If he becomes prime minister, Mark Carney will ‘immediately remove’ the consumer carbon tax

Liberal leadership candidate Mark Carney addresses U.S. President Donald Trump’s tariff threats.

Liberal leadership hopeful Mark Carney says – if he were to become prime minister – his government would “immediately remove” the consumer carbon tax and replace the policy with an incentive program to “reward Canadians for making green choices.”

“It means that you’ll no longer have to pay more to fuel your car or heat your home, but when you choose an energy-efficient appliance or an electric car or home insulation, you will be rewarded, and we will get the big polluters to pay for it,” Carney said during a campaign event Friday in Halifax.

The carbon tax would also be removed for small- and medium-sized businesses.

This marks Carney’s first policy announcement since declaring his intention to run for Liberal leader. The former Bank of Canada governor, who recently worked as a United Nations special envoy for climate action, has previously defended the consumer carbon tax.

Asked about his shifting stance, Carney said the policy has “become very divisive for Canadians,” in part due to misinformation around it.

“We are in this situation, and it’s important that climate policy has brought buy-in. There’s a better way to do things,” Carney said. “We’ve worked on coming up with a better way to do things, which keeps an element of the price on pollution, the most important element, which is the industrial price.”

In a statement, the Conservatives claim Carney will “pause Trudeau’s carbon tax until after the election and then bring in a bigger tax with no rebate.”

“Whatever he tries to tell Canadians now, Carbon Tax Carney has been Justin Trudeau’s Economic Growth Advisor, who has been saying for years not only that he supports consumer carbon taxes but that they need to be even higher,” the statement goes on to say.

How will green incentives work?

Carney says his climate policy will both lower emissions and bring forward new economic measures that will “make Canadian families better off.”

Speaking on Friday, Carney says climate incentives for Canadians would be funded by big polluters “by developing and integrating a new consumer carbon credit market into the industrial pricing system.”

Carney says his government would improve and tighten the output-based pricing system, which has industrial emitters provide compensation if they exceed greenhouse gas limits, and provide more incentive for those companies to reduce emissions.

Consumer rebates would then be packaged as a credit that large industrial emitters can purchase and use against their own emissions.

“We can structure this so that there’s no cost to the taxpayer or recycle some of that money back into other climate action,” Carney said to reporters.

According to Carney’s plan, “specific credit levels” could be used towards appliance and electric vehicle purchases, saying “households are looking at fixed-level, dollar levels of rebates that they will get for taking those steps.”

If elected, Carney also says his government would introduce and improve incentives for home retrofits and subsidies for heat pumps.

Where do other Liberal contenders stand on the consumer carbon tax?

Carney has received the endorsement of multiple cabinet ministers, including Prime Minister Justin Trudeau’s environment and climate change minister Steven Guilbeault, who has been a staunch defender of the policy.

But last week, even Guilbeault conceded that while he believes “the consumer price on pollution is one of the best tools we have to fight climate change,” he admitted “it’s not the only one we have.”

Fellow Liberal leadership contender and Trudeau’s former deputy prime minister Chrystia Freeland has already said she would scrap the consumer carbon tax. Former government House leader Karina Gould – who is also in the race – says she will pause the upcoming April 1 increase.

Meanwhile, former Liberal MP Frank Baylis has said he would fix the carbon price, but did not say how.

The future of the consumer carbon tax — a marquee climate policy from Prime Minister Justin Trudeau’s government — has come under the spotlight during the Liberal leadership race.

The consumer carbon tax came into effect in 2019, under the Trudeau government, and has grown to be unpopular among Canadians.

The Conservatives have used the policy to attack Liberals for years and called for a “carbon tax election.” The tax has also received significant pushback from most premiers, including Liberal Newfoundland and Labrador Premier Andrew Furey, and some Liberal MPs have even expressed a desire to scrap it.

This April, the price on carbon is set to increase to $95 a tonne from $80 a tonne in provinces where the federal backstop applies, costing drivers an extra 3.3 cents per litre at the pump.

The tax is scheduled to increase another $15 each year until it reaches $170 a tonne in 2030. To offset the cost, Canadians who live in regions where the backstop applies will receive a quarterly payment known as the “Canada Carbon Rebate.”

The Liberal party will pick its next leader on March 9.