At a time when tariffs, trade uncertainty and concerns about economic sovereignty are reshaping investment decisions, carbon pricing is playing an increasingly important role in industrial competitiveness. This report by the Pembina Institute and Energy Futures Lab, A Carbon Signal Industry Can Use: Insights from Industry Experts on Effective Industrial Carbon Pricing in Canada, explores how industrial carbon pricing is experienced in practice and what businesses need for carbon pricing to influence investment and operational decisions.
Drawing on 21 interviews with large industrial companies, industry associations, technology and project developers, industry-adjacent and advisory organizations, regulators, researchers, non-governmental organizations and think tanks, and academic researchers, the report examines how industrial carbon pricing is shaping business decisions across Canada.
How does industrial carbon pricing influence investment decisions?
The report identifies seven key findings that suggest effective carbon pricing depends on more than price alone. Interviewees highlighted the importance of credible carbon price signals, confidence in future carbon values, functioning carbon markets, access to emissions-reduction technologies and infrastructure, trusted emissions information, and the competitive conditions in which businesses operate when making decisions about low-carbon investments and operational practices.
What recommendations emerged from the research?
The report identifies seven recommendations to help improve the effectiveness of industrial carbon pricing systems in Canada:
- Provide a durable basis for long-term investment through greater certainty around carbon pricing, benchmarks, rules and enforcement.
- Assess the effective carbon value businesses face, not just the headline price.
- Strengthen the functioning of carbon markets through greater transparency and clearer rules.
- Improve interoperability across carbon pricing systems through better recognition of credible credits, protocols and emission reduction outcomes across Canadian carbon pricing systems.
- Address competitiveness based on actual exposure, including market and facility-level conditions, competitor policies, tariffs and changing trade relationships.
- Strengthen emissions measurement, verification and comparability across systems.
- Use complementary measures when carbon pricing alone cannot close the investment gap.
What does this mean for Canada's economy?
Businesses need durable policy signals, functioning markets, trusted emissions information and practical pathways to reduce emissions. As Canada works to strengthen economic competitiveness, support clean industrial growth and navigate a changing global trade environment, understanding how carbon pricing is experienced in practice can help inform future policy development and investment decisions.
