Carbon pricing in Canada is implemented either as a regulatory fee or tax levied on the carbon content of fuels at the Canadian provincial, territorial, or federal level. Since 2019, every jurisdiction in Canada has had a price on carbon pollution, and Canada’s approach is flexible: any province or territory can design its own pricing system tailored to local needs, or can choose the federal pricing system. The federal government sets minimum national stringency standards that all systems must meet to ensure they are comparable and contribute their fair share to reducing greenhouse gas emissions.

The federal carbon price is currently set at $65 per tonne, which means consumers pay a carbon levy of about 14 cents per litre of gasoline. The carbon tax applies to the purchase and use of fossil fuels and covers approximately 70% of provincial greenhouse gas emissions. The revenue from the carbon tax is redistributed to the provinces, and the majority of Canadian families receive more money back than they pay, with low-income Canadians benefitting the most.

Particular groups or sectors may require targeted support or relief, in particular because of the small number of alternative options. The federal government uses approximately 10% of fuel charge proceeds to fund programs that help small businesses, municipalities, hospitals, schools, and Indigenous communities to reduce their fuel consumption.

In conclusion, carbon tax in Canada is a pricing system implemented either as a regulatory fee or tax levied on the carbon content of fuels at the Canadian provincial, territorial, or federal level. It creates a financial incentive for people and businesses to pollute less and is widely recognized as the most efficient means to reduce greenhouse gas emissions while also driving innovation. The revenue from the carbon tax is redistributed to the provinces, and the majority of Canadian families receive more money back than they pay, with low-income Canadians benefitting the most.