A new study from the Fraser Institute warns that increasing Alberta's carbon tax to the federal government's target of $170 per tonne by 2030 would eliminate 10,000 jobs and reduce average worker earnings by $1,730 annually.
The Vancouver-based policy institute released findings Thursday suggesting the carbon pricing escalation would significantly impact Alberta's economy, with real gross domestic product potentially falling two per cent compared to keeping the tax frozen at current levels.
"The federal and Alberta governments are currently negotiating the future of industrial carbon pricing in the province, but neither government has told the public what the costs will be if the carbon tax increases," said Fraser Institute senior fellow Ross McKitrick, co-author of the study titled "Estimated Impacts of a $170 Industrial Carbon Price in Alberta and Canada."
Currently, Alberta's carbon tax for large industrial emitters sits at $95 per tonne and will increase to $110 on April 1. Under a memorandum of understanding signed between Alberta and Ottawa in November 2025, the province agreed to raise the tax to $130 per tonne, though the timeline remains unclear.
Prime Minister Mark Carney eliminated the fuel tax portion affecting gasoline and diesel in March 2025, but the industrial carbon tax continues to climb toward the federal 2030 target.
Energy Sector Hit Hardest
The Fraser Institute analysis suggests energy and energy-intensive sectors would bear the brunt of economic impacts, with electricity, refined fuels, transportation and utilities experiencing the largest output declines.
"The impacts are not uniformly experienced across the economy," the study notes, highlighting particular vulnerabilities in Alberta's resource-dependent industries.
At the national level, the institute projects workers would lose $1,160 annually in earnings, with GDP potentially shrinking 1.3 per cent.
Long-term Investment Concerns
The study warns that capital earnings - including interest, dividends and capital gains - would initially drop more sharply than wages and salaries. However, researchers caution this could trigger broader economic consequences.
"The large drop in returns to capital can be expected to result in reduced or cancelled investment plans, which will translate into further long-run declines in Canadian living standards," the report states.
Study co-author Elmira Aliakbari, the Fraser Institute's director of natural resource studies, emphasized the importance of transparency in carbon pricing discussions.
"Policymakers — and all Albertans — need to understand the significant costs further carbon price increases would impose."
The Fraser Institute describes itself as a research organization focused on government policies affecting Canadians' quality of life, including taxation, healthcare, education, economic freedom and natural resources. The think tank is generally considered to hold conservative policy positions.
This story is based on reporting by Chad Twair of the Red Deer Advocate.
