With voters set to head to the polls on April 28th, the countdown to Canada’s next federal election is officially underway. Yesterday, Prime Minister Mark Carney requested the Governor General to dissolve Parliament and call an election—just over a week after taking office and removing the consumer-facing carbon tax (federal fuel charge) as his first official act. This move reignited a policy-tug-war over the past week, with the Conservatives vowing, for the first time, to eliminate all forms of carbon tax including industrial carbon pricing and the Liberals promising to uphold the oil and gas emissions cap.
Following Carney’s carbon tax announcement on March 14th, an extra edition of the Canada Gazette Part II was published to set the federal fuel charge to zero dollars for all fuels and combustible waste under the Greenhouse Gas Pollution Pricing Act (GGPPA). The Governor General has the authority to amend lists of fuel charge rates in the Act. The GGPPA comprises two parts: Part 1—Fuel Charge, and Part 2—the Output-Based Pricing System (OBPS) for large industrial emitters.
The federal fuel charge is currently implemented in Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. This tax, distinct from industrial emitter programs in each province, was previously set to rise from CAD 80 to CAD 95 per tonne on April 1 and will no longer need to be reported or paid after March 31, 2025. Industrial carbon pricing remains unchanged at this time, with Carney reaffirming his commitment to strengthening it as part of his Climate Plan.
In response, Conservative leader Pierre Poilievre pledged to repeal the GGPPA entirely, eliminating both the fuel charge and federal OBPS regulations, effectively removing carbon pricing for heavy emitters. His approach prioritizes “technology, not taxes,” expanding tax credits for clean technology and rewarding industries that produce lower-emission goods. This marks the first explicit commitment from the Conservative Party to eliminate industrial carbon pricing.
While provinces manage their own industrial emitter programs, a federal repeal could influence provincial policies. However, Alberta, B.C., and Quebec have longstanding carbon pricing systems. Alberta pioneered carbon pricing in 2007, and B.C. followed with its carbon tax in 2008. Although B.C. will remove its consumer carbon tax, it remains committed to its new OBPS. Quebec’s Cap-and-Trade program is continuing with its regulatory developments and potential future linkage with Washington. Therefore, it is not expected to be impacted by a change in government at this time.
Throughout the week Prime Minister Carney asserted his commitment to maintain the oil and gas sector emissions cap, targeting a 35% reduction below 2019 levels between 2030 and 2032 through a cap-and-trade system. The system would be implemented in addition to industrial carbon pricing with select compliance offsets eligible for use under both systems. The proposed policy has been met with strong opposition from provinces such as Alberta which launched a ‘Scrap the Cap’ campaign last year. Carney and Alberta’s premier Danielle Smith met face-to-face last week for the first time, while Poilievre committed to removing the oil and gas cap in addition to industrial carbon pricing.
With starkly different climate policies at stake, this election will determine Canada’s future approach to climate action. It will also provide much-needed clarity for industry and clean technology investment, which are largely taking a wait-and-see approach as the election campaigns unfold over the next few weeks.
Join ClearBlue on April 9th at our next public webinar for an in-depth exploration of the potential impacts of the upcoming Canadian election on carbon markets.