PM Carney Scraps Consumer Carbon Tax in First Major Policy Shift

In a decisive first act as Prime Minister, Mark Carney has eliminated Canada’s consumer carbon tax, delivering on a pledge to move away from policies that have sparked public division. The tax was officially repealed through an order-in-council on Friday, signaling a shift in the Liberal government’s approach to climate policy and economic relief.

The carbon pricing system, introduced by former Prime Minister Justin Trudeau in 2019, was originally designed to push businesses and individuals toward cleaner energy choices. However, as inflation climbed in recent years, the tax became a growing political flashpoint. Conservative Leader Pierre Poilievre capitalized on the discontent with his “Axe the Tax” campaign, which gained strong support among voters frustrated by rising costs.

Carney, a longtime advocate of carbon pricing, acknowledged during his leadership bid that the existing framework had become too contentious. He promised to repeal it, arguing that climate action should be pursued in a way that doesn’t add financial pressure on Canadians.

While the consumer tax is now scrapped, the industrial carbon pricing system for large emitters will remain intact, ensuring that corporate polluters continue to pay. The federal government had already implemented a three-year pause on the carbon tax for home heating oil in 2023, a move that was seen as an early concession to affordability concerns.

The repeal also means an end to rebates that were provided to households in provinces where the tax applied. Environmental groups have raised concerns about the potential impact on Canada’s emission reduction targets, while business leaders have welcomed the decision as a necessary step toward economic stability.

Carney’s leadership will now be tested as he navigates the challenge of balancing climate commitments with affordability—an issue likely to shape the political landscape in the months ahead.