End of an Era: Canada Eliminates Consumer Carbon Tax

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Canada’s consumer carbon tax has now been eliminated by newly sworn-in Prime Minister Mark Carney. Canada’s carbon pricing system was established by the Liberal government in 2019. The consumer taxes were part of a dual pricing scheme that introduced fuel surcharges for consumers, and a separate pricing system for highly polluting industries. The system aimed to encourage consumers to switch to options which use less fossil fuels and thus help drive Canada’s energy transition. Individual provinces could also opt to create their own carbon pricing systems, as was done in British Columbia. Following suit, BC Premier David Eby has stated that the provincial consumer carbon tax will be eliminated following the removal of federal requirements. BC’s carbon pricing system was established in 2008, and imposes higher charges on fuel than the federal program requires. In BC, the longstanding taxes were shown to have helped lower emissions without causing economic harm, and were perceived globally as a successful example of carbon tax systems. 

In the wake of the affordability crisis as well as economic and political turmoil, carbon taxes have become an increasingly divisive issue in Canada. Politicians such as Conservative leader Pierre Polievre placed the blame for the increasing costs of living on the tax. Consequently, the carbon tax was predicted to be a top issue in the as-yet unscheduled upcoming federal election, meaning its removal has major political implications. 

The elimination of carbon pricing means one of Canada’s main emissions reduction policies is gone. Carney has outlined plans to place increasing responsibility in large industrial polluters and create alternative incentives to encourage sustainable consumer choices. With economic conditions unstable and an election in the likely future, it remains to be seen how Canada’s next slate of climate policies will shape up.