Carney Promises to Remove Consumer Carbon Tax as PM, Make ‘Big Polluters Pay’

Former Bank of Canada governor Mark Carney arrives for the Liberal caucus retreat in Nanaimo, B.C., on Sept. 10, 2024. The Canadian Press/Darryl Dyck

Liberal Party leadership candidate Mark Carney said as prime minister he would cancel the consumer carbon tax and instead make “big polluters pay.”

“Since Canada’s current climate policy has become too divisive, it’s time for a new, more effective climate plan that everyone can get behind,” Carney said during an announcement in Halifax on Jan. 31.

Carney, a former Bank of Canada governor who previously served as the United Nations special envoy for climate action, said his plan would “immediately” remove the carbon tax and instead implement “a system of incentives to reward Canadians for making greener choices” like buying energy-efficient appliances, electric vehicles, or heat pumps.

Carney said “big polluters” would be asked to pay for climate incentives by developing and integrating a new “consumer carbon credit market” into Canada’s industrial pricing system. He said this would ensure Canadians are not forced to pay for climate initiatives.

Carney said if Ottawa were to merely remove the carbon tax without replacing it with a new policy, then Canada’s emissions would not decrease as quickly, and Canadians would be “worse off” because the Canada Carbon Rebates would end.

Carney said his government would also penalize “high-polluting foreign imports” by developing a carbon border adjustment mechanism that would promote Canadian jobs and align the country with Canada’s allies who are “still engaged in the fight against climate change.”

Carney told reporters that while he believed the federal government’s carbon tax had worked to reduce the country’s emissions, many Canadians have negative “perceptions” of the policy “without fully recognizing the positive impacts the rebate has made. Carney accused Tory leader Pierre Poilievre of fuelling the negative perceptions of the tax.

Poilievre reacted to Carney’s announcement on Jan. 31 by calling it a “little tax trick.” He said on social media that Carney would pause the carbon tax until after the federal election, after which he will “bring in a much bigger carbon tax when he no longer needs your vote, but still needs your money.”

Carney was asked by reporters how he would ensure that large polluters would not pass the added costs onto Canadians, and he responded that corporations would not necessarily do this due to the structure of the emissions regulations.

“There’s ways that ensures that it doesn’t come back down [to Canadians], in part because the nature of the polluters who are there, and the fact that we integrate this with a carbon border adjustment mechanism,” he said.

The federal carbon tax originally came into effect at $20 per tonne in 2019, has climbed by $15 annually since, and is set to hit $170 a tonne in 2030. While the Conservative Party has argued the tax has increased the cost of essentials like food, fuel, and heating during Canada’s cost-of-living crisis, the Liberal government has argued most Canadian households get more money back in rebates than they pay through the tax.

The Parliamentary Budget Office released a report in October 2024 that found the average Canadian household would receive more from the Canada Carbon Rebate than what they pay out in the federal carbon tax and related goods and services tax by 2030. However, the report said that households were worse off when the economic impact on Canada’s GDP and investment income is factored in.

Several other candidates in the Liberal leadership race have distanced themselves from the carbon tax. Former Deputy Prime Minister Chrystia Freeland said on Jan. 19 that the price on pollution had become unpopular with Canadians and the government would “have to listen” in response, while former government House leader Karina Gould said she would cancel the upcoming carbon tax hike on April 1.

Carney is currently the frontrunner in the race to become Liberal leader, which is set to wrap up on March 9, and has received the most endorsements of any candidate. According to a Jan. 29 poll from Abacus Data, 64 percent of Liberal voters have a positive impression of Carney, compared to 54 percent for Freeland, and 27 percent for Gould.

If Carney were to win the race, he would need to run for a seat in a byelection or general election. Carney could choose to ask Governor General Mary Simon to dissolve Parliament when it returns from prorogation on March 24 to call an election. The leaders of all opposition parties have vowed to vote to bring the government down when Parliament resumes.

Carney on Trump Tariffs

In his remarks, Carney commented on the threat of tariffs from the United States, saying that Canada would “never, ever bow down to a bully.” U.S. President Donald Trump said a day earlier that he will put 25 percent tariffs on Canada on Feb. 1, which “may or may not rise with time” and could also apply to oil and gas imports.

Carney said he and his fellow Liberals “stand foursquare behind” the ministers negotiating with the U.S. administration, and that he would not say anything that “front runs or interferes with that.” But he said Canada needed to be prepared to “walk away” from negotiations.

He also said Ottawa should impose retaliatory, dollar-for-dollar tariffs if the U.S. plan goes ahead, and “target those tariffs where they have maximum impact, in the United States and minimum impact in Canada.” Carney also said the money Canada brings in from tariffs should be “recycled” back to support Canadians.