Why Industrial Carbon Pricing Is Important
by Stephanie Ho Lem, CHCA Director of Living Green
2025 is becoming an eventful year. Prime Minister Trudeau resigned, and Carney replaced him calling an election for April 28. While Carney was interim, he removed the consumer carbon tax effective April 1. Canada’s carbon pricing system, under the Greenhouse Gas Pollution Pricing Act, consists of two main types: a fuel charge for consumers and an output-based pricing system for industries. The carbon tax was designed as a financial incentive for people and businesses to change their behaviour to burn less fossil fuel and transition to greener forms of energy, thus helping Canada lower its emissions.
The carbon tax was later renamed carbon rebate, but the change was too late. Not understanding the incentive, the carbon tax divided the country. The price on pollution for gasoline translated to a cost of about 17.6 cents per litre. Since my car uses premium gas, currently with the tax removal, I pay about $10 less for 50 litres. Enmax is my utilities provider and in their annual energy report, my house compared to other homes in my neighbourhood is more energy efficient. Overall, I am ahead and will miss the annual carbon tax rebate I’ve been receiving. In fact, most Canadians will likely feel the loss of the rebate.
Climate change remains a problem. How can our governments get everyone behind a plan to reduce carbon?
It would make sense to keep industrial carbon pricing as it is one of the most important policies Canada has for cutting climate pollution and creating a competitive clean economy. Carbon intensive operations by emitters are monitored and if they exceed, they are required to pay. While others that produce less can profit by having surplus credits to sell. This scenario will attract investment for emissions-reduction projects.
How it works is that firms can generate credits they can trade for cash, helping Canadian firms compete for international capital, at lower cost to governments than subsidies like those provided under the Inflation Reduction Act in the United States.
According to Michael Bernstein, the president of Clean Prosperity, “the industrial carbon price is the single largest policy contributing to reducing Canada’s overall emissions…It’s the one that we’ve seen many industry associations and others be most in favour of…Industrial pricing should be the core of driving reductions across heavy industry, which is half of all the emissions in Canada.”
As a Canadian, although we produce less than 2% of the world’s carbon emissions, I recognize climate change is happening and will note one of David Suzuki Foundation’s comments: “As a developed nation with a high standard of living, we are more able than most to manage the costs of a transition away from fossil fuels. We therefore have the moral responsibility to cut emissions at home and to support developing countries with the increasing costs of responding to the climate crisis.”
Please note that the content provided is for informational purposes.
Sources: Canadian Climate Institute, David Suzuki Foundation, Clean Prosperity
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