The Alberta government is undercutting the success of its own industrial carbon tax and risks allowing companies to double-count their emission savings by permitting them to avoid the provincial fee by investing in their own emissions reduction projects instead, independent analysts say.
Premier Danielle Smith told reporters Tuesday that the move, likely to come into effect this fall, would support economic growth while ensuring companies work to lower emissions, The Canadian Press reports.
“We’re looking at it a little like a recycling program,” Smith said.
“It will incentivize companies to spend money here in Alberta on emissions reductions investments specific to their projects without burdensome regulation or government choosing winners or losers.”
Smith said the province is also allowing smaller companies that don’t meet the program’s minimum emissions threshold to opt out of the carbon pricing system for 2025.
“This change will help smaller industries to save money and redirect resources into emissions reduction investments or other operational improvements for more cost savings,” she said.
Smith’s announcement drew criticism, with groups like clean energy think tank the Pembina Institute saying the changes could lead to “double-counting,” while also weakening the value of Alberta’s carbon credits.
“Based on what we’ve heard today, companies will be able to avoid paying a compliance cost at the point of investment in technologies, but then also generate a carbon credit when their emissions start to be reduced,” said Pembina Executive Director Chris Severson-Baker.
Dale Beugin, executive vice president at the Canadian Climate Institute, agreed that permitting double-counting would create an oversupply of carbon credits in the market.
“Without improvements, excess credit supply—and the low credit prices that result—will dilute incentives for investment,” he said in a statement.
“These changes add up to two things: less long-term certainty for businesses and investors, and more harmful emissions going into our atmosphere—contributing to global emissions fuelling more wildfires, droughts, and extreme weather endangering Albertan communities.”
Alberta has had an industrial carbon pricing system since 2007. The current version, called Technology Innovation and Emissions Reduction, has been in place since 2020.
Smith said the upcoming changes to the program stem from consultations her government did with hundreds of oil sands and natural gas officials last spring.
Environment Minister Rebecca Schulz, speaking alongside Smith, said the changes are a “significant win for industry.”
“Instead of sticking to two compliance options—which is by paying a levy or using credits to offset their emissions—enabling companies to reinvest in their own facilities and choose the onsite technologies that work best for them, this helps with the economics of production, but also emissions reduction,” said Schulz.
Opposition NDP energy critic Nagwan Al-Guneid said the province didn’t do enough consultation before moving forward with the changes.
She also said Smith and Schulz’s announcement lacked specific details on what kind of projects will qualify for companies to invest in.
Schulz said Tuesday that companies will have eight years to make infrastructure investments if they choose to comply through the new method.
She said if those investments aren’t made, a company’s emissions fees will be collected by the government as usual.
Kendall Dilling, president of the Pathways Alliance, the consortium proposing a massive carbon capture hub in northern Alberta, said in a statement that the government’s changes will encourage investment in emissions reduction technology.
Alberta indefinitely froze its industrial carbon price at $95 per tonne of emissions in May. On Wednesday, CP writes, the province extended the freeze into 2026, rather than increasing the price to $110 per tonne as planned, in violation of federal regulations.
Smith said in May that the price freeze was a critical step in keeping industry competitive throughout Canada’s tariff fight with the United States.
Ottawa could choose to enforce the $110 price if Alberta fails to do so in January—a move Environmental Defence Canada called on Carney to take Tuesday.
“Alberta needs to pull its weight when it comes to fighting climate change and if it won’t, the federal government must step in,” Program Director Keith Brooks said in a statement.
The original version of this report was first published by The Canadian Press on Sept. 16, 2025.
