Industrial carbon taxes, fuel rules still drive up costs for Canadians

CALGARY — The federal government’s decision to eliminate the consumer carbon tax last year was met with applause by many Canadians, but elements of Canada’s carbon taxing framework have remained in place, and critics have argued they are continuing to drive up household costs.While the levy on gasoline at the pumps and home heating — estimated to have added roughly 17.6 cents per litre at the pump — has been removed, it appears Ottawa is relying on the industrial carbon tax to meet its climate targets laid out in Prime Minister Mark Carney’s “Net-Zero” policy.The industrial carbon tax applies to large emitters such as refineries, manufacturers, and fuel producers, and according to Environment and Climate Change Canada, it is designed to reduce greenhouse gas emissions while limiting economic harm.Ottawa says its approach creates incentives for improvement while protecting jobs and industry competitiveness but critics have argued those costs have just been passed on to average Canadians.A 2025 Leger poll found that 70% of Canadians believe businesses pass most or some of the cost of the carbon tax on to consumers.Only 9% believed businesses absorb most of the cost themselves..In the recent Ottawa–Alberta memorandum of understanding (MOU) on energy, the industrial carbon tax was set to rise to a minimum effective credit price of $130 per tonne.Carney stated the change represents "more than a sixfold increase” in the tax on carbon and has argued the revised system ensures large companies bear greater responsibility for emissions reductions.“We are making the large companies pay for everybody,” Carney stated.However, the Canadian Taxpayers Federation (CTF) has disputed that claim.Franco Terrazzano, the CTF’s federal director, said higher industrial costs inevitably flow through the economy.“Carbon taxes on refineries make gas more expensive, carbon taxes on utilities make home heating more expensive, and carbon taxes on fertilizer plants increase costs for farmers, and that makes groceries more expensive,” he said.“The hidden carbon tax on business is the worst of all worlds: higher prices and fewer Canadian jobs.”The Canadian Climate Institute (CCI) — which alleges there is no impact on everyday Canadians from the industrial carbon tax — says its modelling shows the system will reduce household consumption by approximately 0.1% by 2030, with near-zero impacts in the mid-2020s.The CCI attributes the limited effect to the system’s design, noting that most emissions are covered by benchmarks and that effective prices paid by industry average around $10 per tonne or less, well below the headline federal carbon price..Poll suggests strong support in Saskatchewan for scrapping industrial carbon tax.Other analyses have been more critical of the tax.A March 2025 report by Resource Works argues the carbon tax regime places domestic producers at a competitive disadvantage.The report also notes Canada collects a disproportionately large share of global carbon taxing revenues despite accounting for less than 2% of global emissions, and believes Canadian oil and gas producers face significantly higher carbon costs than many US competitors.Resource Works also links higher carbon costs to weaker investment in Canada’s energy sector, noting capital investment has recovered more slowly than in the United States.In addition to industrial taxes, the federal Clean Fuel Standard (CFS) has become a major focal point for critics.The regulation requires fuel suppliers to reduce the carbon intensity of fuels or purchase compliance credits.Analysis cited by the CTF, based on modelling by the Parliamentary Budget Officer (PBO), estimates the CFS currently costs Canadians up to seven cents per litre at the pump and will again rise to 17 cents per litre once regulations are fully implemented in 2030.Jay Goldberg, Canadian Affairs Manager at the Consumer Choice Center, has said that by 2030, the CFS “will cost the average household between $384 and $1,157, depending on the province in which Canadians live.”“It will cost the overall economy $9 billion a year,” Goldberg stated.Despite Ottawa maintaining the industrial carbon tax and fuel regulations are essential to meeting Canada’s climate commitments Canadians will continue to feel the effects through higher prices across the economy in the near and far future.

Industrial carbon taxes, fuel rules still drive up costs for Canadians

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