A new study by the Fraser Institute released on June 25, 2026, finds that the $140 per tonne industrial carbon tax and carbon capture regulations agreed to by Ottawa and Alberta will increase the cost to produce energy in Alberta, making the province less competitive than energy-producing U.S. states for investment. The study, authored by Jack M. Mintz, President's Fellow of the School of Public Policy at the University of Calgary, highlights that federal and provincial policies are effectively encouraging investors to look to jurisdictions with lower costs and higher returns on investment.

The research indicates that in addition to existing corporate, royalty, and fuel taxes, Alberta's industrial carbon tax on large emitters under the Technological Innovation and Emissions Reduction Regulation, combined with mandatory carbon capture, utilization, and sequestration requirements, will significantly raise production costs. Crucially, these costs do not apply to energy producers in U.S. states such as Texas and New Mexico, placing Alberta at a distinct competitive disadvantage.

By 2040, under the agreed-upon corporate level taxes, carbon capture requirements, and the $140 per tonne industrial carbon tax, the study projects specific cost increases across key energy sectors. The cost to produce a barrel of conventional oil is projected to increase from US$43 to $54, a 25.6 per cent rise. Similarly, the cost to produce a barrel of oil sands oil will rise from US$51 to $61, representing a 19.6 per cent increase.

Projected Cost Increases by 2040

The natural gas sector is expected to see the highest percentage increase, with costs rising from CDN$1.56 to $2.17 per gigajoule (GJ), a jump of 39.1 per cent. Electric power production costs are also set to rise significantly, increasing from CDN$39 to $53 per megawatt hour (MWh), a 35.9 per cent increase. Mintz noted that raising the cost to generate electricity would increase costs for producers across the province, making goods and services more expensive.

Mintz concluded that as energy becomes more expensive to produce due to increased taxes and regulations, investors will inevitably look to other energy-producing jurisdictions where costs are lower. The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, Montreal, and Halifax.

Alberta's economy is projected to grow faster than the national economy in 2026, driven by a surge in oil prices and persistent population growth, according to the Economic Outlook released by ATB Financial on June 11, 2026. The report forecasts Alberta's real GDP will increase by 2.6 per cent this year, well above the 2.1 per cent projected in December before the Iran war disrupted global markets. By comparison, the national economy is expected to grow by just 0.8 per cent in 2026.

The growth is supported by the energy sector, where the closure of the Strait of Hormuz has pushed West Texas Intermediate (WTI) price projections to an average of US$84 per barrel. However, energy producers are maintaining capital discipline amid ongoing uncertainty over prices, regulations, and future pipeline capacity. Beyond energy, relative housing affordability and an improving labour market are driving a steady influx of new residents, leading to increased construction and consumer spending.

Key Economic Indicators

Despite the positive outlook, the report cautions that this is not a classic energy boom. Households are navigating a steep cost of living, youth unemployment remains high, and businesses are holding back on hiring as they await clarity on the Canada-United States-Mexico Agreement (CUSMA) review scheduled for this summer. Mark Parsons, Vice President and Chief Economist at ATB Financial, described the situation as "a fast car restricted to the slow lane," noting that while momentum is clear, trade conflicts and infrastructure constraints are preventing the province from reaching its full potential.

Long-term Growth Drivers

Economic modeling indicates that major pipeline expansions and carbon capture projects linked to the Canada-Alberta memorandum of understanding could add 5.1 per cent to the provincial GDP between 2027 and 2035. Additionally, Alberta's economy is benefiting from diversification into sectors such as petrochemicals, hydrogen, food processing, tech, tourism, critical minerals, aviation, and logistics. While upstream investment remains below peak levels, spending on downstream activities continues to trend higher.

Parsons emphasized that while top-line numbers show resilience, not everyone will feel the benefits equally. Surging fuel and input costs are squeezing family and business budgets, and structural improvements in investment and productivity remain vital for sustained growth. The report underscores the need for ongoing monitoring of geopolitical developments and domestic policy changes to ensure long-term economic stability.