OTTAWA — Liberal leadership contender Mark Carney is backing away from Prime Minister Justin Trudeau's consumer carbon pricing regime but will keep industrial pricing in place.
“Since Canada's current climate policy has become too divisive, it's time for a new, more effective climate plan that everyone can get behind," Carney said at an event in Halifax Friday morning.
The plan he outlined largely swaps the stick for the carrot for Canadian households. It includes financial incentives for green purchases — things like more energy efficient appliances, electric vehicles and improvements to home insulation.
Carney, a former Bank of Canada governor who has spent the last several years as a United Nations special envoy for climate action, said he would have big polluters, including oil and gas companies, help cover the cost of allowing Canadians to make those choices while still paying "their fair share for emissions."
Carney said Friday he will introduce a measure to counter competition from large polluters based in nations with slack environmental standards through a new "carbon border-adjustment mechanism," following in the footsteps of the European Union. That policy would work like a tax or tariff on imports from countries with environmental policies the federal government considers to be substandard.
Conservative Leader Pierre Poilievre has said he doesn't believe the Liberals will abandon consumer carbon pricing under new leadership.
The Conservative leader branded Carney's announcement a "tax trick" in a video published on social media after Carney's event on Friday. Poilievre said the plan means more taxes down the road if Carney wins the next election.
"You know who will love this idea? President Donald Trump," Poilievre said. "Here we have the threat of U.S. sanctions on our industry, and Mark Carney thinks now is the time to hit our businesses with higher taxes? You can picture President Trump calling Canadian businesses and telling them to move south of the border where there is no carbon tax and other taxes are dropping."
There is no federal U.S. carbon price but some individual states, such as California, have adopted their own.
Carney said he must dispense with the consumer-facing carbon price because the country has become polarized over the policy, due to "misinformation" pushed by Poilievre.
The NDP sought to discredit Carney's environmental credentials on Friday by pointing out that he had to walk back a claim in 2021 that his firm Brookfield Asset Management Inc. had achieved a net-zero portfolio.
Carney's move away from the consumer carbon price is likely the last nail in the coffin for one of Trudeau's signature climate policies. Most of the other Liberal leadership candidates are vowing to end or at least freeze the existing consumer carbon price charged on fossil fuel purchases.
Rival candidate Chrystia Freeland, who came out against the consumer carbon price weeks ago, slammed Carney for the timing of his announcement.
She said it is "truly out of touch" for Carney to be talking about anything other than the "very real, generational, existential, historic threats Canadians are facing from the United States," with President Trump still poised to hit Canada with tariffs on Saturday.
Carbon pricing has been in place since 2019 and charges $80 per tonne of emissions.
It has two portions. The first is the industrial system, which charges a price on emissions from large polluters like oilsands mines, auto factories and steel manufacturers.
The consumer portion is charged on the purchase price of 22 types of fuel bought by individual consumers or smaller businesses and non-profit entities like schools and hospitals. It adds about 17.6 cents to a litre of gasoline and 15 cents to a cubic metre of natural gas.
While the government compensates Canadians for the consumer cost with quarterly rebates, the policy has never been that popular — and Poilievre has made "axing" it the centrepiece of his pitch to Canadians.
Freeland promised to end the consumer carbon price weeks ago, citing sagging public support for the policy. Liberal MP Karina Gould said she would freeze the price at its current rate, but has not committed to abolishing it.
Former Liberal MP Frank Baylis said at his official leadership campaign launch on Thursday that he would fix the carbon price, but didn't say how.
Liberal MPs Sean Fraser and Kody Blois attended Carney's announcement Friday, along with former leadership hopeful Jaime Battiste, who withdrew from the race Thursday and endorsed Carney.
Battiste was forced to end his campaign because he was unable to raise the $350,000 needed to remain the race. He said that "the funding was always going to be difficult because of the sheer amount of money needed in a short amount of time."
An analysis published in March 2024 by the Canadian Climate Institute found Canada's carbon price could slash greenhouse gas emissions by more than 100 million tonnes a year by 2030, but only about one-fifth of that would come from the consumer carbon price.
Most of the reduction would come from the big industrial system.
Most Liberals have previously defended carbon pricing, including Carney.
In 2021, while attending annual UN climate talks in Scotland, Carney participated in a panel with Trudeau discussing the need for more countries to price carbon as a way to drive down emissions.
"Everyone should try and have a price on carbon," he said at the time.
During his leadership launch in Edmonton on Jan. 16, Carney said if carbon pricing is to go, it must be replaced "with something that is at least, if not more, effective."
This report by The Canadian Press was first published Jan. 31, 2025.
— With files from Michael MacDonald in Halifax.
Nick Murray and Kyle Duggan, The Canadian Press
