Canada, Alberta to raise carbon price by 2040 - Bloomberg

Investing.com -- The Alberta and Canada governments are finalizing an agreement to increase the province’s industrial carbon price to C$130 ($95) per metric ton by 2040, a key step toward federal support for a new crude pipeline going to the Pacific coast.

The terms were discussed at a federal cabinet meeting on Wednesday, and Prime Minister Mark Carney and Alberta Premier Danielle Smith are expected to announce the deal Friday, according to reporting from Bloomberg, citing a person familiar with the discussions. The agreement removes a crucial obstacle to Ottawa backing the province’s pipeline proposal expected next month, but negotiations remain on a carbon capture system for the oil sands.

The deal addresses a malfunctioning carbon market where credits currently trade far below the nominal headline price. It also represents the latest move by Carney to roll back environmental rules brought in by his predecessor, Justin Trudeau, who had envisioned the price rising to C$170 per metric ton by 2030.

The C$130 figure is an effective price, reflecting what it actually costs companies to stay in compliance with the industrial carbon tax regime, which applies only to the heaviest-emitting businesses. The agreement includes escalating price floors between 2027 and 2040, said the person.

Environmental advocates had urged a 2030 target for the C$130 price. While the deal reduces the near-term burden on industry, some oil producers have been calling for the carbon tax to be scrapped altogether, arguing it makes them uncompetitive internationally.

The agreement marks the third issue settled between Alberta and Canada since they reached a broader memorandum of understanding on energy and environmental policy in November. Deals were reached in March on measures to cut methane emissions and on jurisdiction for impact assessments.

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