The Fraser Institute estimates the industrial carbon tax would shrink Alberta’s economy by 2%, cost workers roughly $1,730 annually in lost income, and eliminate more than 10,000 jobs in the province. Nationally, the policy is projected to reduce GDP by 1.3% and wipe out more than 50,000 jobs across Canada.

A new report from the Fraser Institute warns Canada will remain economically uncompetitive unless Ottawa abandons a slate of anti-energy policies, including the federal industrial carbon tax.

The commentary comes after Prime Minister Mark Carney reached a new agreement with Alberta Premier Danielle Smith on industrial carbon pricing tied to a proposed West Coast pipeline framework.

According to the Fraser Institute, Alberta’s oil and gas investment has collapsed by nearly 61% since 2014, falling from $64.7 billion to $25.4 billion in 2024 after adjusting for inflation.

The institute points to a combination of federal policies introduced under former prime minister Justin Trudeau, including Bill C-69, Bill C-48, methane regulations, emissions caps and carbon taxes.

While Ottawa eliminated the consumer carbon tax last year, the industrial carbon tax remains fully intact.

“The industrial carbon tax was originally set to increase from $95 per tonne to $170 per tonne by 2030,” the report states. “According to recent analysis, this policy would impose substantial costs on Canadians—particularly Albertans.”

The Fraser Institute estimates the industrial carbon tax would shrink Alberta’s economy by 2%, cost workers roughly $1,730 annually in lost income, and eliminate more than 10,000 jobs in the province. Nationally, the policy is projected to reduce GDP by 1.3% and wipe out more than 50,000 jobs across Canada.

Go Ad Free

Under the new agreement between Ottawa and Alberta, the industrial carbon price will rise more slowly, eventually reaching $130 per tonne by 2040 instead of $170 by 2030.

The Fraser Institute says that it is still enough to undermine Canadian competitiveness, especially against the United States, which has no national carbon tax.

“Carbon taxes make life more expensive for everyday people while pushing private investment and jobs to jurisdictions that have more competitive regulatory and tax environments,” the report states.

Energy executives are also sounding the alarm.

Cenovus CEO Jon McKenzie called the industrial carbon tax one of the factors “that make us uncompetitive,” while Advantage Energy CEO Michael Belenkie warned the tax is “damaging to our economy and our competitiveness on a global scale.”

The report also criticizes Ottawa’s continued push for costly carbon capture and storage infrastructure projects, including the proposed multibillion-dollar Pathways Alliance carbon capture network, which would transport captured CO2 through a 400-kilometre pipeline for underground storage.

According to the Fraser Institute, those added compliance costs could potentially double oilsands break-even costs, making Alberta’s energy sector even less competitive internationally.

The institute concludes that if Ottawa truly wants Canada to become an “energy superpower,” it must repeal the policies still choking investment, including Bill C-69, Bill C-48, carbon capture mandates and the industrial carbon tax itself.