Key figures in Canada’s oil and gas industry are cautioning against the implementation of an industrial carbon levy, arguing that it would undermine the country’s competitive position at a time when global demand for reliable energy sources is high.
Lisa Baiton, the head of the Canadian Association of Petroleum Producers (CAPP), emphasized the uniqueness of Canada’s stance on industrial carbon taxation, highlighting that no other major oil-producing and exporting nation imposes such a levy on its producers. Baiton delivered these remarks during the commencement of the 2026 BMO CAPP Energy Symposium in Toronto.
The ongoing conflicts in the Middle East have further accentuated CAPP’s long-standing argument, which gained traction following Russia’s invasion of Ukraine in 2022. Baiton stressed that Canada, endowed with vast oil and gas reserves, holds both the potential and the obligation to develop these resources to enhance global energy security.
Expressing frustration, Baiton noted, “Instead of capitalizing on this opportunity and embracing the responsibility, we are preoccupied with initiatives that increase costs and diminish our competitiveness.”
The ongoing dialogue is taking place against the backdrop of efforts in Canada to expedite the construction of oil and gas export infrastructure to cater to markets beyond the traditional reliance on the United States.
The push for pipelines
The Alberta government is gearing up to submit an application for a new West Coast crude oil pipeline to the federal major projects office this summer, with the objective of fast-tracking infrastructure projects deemed critical for national interests.
Last year, Alberta and the federal government formalized a comprehensive memorandum of understanding on various energy-related issues, outlining a pathway for constructing a new British Columbia pipeline alongside an industrial carbon pricing mechanism to support the economics of the substantial Pathways carbon capture initiative.
However, specific agreements regarding the carbon price and Pathways components are yet to be finalized, extending beyond the April 1 deadline stipulated in the energy agreement.
According to the memorandum of understanding, Alberta’s industrial carbon price is slated to escalate to $130 per tonne from the current $95. Premier Danielle Smith recently indicated that discussions are ongoing regarding the pace of this price hike.
An analysis by Clean Prosperity, a climate policy non-profit, suggested that oilsands producers could offset the additional carbon expenses by commanding higher prices if a new pipeline facilitates increased exports to Asia. The study estimated that the net profits of four oilsands facilities could surge by over $3 billion over a 15-year period post the pipeline’s inauguration.
On the other hand, a study by the Canadian Climate Institute projected that the per-barrel impact of the augmented carbon price would average around 50 cents, approximately equivalent to the cost of a Timbit.
A matter of competitiveness
Jon McKenzie, the CEO of Cenovus Energy and Chair
