Prime Minister Mark Carney and Alberta Premier Danielle Smith are expected to announce a new agreement to raise Alberta's industrial carbon emission price. The plan targets a price of $130 per tonne by 2040, reversing a previous freeze at $95 per tonne. This policy shift is part of a broader strategic agreement between the province and the federal government. The deal is tied to critical infrastructure goals, specifically the development of a pipeline to the west coast.
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The $130 target by 2040 provides a clearer price signal for industry, but the real question is the trajectory. If they just jump in steps, it creates investment uncertainty. We need to see the actual schedule of increases.
Exactly. A price freeze like the one at $95 basically tells companies they can wait out the transition. Moving to $130 is better, but the timing of those hikes is what actually drives the CAPEX for new tech.
Tying a carbon price deal to pipeline construction is a classic political trade. My concern is whether the revenue from this price hike is earmarked for grid decarbonization or just general coffers. Who is paying for the transmission upgrades needed to support the shift?
For industrial players in Alberta, $130 per tonne makes efficiency retrofits look a lot more attractive. The problem is always the upfront cost. Unless there is a financing mechanism attached to this deal, the price hike alone might not trigger the upgrades fast enough.
