Alberta's Net-Zero Commitment Faces Scrutiny Over Carbon Pricing Projections
While much of Canada may be unaware, Alberta has formally committed to achieving net-zero carbon emissions by 2050. Premier Danielle Smith has championed this policy since July 2022, reinforced it in the province's 2023 climate change strategy, and officially endorsed it through the Canada-Alberta Memorandum of Understanding alongside federal Liberal counterparts.
The Carbon Pricing Trajectory: A Steep Climb Ahead
Within the MOU framework, the Smith government agreed to collaborate with federal authorities on establishing long-term effective carbon pricing mechanisms in Alberta. This raises critical questions about what Alberta's net-zero 2050 target means for the future trajectory of carbon tax rates in the province.
According to custom modeling conducted by Navius Research in 2024, achieving net-zero emissions by 2050 would require Alberta's carbon price to escalate to $233 per tonne by 2035 and $371 per tonne by 2050. These projections are considered conservative estimates, as they do not account for potential impacts from Ottawa's elimination of the consumer carbon tax. Consequently, Alberta's carbon tax might need to exceed $371 per tonne substantially.
Economic Implications for Alberta's Oil Sands Sector
The implications of such elevated carbon pricing for Alberta's cornerstone oil sands industry are significant. Analysis suggests that increasing the carbon tax to $371 by 2050 would add approximately US$5.30 per barrel to production costs across all oil sands operations. This calculation is based on the International Energy Agency's World Energy Outlook projection, which anticipates oil sands production reaching 4.1 million barrels per day by 2050 under current policy frameworks.
Given the potential negative effects on the oil sands' future competitiveness, there could be serious economic and fiscal consequences for Alberta. However, the provincial government has not publicly disclosed any comprehensive impact assessments regarding the pursuit of net-zero emissions by 2050. This omission is particularly puzzling for a policy that Premier Smith and her administration have actively promoted for over three years.
Calls for Transparency and Accountability
Premier Smith has recently indicated that the provincial government is seeking independent modeling to determine appropriate future carbon tax levels for Alberta. There is growing expectation that these findings will be shared transparently with the public and stakeholders.
Looking internationally, the United Kingdom's Department for Energy Security and Net Zero provides a potential model for transparency. The department annually examines traded carbon values under various net-zero scenarios and publishes these results. Their most recent report found that traded carbon values would need to reach the equivalent of $437.10 in Canadian dollars by 2050 to achieve net-zero emissions.
Drawing from the U.K. experience and emphasizing principles of openness and accountability, there are increasing calls for the Smith government to release all carbon policy modeling results. This should include detailed analysis of:
- The carbon tax price pathway required to reach Alberta's net-zero 2050 target
- Comprehensive economic and fiscal impact assessments of net-zero policies
- Implications of rising carbon taxes on the competitiveness of major emitter sectors, particularly the oil sands industry
As Alberta navigates its climate commitments, transparency regarding the economic costs and industrial impacts of carbon pricing policies remains essential for informed public discourse and responsible governance.
