In his first act as Canada’s new Prime Minister, Mark Carney signed an order on Friday eliminating a controversial consumer carbon tax, the “fuel charge,” effective April 1, 2025.

Introduced in 2019, the fuel charge aimed to introduce a price on carbon for businesses and consumers in order to incentivize emissions reductions and to adopt cleaner technologies and products. The carbon tax started at $20 per tonne in 2019, and has been increasing annually, and was set to reach $170 per tonne in 2030.

The elimination of the fuel charge follows a campaign by Canada’s Conservative Leader Pierre Poilievre over the past several months against the carbon tax, as consumers faced high inflation. Despite championing the carbon tax in the past, Carney’s campaign for Liberal party leadership acknowledged that it “isn’t working and has become too divisive,” and pledged to cancel it.

Carney takes the office of Prime Minister with a strong resume in both finance and climate action. He has served as the Governor of the both the Banks of Canada and of England, as the UN Special Envoy for Climate Action and Finance, as the UK Prime Minister’s Finance Adviser for the COP26 UN Climate Change Conference, and as co-Chair of the Glasgow Financial Alliance for Net Zero (GFANZ). Prior to running for Liberal leadership, he was serving as Chair and Head of Transition Investing at Brookfield Asset Management, focused on ESG investing.

While the consumer carbon tax will be ending, the carbon price on businesses will remain in place. In his leadership campaign, Carney pledged to ensure that “Canada’s biggest emitters will contribute their fair share,” with a plan to tighten the Output-Based Pricing System (OBPS) for large, industrial emitters, and to introduce a Carbon Border Adjustment Mechanism (CBAM), or a carbon tax on imports designed to prevent “carbon leakage,” a situation in which companies move production of emissions intensive goods to countries with less stringent environmental and climate policies. Carney also pledged to introduce incentives for green buildings and transport electrification, and for consumer investments such as home retrofits and heat pump installations.

In a presentation announcing the elimination of the consumer carbon tax, Carney said:

“This will make a difference to hard-pressed Canadians, but it is part of a much bigger set of measures that this government is taking to ensure that we fight against climate change, that our companies are competitive, and the country moves forward.”