The first day in office for new Prime Minister Mark Carney was marked by the nullification of the consumer carbon tax rate in Canada.
Speaking with journalists in the usually off-limit cabinet room Carney said: “This will make a difference to hard-pressed Canadians, but it is part of a much bigger set of measures that this government is taking to ensure that we fight against climate change, that our companies are competitive and the country moves forward.”
The move also has political impact with Carney looking to challenge Conservative leader Poilievre in the upcoming election. The removal of the tax now leaves Poilievre looking for a new key messages after much his campaign was focused on the promise of removing the carbon tax.
Another potential component of the upcoming election campaign is Carney’s decision to keep rebates that are scheduled for April. There is an expectation that the election date will be announced then, giving an informal start to the campaign. Recent polls are showing the gap between Conservatives and Liberals tightening after Justin Trudeaux announced his resignation.
Regardless, the new Prime Minister of Canada is not seen as a climate-sceptic. He is the UN Special Envoy on Climate Action and Finance and is credited with bridging the gap between climate and finance.
After announcing the fate of the carbon tax Carney quickly provided assurances that he plans to shift the cost of decarbonization to emitters and work on developing a more carrot-like incentive system, as opposed to stick approach which led 64% of respondents to a recent poll to say they want the carbon tax to be removed.
Canada carbon tax demise not in sync with rest of the world (apart from the U.S.)
The tax was part of Greenhouse Gas Pollution Pricing act and was seen as a key component of Trudeau’s climate drive during his first term.
It was in line with efforts in the UK and EU where industrial players were included in emission trading systems that set limits to carbon emissions and allocated a gradullay shrinking amount of allowances for them.
Canada now joins the U.S. where efforts to reduce or entirely remove policies and incentives for decarbonization are popular with the new administration. Cap-and-trade systems in 13 states will remain in place with California and Washington being the largest, with the other 11 working together under the Regional Greenhouse Gas Initiative (RGGI) in the northeast.
Countries like China and India, currently registering the fastest growth rates at scale, are headed in the other direction at their own speed. China is set to expand its market to include steel, cement and aluminum, while India has announced it will launch its market in 2026.
Relevant: China To Add Steel, Cement and Aluminum To Its Carbon Market
Carbon taxes, trading systems and pricing
As of 2024, approximately 6% of global greenhouse gas emissions are covered by various forms and levels of carbon taxes. When considering all carbon pricing mechanisms—including both carbon taxes and emissions trading systems (ETS)—coverage extends to about 24% of global GHG emissions.
The coverage of GHG emissions by carbon pricing mechanisms has been increasing over the years, reflecting global efforts to mitigate climate change. However, a significant portion of global emissions remains unpriced, indicating ongoing challenges in achieving comprehensive global carbon pricing.
Read more: Canada Invests More Than $9.5M In Innovative Carbon Management Technologies
