*Update: On March 15, 2025, the Canadian Federal Government announced changes to the consumer carbon tax. Effective April 1, 2025, the carbon tax will be set to $0. This means that after March 31, 2025, the carbon tax will no longer be applied to natural gas usage.
Customers will still see carbon tax charges for usage incurred up to and including March 31, 2025. For usage periods after March 31, 2025, the line-item Carbon Tax will read $0.00. Eligible Canadians will receive a final Canada Carbon Rebate payment starting April 22, 2025.
To learn more about the change to Canada’s carbon tax, click here for our detailed guide.
The carbon tax seems to be at the centre of an ever-raging debate, from the initial controversy over its impact on Alberta to the liberal debate that is currently in place over the federal imposition of the carbon tax across Canada. Now some changes have been introduced, but what does that mean for those who are either already paying the carbon tax or who are awaiting its imposition?
Potentially very little.
The new changes are significant, but they are also focused towards specific industries, which include the steel and iron, lime, nitrogen fertilizers, and cement sectors. They are also only going to impact those whose provinces have not imposed their own carbon tax system.
The modifications are ultimately intended to keep heavy industries from losing interest in Canada—especially now that our Southern neighbours, who don’t impose a carbon tax at all, are introducing tariffs that could add further difficulty to these heavy industries, making it more viable for them to cross borders to operate their business than to remain in Canada.
How will the changes to the carbon tax help?
The new modifications introduce credits to heavy industries who emit high levels of taxed emissions. In other words, the rate of the proposed carbon tax will not be lowered, nor will these industries have to pay less for their emissions, but they will receive a subsidy in the form of credits to help offset production costs (the cost of making a widget) so the industries won’t have to increase pricing to manage production. The credits are issued per widget, which means the industry doesn’t have to produce fewer widgets to decrease the cost of the carbon tax, and a standard is used to ensure the number of credits issued is calculated based on the amount of emissions is required to produce each widget. Credits that were going to be at 70 per cent of industry standard, for instance, are, for these industries, rather set to 90 per cent. Other industries have also gone from 70 to 80 per cent.
The changes aren’t intended as a way to allow industries to back out of the carbon tax program. Rather, they still work as an incentive-based program, helping increase the gap between carbon tax cost and widget production so companies can aim to produce the same amount or more while still benefiting from producing fewer emissions. The changes attempt to ease the economic impact while still benefiting the environment, which is what the carbon tax program has always been about—making it easier and more financially viable, as well as an incentivized higher priority, for individuals and companies to make changes that will benefit the environment that ultimately supports their livelihoods.
How can you avoid the impacts of the carbon tax in your province?
The easiest way is to take advantage of the current government incentives to introduce smart thermostats and LED lightbulbs into your home and workplace, and make a conscious effort to decrease your carbon footprint. It’s the easiest way to lower the impact the carbon tax will have on you—and it’s what the program has been designed to encourage from the start.
