A new report from the Fraser Institute is raising concerns about the economic impact of Canada’s industrial carbon pricing system, arguing that the policy could discourage investment and reduce the country’s competitiveness in global energy markets.
The report focuses on the federal industrial carbon tax, often referred to by critics as “Carbon Tax 2.0,” which applies to large industrial emitters. While Ottawa eliminated the consumer carbon tax in 2025, the industrial pricing framework remains in place and is scheduled to continue increasing over time.
According to the Fraser Institute, higher industrial carbon costs could have significant economic consequences, particularly in energy-producing provinces such as Alberta. The organization estimates that the policy could reduce Alberta’s economic output by roughly two per cent, eliminate more than 10,000 jobs in the province, and contribute to the loss of more than 50,000 jobs nationwide. The report also projects a reduction in Canada’s overall economic output if the policy remains unchanged.
Researchers argue that rising compliance costs may encourage companies to direct investment toward jurisdictions with lower regulatory and taxation burdens. The institute points to a substantial decline in oil and gas investment over the past decade and suggests that carbon pricing, along with other federal regulations affecting the energy sector, has contributed to a less competitive business environment.
The report comes amid ongoing discussions between the federal government and provincial leaders about Canada’s energy future. Recent agreements between Ottawa and Alberta have modified the planned trajectory of industrial carbon pricing, slowing future increases compared with earlier proposals. However, the Fraser Institute maintains that the revised framework could still hinder investment and economic growth.
Industry leaders have also voiced concerns about Canada’s ability to compete internationally. Some executives in the energy sector argue that higher carbon costs place Canadian producers at a disadvantage when competing with companies operating in countries that do not have comparable national carbon-pricing systems.
Supporters of carbon pricing contend that such policies are necessary to reduce greenhouse gas emissions and encourage the development of cleaner technologies. Critics, meanwhile, argue that the economic costs outweigh the environmental benefits and risk driving jobs and investment elsewhere.
As policymakers continue to debate Canada’s climate and energy strategy, the report adds another voice to the ongoing discussion about how to balance environmental objectives with economic growth, investment attraction, and long-term competitiveness.
