Alberta and Ottawa to unveil details of pipeline pact and industrial carbon tax plan

Prime Minister Mark Carney meets with Alberta Premier Danielle Smith in his office in Ottawa on Friday, May 8, 2026. Photo by HYUNGCHEOL PARK /Postmedia

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OTTAWA — After weeks of negotiations, Prime Minister Mark Carney and Alberta Premier Danielle Smith are set to announce today the next phase of its agreement to pave the way for the construction of a new oil pipeline to the West Coast, in exchange for Alberta increasing its industrial carbon tax.

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Sources have confirmed that both sides are expected to announce an agreement that will see Alberta increase its industrial carbon tax on heavy emitters to an effective rate of $130 per tonne by 2040.

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That’s 10 years later than what federal law currently stipulates, which is a rate of $170 per tonne by 2030.

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Carney and Smith will participate in a signing ceremony, to be followed by a closed-door meeting.

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He is expected to speak to reporters later Friday afternoon.

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Alberta agreeing to increase its industrial carbon tax to $130 per tonne was part of a memorandum of understanding Carney and Smith signed last November, meant to usher in a new era of relations between Ottawa and Alberta, which grew increasingly tense under former prime minister Justin Trudeau.

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Deciding when that would happen has been the subject of negotiations between senior officials on both sides, with Carney and Smith meeting in Ottawa last week to resolve outstanding issues.

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It came as industry leaders in the energy sector warn that raising the industrial carbon tax risks undermining the country’s competitiveness.

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Smith said last week that Albertans and industry were growing “impatient” to see a finalized deal. She has argued that the tax needed to be set at a rate that “industry can afford,” and signalled from the outset that deciding on that timeline would be one of the main sticking points.

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As part of their initial deal, Carney’s government agreed to forgo plans to implement a planned cap on oil and gas emissions and exempt Alberta from a federal set of clean energy regulations in exchange for the oil-producing province unfreezing the rate of its industrial carbon tax from its current $95 per tonne, to $130 per tonne.

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It is expected that the rate in Alberta would increase by $5 to $100 in 2027 and then increase by $3 every year after 2029 to hit $130 per tonne by 2040.

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What Smith’s government wants out of the deal with Ottawa is a path to build a new million-barrel-a-day bitumen pipeline through British Columbia’s West Coast, arguing that route is best suited to open access to Asian markets.

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Her United Conservative Party government plans to submit a proposal to the federal Major Projects Office, established by Carney to help proponents streamline the approvals process, no later than the end of June.

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An Alberta government source, speaking on the condition of background, confirmed this week that an agreement is also in the works to see the province’s pipeline proposal receive a designation as being deemed in the national interest sometime this fall.