Mark Carney presents plan for change on consumer carbon tax

A new climate plan that creates jobs and grows our economy 

Halifax, Nova Scotia – Today, Mark Carney presented a climate policy that will bring Canadians together, lower costs for people, grow our economy, and create jobs today and in the future.

“The Consumer Carbon Tax isn’t working—it’s become too divisive. That’s why I’ll cancel it and replace it with incentives to reward people for greener choices”, Mark said.

A Mark Carney-led government will immediately remove the consumer carbon tax and instead, create a system of incentives to reward Canadians for making greener choices, such as purchasing an energy efficient appliance, electric vehicle, or improved home insulation.

This plan will be complemented by measures to: invest in energy efficient buildings and electrified transportation; have big polluters pay Canadians to make their green choices while paying their fair share for emissions; help make Canadian companies more competitive so that Canada can leapfrog the United States in international markets; and introduce trade measures to ensure fairness for Canadian industries in the global economy to ally with those countries engaged in the fight against climate change.

Mark Carney is laser-focused on lowering costs for families and will put forward major economic measures to strengthen the economy and ensure households are immediately better off.

“Pierre Poilievre pretends we have to choose between fighting climate change and growing our economy. His simplistic and misleading Axe the Tax inaction won’t work and would cost families more.” Mark offered. “We can make Canadian families better off, we can fight climate change together and build the strongest economy in the G7.”

Backgrounder:

Canada’s current climate policy has become too divisive. It’s time to come together. We need a climate policy that is unifying, credible, and predictable—to reduce emissions, drive investment, and build an economy for the future. New and more effective policies that have broad public support are now needed. It’s time for a climate policy that brings Canadians together, makes our economy more competitive, and grows jobs today and in the future.

A Mark Carney-led government will immediately remove the consumer ‘carbon tax,’ meaning consumers and small businesses will no longer pay a charge on fuels, such as gasoline, natural gas, diesel, home heating oil, etc. If nothing else changes, removing the consumer ‘carbon tax’ would create two problems. First, in the absence of further measures to make up for the lost impact of the consumer ‘carbon tax,’ Canada’s emissions would not decrease as rapidly as before. Second, without additional measures, most Canadian households would be worse off following the end of the rebate.  Pierre Poilievre’s simplistic and misleading approach to “axe the tax” doesn’t care about either problem. A Mark Carney-led government cares about both.

Our plan will directly solve both problems. We will implement policies that are at least as effective in lowering emissions, and we will bring forward new economic measures that will make Canadians better off.

Rather than reducing emissions by penalizing hard-working Canadians, we will provide real incentives to Canadian households to achieve carbon reductions, particularly in their homes and their transportation. This will be done in three ways.

First, to create a Made-in-Canada Industrial Competitiveness Strategy that fosters a clean comparative advantage, a Mark Carney-led government will:

• Improve and tighten the Output-Based Pricing System (OBPS) for large, industrial emitters to ensure carbon markets function properly. The current approach provides industrial emitters with price certainty for their emissions but price uncertainty for carbon abatement. We will work with provincial and territorial governments to avoid credit oversupply and increase transparency between systems. This will help provide policy certainty for companies and investors to drive investment to the lowest carbon opportunities. We will also extend the OBPS framework to 2035 to provide additional policy certainty and help foster Canada’s clean industrial competitive advantage.
• Promote fair competition and improve environmental outcomes by developing a Carbon Border Adjustment Mechanism. This will be done in collaboration with key stakeholders and international partnersto ensure fairness for Canadian industries, prevent carbon leakage, and better economically integrate Canada with allies in the fight against climate change. This approach would focus on ensuring fairness for—and supporting Canadian jobs in—our most energy-intensive, trade-exposed sectors, such as steel, chemicals, cement, and aluminum.
• Explore strengthening existing commitments, such as the oil and gas methane regulations, by working with provincial and territorial governments.
• Implement an efficiency mandate for low-temperature industrial heat.
• Enact federal permitting reform and cut red tape to speed up approvals of clean energy projects, including new electricity developments across generation, transmission, distribution, and storage. Current permitting processes are too complex and slow, driving up costs for consumers and delaying essential projects.

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Second, to provide investment incentives to green buildings, electrify transportation, and directly reward consumers for taking action, a Mark Carney-led government will:

• Have big polluters pay consumers to lower their carbon footprint by developing and integrating a new consumer carbon credit market with the industrial pricing system.By linking the consumer carbon market, we will improve market efficiency and maintain fiscal neutrality, while the government will ensure price certainty for consumers that supports investment.
• Introduce new consumer incentives to lower costs for families investing in our clean future, such as through home retrofits. We will enhance and recapitalize the Greener Homes Grant and improve the efficiency of the application process. These measures will be targeted to lower income households.
• Improve subsidies for heat pumps to make home heating more affordable by strengthening the current oil-to-heat pump affordability program, allowing low- and middle-income households to save more on their home energy bills.
• Increase financial incentives for energy efficient homes through alternative financing mechanisms and the Canada Mortgage and Housing Corporation.Explore offering discounts on mortgage insurance premiums for low- or middle-income households that make energy efficient renovations or purchase energy efficient homes.
• Deploy technology to speed assessments of home energy efficiency so that households can make smart choices to save money by reducing emissions.
• Phase out the use of fossil fuels in federal government buildings by 2030 to reduce government energy bills.
• Boost investment where Canada needs it most through Investment Tax Credits, Canada Growth Fund initiatives, and provisions for accelerated depreciation of private investment. For example, we will support Carbon Contracts for Difference to de-risk climate investments and we willrecapitalize the ZEV subsidy program to reinstate subsidies of $5,000 to low- and middle-income households.
• Expand Canada’s electric vehicle charging station infrastructure through green bonds and public-private financing with the Canada Growth Fund and Canada Infrastructure Bank.

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Third, to mobilize investments that create good Canadian jobs and economic growth through sustainable finance, a Mark Carney-led government will:

• Move quickly to finalize and implement the Made-in-Canada Sustainable Investment Guidelines—also known as the transition taxonomy. Nearly two years ago, representatives from Canada’s financial institutions submitted a blueprint on how to mobilize capital for transition investments, yet no meaningful action has been taken. The absence of such guidelines is eroding Canadian competitiveness.
• Implement a taxonomy for every priority sector by fall 2026. As a key early priority, we will kickstart the development of clear, science-based criteria to identify those economic activities that are in “transition.” These guidelines will apply to activities in the electricity, transportation, buildings, agriculture and forestry, manufacturing, and extractives sectors.
• Mandate broad coverage of climate risk disclosure for companies across Canada. This will increase transparency for investors to better assess climate risks and opportunities and help align capital towards a sustainable economy. We will prioritize working with provincial, territorial, and international partners and ensure disclosure requirements align with international best practice.

In the coming weeks, we will outline major additional economic measures to strengthen the economy and ensure households are immediately better off, following the removal of the rebate.

The measures announced today will reduce emissions faster than before, help Canada create jobs, build the competitiveness of our major companies, and begin to realize Canada’s immense potential to be a global leader in a clean economy. By working together and pursuing more effective policies, we can build a sustainable economy for all Canadians across generations and the strongest economy in the G7.

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