Liberal leadership candidate Mark Carney will abandon his party’s consumer carbon tax and replace the policy with an incentive program that rewards Canadians for making green choices.
The former Bank of Canada and Bank of England governor will make the announcement at an event in Halifax later Friday morning. CBC News will stream the event live on CBCNews.ca.
“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”, Carney said in a statement released to the media.
The statement explains that the green incentive program he’ll introduce would reward Canadians for buying energy efficient appliances, electric vehicles or better home insulation.
The Carney campaign says replacing the carbon tax with a green incentive program will be one of a suite of measures a Carney government would introduce to combat climate change.
Other measures include investing in energy-efficient buildings, electrified transportation and making big polluters pay.
The plan would also see trade measures introduced to “ensure fairness for Canadian industries in the global economy to ally with those countries engaged in the fight against climate change.”
The statement says that by helping to make Canadian businesses more competitive Canada would be able to “leapfrog the United States in international markets.”
Conservative Leader “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,” Carney said in the statement.
Carbon pricing falls out of favour
The consumer carbon tax began in April 2019 at a cost of $20 a tonne and increased by $10 a year to $50 by 2022, when it began rising by $15 a year. In April 2024, it increased to $80 a tonne on its way to hitting $170 a tonne by 2030.
The federal carbon price, or backstop, does not apply in Quebec, British Columbia and the Northwest Territories because they have their own carbon pricing systems that meet the federal standard.
In provinces using the federal backstop, the price on carbon is applied to emitting fuels through fuel charge rates that vary from fuel to fuel based on the amount of CO2-equivalent emissions they generate when burned.
Ninety per cent of government revenues from the carbon tax are returned to households through Canada Carbon Rebate payments issued every quarter.
The other 10 per cent of carbon tax revenue is directed to programs that help businesses, schools, municipalities and other grant recipients reduce their fossil fuel consumption.
The Office of the Parliamentary Budget Officer (PBO) has found that most households — particularly those at the lower end of the income scale — end up profiting when what they pay through the carbon price is offset by what they receive in rebates.
Erin O’Toole, who served as Conservative leader in the 2021 federal election, campaigned on his own carbon pricing policy. But Poilievre has made eliminating the tax a central part of his opposition to the Liberal government.
Former finance minister and deputy prime minister Chrystia Freeland, who is also running for the party leadership, has told CBC News that should she win the contest she will also scrap carbon pricing.
Freeland’s campaign said the policy replacing the tax would be developed in collaboration with the provinces and territories.
Despite the two front-runners in the leadership now pledging to cut the tax, Karina Gould, the former government House leader challenging them for the leadership, has only promised to hold the tax at its current level.
The Liberal leadership will be decided in a vote on March 9.