Alberta pioneered industrial carbon pricing. Now, Poilievre says he'd kill the federal mandate for it

Alberta Premier Danielle Smith welcomed a promise from the Conservative Party of Canada on Monday to eliminate the federal backstop on industrial carbon pricing, if it were to form the next federal government. Although it appears unlikely the province would abandon its longstanding pricing system altogether.

"We fully support Pierre Poilievre's commitment to return jurisdictional authority back to the provinces to regulate their own industrial emissions," Smith said in a written statement.

Back in 2007, when Stephen Harper was prime minister and Ed Stelmach was premier, Alberta became the first jurisdiction in North America to put a price on industrial carbon emissions.

This policy is separate from the consumer-level carbon pricing — commonly known as the "carbon tax" — that Alberta adopted in 2017 under NDP premier Rachel Notley, then repealed in 2019 under UCP premier Jason Kenney.

Almost immediately after that, Alberta became subject to the federal carbon tax under Justin Trudeau's Liberal government, which has now been effectively killed by Mark Carney's Liberal government.

Throughout all this flux, Alberta's industrial-scale pricing system has persisted. It has, however, undergone numerous changes over the years, including per-tonne price increases that keep it in line with the requirements of the federal backstop.

On Monday, Conservative Leader Pierre Poilievre pledged to eliminate federal carbon-pricing law altogether, including the backstop, if his party wins the next federal election. Provinces would be free to do as they like with their own industrial policies, he said.

Large-scale emitters — such as oilsands facilities, power plants, and other facilities with more than 100,000 tonnes of annual emissions — are subject to this industrial system of carbon pricing.

The carbon price only applies to the portion of their emissions beyond facility-specific "benchmarks" that are calculated by a complex formula.

At the same time, facilities can also receive credits for cutting emissions below their reduction targets.

Low-emitting facilities can sell their credits to higher-emitting facilities, which can then use the credits to avoid paying a portion of the carbon price they owe. This effectively creates both a carrot and stick within a single policy, with the carrot for low-emitting facilities being funded by the stick that applies to high-emitting facilities.

The money from facilities that do pay the carbon price goes into a fund that is administered by a provincial agency which offers grants to support projects and new technologies "that reduce emissions, lower costs, attract investment, and create jobs in Alberta."

This approach to industrial carbon pricing has seen broad support from a variety of Alberta leaders, including former premier Jason Kenney.

"That fund, paid for by major emitters, I think is a good way of doing it," Kenney said in 2018, even as he campaigned against Alberta's consumer-level carbon tax.