Canada to Remove Consumer Carbon Price Effective April 1, 2025
The Government of Canada has previously announced that, effective April 1, 2025, the federal fuel charge no longer applies, and provinces and territories are no longer required to implement a consumer-facing carbon price. Instead, the federal carbon pricing system now focuses on industrial emissions, maintaining a price on pollution for large emitters as a key part of Canada’s Emissions Reduction Plan.
This article provides a summary of the most relevant measures and therefore does not cover all changes. For more details, please refer to the Ministry of Finance’s announcement of the removal of the consumer carbon tax and the government’s Fuel Charge Notice FCN16.
What This Means for Consumers and Businesses
Federal Fuel Charge
The federal fuel charge was established under Part 1 of the Greenhouse Gas Pollution Pricing Act (GGPPA). Until March 31, 2025, it applied in Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, Nunavut, and Yukon.
As part of Canada’s carbon pricing system, the federal fuel charge served as a benchmark—provincial and territorial governments were required to implement a system that met or exceeded the federal standard. If a province or territory did not have an equivalent or more stringent pricing mechanism in place, the federal system applied by default.
For a deeper dive into the federal fuel charge and its mechanics, refer to our previous article: Pollution pricing in Canada – the fuel charge.
Federal Fuel Charge Ends
As of April 1, 2025, the federal fuel charge has been set to zero and no longer applies.[1]
It is important to note that Part 1 of the GGPPA remains in force. Under the GGPPA, the government had the ability, via regulation, to reduce the rate to 0%, and this decision could be reversed just as easily.
After March 31, 2025:
- Registered emitters under a provincial output-based performance standards system are no longer required to report facility changes to the Minister of Environment and Climate Change. By September 30, 2025, all remaining obligations for these emitters will be eliminated.
- There is no longer an obligation to self-assess on inventories on hand.
- No new registrations are required for any category or fuel type, and all existing registrations will be canceled as of November 1, 2025.
Notably, British Columbia Premier David Eby announced that there will be no further increases to the provincial carbon tax after April 1, 2025, and that the consumer carbon tax will be removed entirely by the end of the year.
Canada Carbon Rebate for individuals to Be Phased Out
With the elimination of the fuel charge, the final Canada Carbon Rebate payment will be issued starting April 22, 2025. Canadians must file their 2024 tax return to receive this payment. A family of four could receive up to $456, depending on their province.
Final Fuel Charge Proceeds for Businesses, Farmers, and Indigenous Governments
- Small businesses will receive a final Canada Carbon Rebate for Small Businesses payment for the 2024-25 fuel charge year.
- Farmers will receive a final refundable tax credit under the Return of Fuel Charge Proceeds to Farmers Tax Credit.
- Indigenous governments will continue to receive proceeds through the Fuel Charge Proceeds Fund, with $531.5 million in total funding from 2020-21 to 2024-25, consistent with the amounts previously specified by the Minister of Finance.
What’s Next? Strengthening Industrial Carbon Pricing
While consumer carbon pricing is being eliminated, the federal government will continue to require carbon pricing for industry. The government plans to update the federal benchmark criteria, ensuring that industrial pricing systems maximize emissions reductions while maintaining competitiveness.
This is expected to help Canada transition to a low-carbon economy and deepen access to markets like the European Union, which increasingly favor lower-emission goods.
[1] Regulations Amending Schedule 2 to the Greenhouse Gas Pollution Pricing Act and the Fuel Charge Regulations: SOR/2025-107; Regulations Amending the Output-Based Pricing System Regulations: SOR/2025-108.
