Ottawa has announced an agreement with Alberta to allow it to keep its carbon pricing plan on large industrial emitters.

Environment and Climate Change Canada said on Friday that Alberta’s regulations on big polluters meets the federal government’s stringency criteria for carbon pricing systems.

Alberta’s new Technology Innovation and Emissions Reduction (TIER) levy will go into effect at the beginning of next year, keeping a $30 per tonne price on emissions from industrial sectors such as oil and gas, electricity, cement and agriculture. Oil sands facilities, for example, will be subject to the levy.

The move will prevent Ottawa’s output-based carbon pricing system from being slapped on Alberta. The federal system priced pollution based on average emissions intensity for industrial sectors likely to be severely hurt in the global market if they were hit with a high carbon tax burden.

Ottawa’s system was similar to the formula under the former Notley government, but the TIER system will price each facility based on past emissions, which could give firms a higher chance to hit their emissions target.

The other portion of the federal carbon pricing system, the fuel charge, will still be applied to Alberta starting Jan. 1, as the Kenney government cancelled its own levy last May.

Alberta will join Saskatchewan, Manitoba, Ontario and New Brunswick as provinces to have the federal backstop applied to them. The federal price per tonne of emissions currently sits at $20, and is set to increase $10 each year until 2022.

All of those provinces have governments that have opposed the federal carbon pricing plan, which is a key pillar of the Liberal government’s climate agenda thus far. Several of them are fighting Ottawa over it in court.

Alberta’s TIER system will be subject to annual review by Environment Canada for compliance. A tax on big emitters was first introduced by the Progressive Conservative government in 2007 and later tweaked by the Notley government.

Friday’s announcement marks a rare moment of agreement between the Trudeau government and government of Premier Jason Kenney. Alberta’s leader has frequently criticized the Trudeau Liberals for what he sees as their efforts to undermine the province’s oil and gas-focused economy.

READ MORE: Feds loosen carbon-price limit for certain large polluters

Speaking to reporters on Friday, Environment and Climate Change Minister Jonathan Wilkinson said the TIER levy currently exceeds the federal threshold for output-based systems.

“Alberta’s TIER output-based system does meet and actually surpass the federal benchmark,” he said. “It is, as you know, an important part of the pricing of pollution.”

“It is, I think, a step forward in terms of ensuring that provinces across this country are taking action on climate change.”

In October, the Kenney government released a proposal for heavy emitters that included keeping the TIER levy at $30 per tonne, as it was set during the Notley government. However, the plan did not include raising it in lockstep with the federal pricing plan, which requires the price to be $50 per tonne by 2022.

Wilkinson said on Friday that that remains the case, although Alberta isn’t the only province to not have plans for raising the benchmark.

“Of course the benchmark changes in 2021 and in 2022, and provincial systems that meet the benchmark in 2020 will need to meet the benchmark in 2021 and in 2022,” he said.

“We have other provinces that have not yet confirmed publicly that they will raise it in line with the benchmark. Alberta is no different. Our hope is that Premier Kenney will work with us to do that. In the event that he doesn’t, obviously the benchmark needs to be met.”

Finance Canada also released a set of draft regulatory proposals that offer guidelines on how to integrate TIER facilities with the federal fuel charge. It included measures to ensure financial relief is provided to greenhouse operators, remote power plant operators and fishers.

In a statement, provincial environment minister Jason Nixon said his United Conservative government will continue to stand up for Alberta’s industries.

“As the federal carbon price schedule rises in the coming years, our government will continue to advocate – both in court and through negotiations — for Alberta’s ability to set our own policies, in consideration of impacts on our trade-exposed industries,” he said.

Kenney also told a press conference Friday that his government will continue to fight the federal carbon pricing plan in court, saying Alberta has a stronger case than the two other provinces who have launched lawsuits because of TIER, which will cover more than half of the province’s carbon emissions.

“We believe, frankly, that we have a stronger case than Saskatchewan or Ontario because of how robust our TIER fund is,” he said. “Our TIER program, we think, is a very detailed and credible plan for emissions reduction through the levy price that we are imposing here. We do not need the federal government to punish people heating their homes and filling up their gas tanks.”

Kenney is set to meet Prime Minister Justin Trudeau in Ottawa on Tuesday. He will also give a lunchtime speech to the Canadian Club of Ottawa on Monday.

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