintain their own carbon pricing mechanisms.
Additionally, Reuters reports that Canada could meet its 2030 emissions targets without the consumer carbon tax by focusing on alternative policies, such as industrial carbon taxes and regulations like an oil-and-gas emissions cap and methane reduction strategies.
