Ottawa unveils plans for carbon tax, incentives in 2019

Maria Church
October 23, 2018
Written by
Oct. 23, 2018 - Ottawa will be enforcing a federal carbon tax next year in provinces that have not already developed their own versions, Prime Minister Justin Trudeau announced today.


The federal system will be imposed in Ontario, New Brunswick, Manitoba, and Saskatchewan in 2019. All other provinces and territories have developed their own systems or chose to adopt the federal pollution pricing system.

“The effects of climate change are everywhere, and they are a constant reminder of the need to act now," Trudeau said in a news release. "While climate change is the biggest challenge of this generation, it also provides the opportunity to do better while growing the economy. We are investing in Canadian companies that are on the forefront of clean technologies, and are working with provinces, territories, and municipalities to provide Canadians with more clean energy options. Protecting the environment is a responsibility we all share.”

The federal government also plans to introduce a Climate Action Incentive, which, according to the release, will more than offset what most households will pay under the new system. Other proceeds from the tax will go to the cities, schools, hospitals, businesses, and Indigenous communities to help them reduce emissions.

“Canadians know that polluting isn’t free. We are all paying the cost of storms, floods, wildfires, and extreme heat," Environment minister Catherine McKenna said in the release. "Our government is ensuring a price across Canada on what we don’t want, pollution, so we can get what we do want – lower emissions, cleaner air, opportunities for businesses with clean solutions, and more money in the pockets of Canadians. We have a plan for healthy environment and a stronger economy. Because, at the end of the day, it’s what we owe our kids.

Quick facts

  • The three provinces that already have carbon pollution pricing systems – British Columbia, Alberta, and Quebec – were also among the top performers in GDP growth across Canada in 2017.
  • According to the World Bank, 70 jurisdictions – representing about half of the global economy – are putting a price on carbon pollution.
  • Investing in the clean economy presents an enormous economic opportunity. According to the Global Commission on the Economy and the Climate, the clean economy is expected to grow to $26 trillion and create 65 million jobs worldwide by 2030.
  • Climate change has already had financial impacts on Canada, and these costs will only continue to grow. In 2016, it was estimated that larger and more intense weather events will cost the federal Disaster Financial Assistance Arrangements program around $902 million each year. The health costs of extreme weather are estimated to be over $1.6 billion a year.
  • The cost of property damages from climate change averaged $405 million per year between 1983 and 2008, but have risen dramatically to $1.8 billion a year since 2009. That number is expected to grow as high as $43 billion by 2050.
  • Since 2015, the Government of Canada has invested more than $9 billion in public transit for more than 1200 projects across Canada.
  • The federal carbon pollution pricing system has two components: the fuel charge and the output-based pricing system (OBPS) for emissions-intensive trade-exposed industries. In the provinces in which the backstop applies, the OBPS will take effect on January 1, 2019, and the fuel charge will take effect in April 2019. In Nunavut and Yukon, both components of the backstop will come into effect no later than July 1, 2019, at the same time as Northwest Territories’ price on carbon pollution.
  • To address high costs of living and energy, a full exemption from carbon pollution pricing will be granted to diesel-fired electricity generation in remote communities, and for aviation fuel in the territories.
  • In addition, a full exemption for farmers and fishers from the fuel charge would be provided for eligible fishing and farming activities. Partial relief from the fuel charge would also be provided for eligible commercial greenhouse operators.
  • We will continue to work with Atlantic provinces to advance an interconnected and efficient clean electricity grid to support growth in the region.


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