Alberta said on Sunday it will implement an economy-wide tax on carbon emissions in 2017.
The provincial government estimated the plan, including a pledge to phase out pollution from coal-fired electricity generation by 2030 and a limit on emissions from the province's oil sands industry, would generate $3 billion in annual revenue.
Backed by prominent representatives from industry and the environmental movement, Premier Rachel Notley said the province was trying to do the right thing for the future.
Notley will bring her plan into a meeting on Monday of Canadian premiers with Prime Minister Justin Trudeau, to prepare Canada's national strategy at the upcoming Paris climate change summit.
Alberta has the world's third-largest crude reserves, but its oil sands industry is also Canada's fastest growing source of greenhouse gas emissions.
That status has prompted fierce opposition from environmental groups to proposed pipelines that would allow the industry to access new markets, including the recently rejected Keystone XL pipeline, proposed by TransCanada Corp (T.TRP)
Alberta's energy sector has also been hammered with thousands of layoffs in recent months due to slumping global oil prices.
Several major oil companies, including Suncor Energy Inc (T.SU), Cenovus Energy Inc (T.CVE), Canadian Natural Resources (T.CNQ) and the Canadian division of Royal Dutch Shell Plc (T.SHC) endorsed the government proposal to set a cap that would still allow overall oil sands emissions to grow by about 40%.
Environmental groups, including the Pembina Institute, Forest Ethics and Environmental Defence Canada, also endorsed the plan.
Greenpeace Canada described the plan as an "historic first step" to slowing growth of pollution, but said more needed to be done by all jurisdictions to prevent dangerous changes to the climate.
