Alberta’s Carbon Price Freeze: A Short-Term Relief or a Long-Term Setback?

On May 12, 2025, Alberta Premier Danielle Smith announced a surprise freeze on the province’s industrial carbon price, capping it at $95 per tonne, effective immediately. This move is being criticized by the Canadian Climate Institute, industry leaders, and clean tech investors, who warn that this policy shift undermines billions in planned and ongoing decarbonization investments.

Although the Premier framed the decision as a necessary step to maintain Alberta’s competitiveness and to protect jobs amid uncertain trade dynamics with the United States, climate and policy experts argue that it creates deep uncertainty for businesses that are expecting predictable, steadily rising carbon prices. 

Currently, Alberta’s heavy industry is in the midst of a major transformation where billions of dollars are being put towards carbon capture, clean hydrogen, and emissions-reducing technologies - driven by the province’s industrial carbon pricing system (a market-based program which rewards companies for reducing carbon emissions). By stopping the planned increases to Alberta's industrial carbon price, the article speaks to the criticism received which suggests that the government is undermining businesses that had made long-term financial decisions (e.g., funding decarbonization projects or buying carbon credits) based on the expectation that the carbon price would continue to rise. 

In announcing the freeze, Smith insisted the government was providing “certainty, stability, and economic relief” and defended the move by pointing out global competitiveness. However, the message from the Climate Institute highlights that there are better options for protecting competitiveness and that policy stability requires credible rules that allow investors to plan for the future. Instead, these sudden policy reversals, even those that attempt to advance competitiveness, may end up causing more damage to the certainty they intend to provide.

As countries around the world advance towards a low-carbon economy, the question is no longer whether to decarbonize, but how countries will do it and whether governments fully commit to their climate ambitions with consistent, science-backed, forward-looking policies. 

Written by Sabrina Careri, for Ann Dale.

Image credit: Daniel Moqvist from Unsplash