Canada’s Carbon Tax: What’s Really Going On?

Most Canadians believe climate change is real, but many don’t understand or trust the carbon tax. Let’s break down what’s happening and why the policy sparked so much debate.

For more information, check out the article “Perceptions and Realities of Canada’s Carbon Tax: Disconnect Between Climate Concern and Policy Support” by Lark Scientific’s researcher Denis Koshelev.

What is the Carbon Tax?

• It’s a fee on fossil fuels (like gas and oil) to encourage people and companies to use cleaner energy.

  
  

• Introduced in 2019, it started at $20 per tonne of carbon and was supposed to increase to $170 by 2030.

  
  

Do Canadians Support the Carbon Tax?

Canadians are split:

• 49% support the carbon tax

  
  

• 44% oppose it

  
  

Most people aren’t sure it really helps the environment. Only 21% think it works, while 46% think it doesn’t.

Does It Actually Work?

Yes, but not everyone sees it. In British Columbia, a similar tax helped cut emissions by 5 to 15% since 2008.

The Canadian Climate Institute says the policy could cut emissions by up to 50% by 2030.

But here’s the catch:

• Industrial carbon pricing (for factories, etc.) will reduce 3x more emissions than the tax on individuals.

  
  

• People just don’t see the impact in their day-to-day lives.

  
  

What About the Rebates?

The government has given back carbon tax money as rebates to help families with higher fuel costs.

But the system is confusing and uneven:

A low-income family in Alberta might get $1,800/year, while a higher-income person in Ontario might get $1,200.

Rural families who drive more feel it is unfair.

Politics Changed Everything

The carbon tax became a major political issue in the 2025 federal election.

Pierre Poilievre, the Conservative leader, promised to “axe the tax” during his campaign.

Prime Minister Mark Carney did just that. He ended the consumer carbon tax.

But the government didn’t get rid of carbon pricing altogether. PM Carney is shifting to a cap-and-trade system for big polluters.

What’s Next? Industrial Carbon Pricing

The focus is now on companies that produce lots of pollution.

Canada’s Output-Based Pricing System (OBPS) charges large companies and uses that money to fund clean energy.

In March 2025, the government gave $150 million to 38 clean technology projects using OBPS funds.

What’s Missing?

Right now, there’s no new consumer tax or simple plan to replace it.

Some experts worry that without it, we may not meet climate goals.

The link between pollution fees and green energy spending is now less clear.

Most Canadians care about the climate. But, confusion, politics, and mixed results made the carbon tax hard to support. With the consumer carbon tax now gone,

Canada’s climate plan will rely more on industrial solutions and clean tech funding. Whether this is enough, we’ll have to wait and see.