The Government of Alberta has seized on a dip in oil prices to justify freezing the industrial carbon tax at $95 per tonne of emissions.
The province’s carbon pricing system, launched in 2007, charges industry producers for their greenhouse gas emissions and reinvests the money in clean emissions technology and industry innovation.
Under the system, the price was set to increase to $110 per tonne in 2026 and $170 per tonne in 2030.
According to the provincial government, the freeze is necessary to keep Alberta’s energy sector viable.
“With the change in government south of the border, it is essential that we have a reasonable carbon pricing system, not one that will price our industries out of global markets,” Premier Danielle Smith told reporters.
A Step Backwards
Dale Beugin, Executive Vice President with the Canadian Climate Institute, called Alberta’s carbon tax freeze a step backwards.
He said it could jeopardize billions of dollars in decarbonization projects that are banking on the current industrial carbon pricing system.
“Crucially, systems like Alberta’s are already designed to minimize costs and competitiveness impacts. Our research shows these costs, at most, amount to the price of just 30 cents per barrel of oil. These systems create incentives to reduce emissions by improving performance, not by reducing investment or production,” Beugin said in a media release.
“There are other, better options, for protecting competitiveness, like returning more revenue generated from the policy to industry. Freezing Alberta’s industrial carbon price is a mistake and the government should reconsider.”
Tariffs and Supply
President Donald Trump, who campaigned on a promise to “drill baby, drill,” has achieved the opposite.
The economic uncertainty and unpredictability of tariffs are being blamed for tanking oil prices. Making matters worse for American petroleum producers is a decision by the 13 member countries of OPEC+ to increase supply and flood the world with oil.
Companies south of the border are cutting production and forecasts following a big drop in the benchmark price of oil from $80 US per barrel to around $60 US.
The nature of each country’s oil reserves and their respective costs of production mean markets in Canada react differently to price swings than in the US, however.
Resilient By Design
The bulk of US oil production is from shale wells, which decline quickly. To maintain production, companies must keep drilling new wells. That costs money.
According to the Federal Reserve Bank of Dallas, most Texas oil producers have a break-even price of around $65 US per barrel.
It’s a different story in Canada. Industry analysts say the Canadian oil and gas sector is much more resilient than America’s. The oil sands dominate and the huge upfront development costs are compensated by the relatively long life of these environmentally destructive mines and production facilities.
Canadian companies can still make a profit at between $50 US and $55 US per barrel, as reported by CBC.
“The largest companies here in Canada … they have cost structures that are among the best in the world,” Randy Ollenberger, an oil and gas researcher with BMO Capital Markets, told CBC.
Despite what the Alberta government claims, the industrial carbon tax isn’t hurting oil companies even with the $20 US drop in per barrel price over the past several months.Canadian Natural Resources, Canada’s largest producer, reported adjusted net earnings of $2.4 billion in the first quarter of 2025 and says it can meet its maintenance capital and shareholder obligations at per-barrel prices in the low to mid $40s .
