Alberta
Premier Smith urges PM Trudeau not to raise carbon tax on April 1
Premier Danielle Smith met with Prime Minister Justin Trudeau in Calgary to discuss areas of priority for the province.
The meeting was constructive, but there are still several issues on which there is some distance between both the federal and provincial governments. These include the impact of the federal carbon tax, and its cascading effects on inflation, affordability and sustained higher interest rates, as well as the timeline to reach carbon neutrality.
Premier Smith reiterated the growing opposition to the federal carbon tax, which includes seven Premiers, federal members of Parliament, and everyday Albertans and Canadians. The Premier suggested that the Prime Minister could achieve a win if he listened to the many voices raised against the carbon tax and reversed his decision to increase the tax by 23 per cent on April 1.
Alberta remains focused on achieving carbon neutrality by 2050 and is a willing partner in responsible, manageable efforts to see that goal through. The province and the federal government have worked together to see several projects start and progress from companies including Air Products, Dow Chemical and Heidelberg. The Premier highlighted the importance of projects that will move the province and country forward on carbon neutrality, including the Pathways Alliance project. Premier Smith is awaiting the federal budget to see if Ottawa will give more clarity to support it.
Premier Smith also relayed to the Prime Minister the massive opportunity Alberta has to export ammonia to South Korea and Japan, in co-operation with British Columbia, and expressed hope that the federal government would be a partner in this work.
Premier Smith expressed gratitude for the progress on the TransMountain pipeline and was encouraged by federal conversations aimed at replicating the highly successful Alberta Indigenous Opportunities Corporation (AIOC). Indigenous leaders across the country have praised Alberta for leading the way on economic reconciliation and being an example that should be followed. There are opportunities for greater Indigenous partnership in energy projects, including the TransMountain pipeline, and in other industries. Premier Smith also highlighted Alberta’s plans to collaborate with First Nations on issues such as mental health and addiction, infrastructure and housing.
Alberta will remain a willing partner when given the opportunity to do so. There are many ways that the province can co-operate with Ottawa that do not involve the federal government overstepping its constitutional authority, and Alberta will continue to advocate for solutions that will benefit Albertans and all Canadians.
Premier Danielle Smith issued the following statement on the April 2, 2025 U.S. tariff announcement:
“Today was an important win for Canada and Alberta, as it appears the United States has decided to uphold the majority of the free trade agreement (CUSMA) between our two nations. It also appears this will continue to be the case until after the Canadian federal election has concluded and the newly elected Canadian government is able to renegotiate CUSMA with the U.S. administration.
“This is precisely what I have been advocating for from the U.S. administration for months.
“It means that the majority of goods sold into the United States from Canada will have no tariffs applied to them, including zero per cent tariffs on energy, minerals, agricultural products, uranium, seafood, potash and host of other Canadian goods.
“There is still work to be done, of course. Unfortunately, tariffs previously announced by the United States on Canadian automobiles, steel and aluminum have not been removed. The efforts of premiers and the federal government should therefore shift towards removing or significantly reducing these remaining tariffs as we go forward and ensuring affected workers across Canada are generously supported until the situation is resolved.
“I again call on all involved in our national advocacy efforts to focus on diplomacy and persuasion while avoiding unnecessary escalation. Clearly, this strategy has been the most effective to this point.
“As it appears the worst of this tariff dispute is behind us (though there is still work to be done), it is my sincere hope that we, as Canadians, can abandon the disastrous policies that have made Canada vulnerable to and overly dependent on the United States, fast-track national resource corridors, get out of the way of provincial resource development and turn our country into an independent economic juggernaut and energy superpower.”
From the Fraser Institute
By any measure, Alberta is an energy powerhouse—within Canada, but also on a global scale. In 2023, it produced 85 per cent of Canada’s oil and three-fifths of the country’s natural gas. Most of Canada’s oil reserves are in Alberta, along with a majority of natural gas reserves. Alberta is the beating heart of the Canadian energy economy. And energy, in turn, accounts for one-quarter of Canada’s international exports.
Consider some key facts about the province’s energy landscape, as noted in the Alberta Energy Regulator’s (AER) 2023 annual report. Oil and natural gas production continued to rise (on a volume basis) in 2023, on the heels of steady increases over the preceding half decade. However, the dollar value of Alberta’s oil and gas production fell in 2023, as the surging prices recorded in 2022 following Russia’s invasion of Ukraine retreated. Capital spending in the province’s energy sector reached $30 billion in 2023, making it the leading driver of private-sector investment. And completion of the Trans Mountain pipeline expansion project has opened new offshore export avenues for Canada’s oil industry and should boost Alberta’s energy production and exports going forward.
In a world striving to address climate change, Alberta’s hydrocarbon-heavy energy sector faces challenges. At some point, the world may start to consume less oil and, later, less natural gas (in absolute terms). But such “peak” consumption hasn’t arrived yet, nor does it appear imminent. While the demand for certain refined petroleum products is trending down in some advanced economies, particularly in Europe, we should take a broader global perspective when assessing energy demand and supply trends.
Looking at the worldwide picture, Goldman Sachs’ 2024 global energy forecast predicts that “oil usage will increase through 2034” thanks to strong demand in emerging markets and growing production of petrochemicals that depend on oil as the principal feedstock. Global demand for natural gas (including LNG) will also continue to increase, particularly since natural gas is the least carbon-intensive fossil fuel and more of it is being traded in the form of liquefied natural gas (LNG).
Against this backdrop, there are reasons to be optimistic about the prospects for Alberta’s energy sector, particularly if the federal government dials back some of the economically destructive energy and climate policies adopted by the last government. According to the AER’s “base case” forecast, overall energy output will expand over the next 10 years. Oilsands output is projected to grow modestly; natural gas production will also rise, in part due to greater demand for Alberta’s upstream gas from LNG operators in British Columbia.
The AER’s forecast also points to a positive trajectory for capital spending across the province’s energy sector. The agency sees annual investment rising from almost $30 billion to $40 billion by 2033. Most of this takes place in the oil and gas industry, but “emerging” energy resources and projects aimed at climate mitigation are expected to represent a bigger slice of energy-related capital spending going forward.
Like many other oil and gas producing jurisdictions, Alberta must navigate the bumpy journey to a lower-carbon future. But the world is set to remain dependent on fossil fuels for decades to come. This suggests the energy sector will continue to underpin not only the Alberta economy but also Canada’s export portfolio for the foreseeable future.
Jock Finlayson
Senior Fellow, Fraser Institute
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