Everything you need to know about gas prices & rebates now the consumer carbon tax is dead

What exactly is the carbon tax?

Carbon pollution pricing — also known as the carbon tax — is part of a broader effort to reduce greenhouse gas emissions in Canada. The idea is to make carbon-emitting products more expensive to encourage people to use less and push companies to offer more climate-friendly alternatives.

Officially implemented in 2019 after Justin Trudeau's government passed the Greenhouse Gas Pollution Pricing Act, it has two parts: a federal fuel charge on fuels like gasoline, diesel and natural gas, and a separate system for large industries.

When people talk about the "consumer carbon tax," they're referring to the first piece — the federal fuel charge.

The federal fuel charge is revenue neutral, meaning that all money collected is returned to the province or territory it's from. Most of the proceeds are sent directly to Canadians through quarterly Canada Carbon Rebate payments, and the rest is distributed to farmers, Indigenous governments and small- and medium-sized businesses.

Provinces and territories are allowed to implement their own pollution pricing systems as long as they meet the benchmark set by the federal government — otherwise, they can simply use the federal system. Currently, only three jurisdictions use their own fuel charge system instead of the federal one — B.C., Quebec and the Northwest Territories.

Is the carbon tax actually dead?

Yes... and no. Prime Minister Mark Carney's order-in-council on Friday put an end to the consumer-facing federal fuel charge, but the federal industrial carbon tax on large emitters will remain in place.

The government says it is "refocusing pollution pricing on industrial carbon pricing by effectively eliminating the fuel charge and removing the requirement for a consumer carbon price," according to an amendment to the Greenhouse Gas Pollution Pricing Act published on Saturday. This means that rather than removing the tax altogether, the feds are shifting the responsibility for paying it onto industrial polluters, rather than consumers.

Despite Parliament currently being prorogued, a Department of Finance official confirmed to Narcity in an email that the order Carney signed was valid and that the fuel charge would end right away on April 1, even if Parliament hasn't returned yet by then.

"An Order in Council is a formal, legal instrument, signed by the Governor General, that implements decisions made by the federal cabinet," a Finance Canada spokesperson explained. "Orders in Council do not need to be tabled in Parliament in order to be effective."

They confirmed that all fuel charge rates will be set to zero, and administrative rules like registration and filing requirements will end.

That means starting April 1, you'll no longer be paying the extra charge to fill up your gas tank or heat your home. However, the separate industrial carbon pricing system will stay in place — which affects prices across many industries.

What does this mean for B.C., Quebec & the Northwest Territories?

Because B.C., Quebec and the Northwest Territories have their own carbon pricing systems, federal changes don't automatically apply.

In B.C., Premier David Eby announced on Friday that the province will move quickly to repeal its own consumer carbon tax now that the federal requirement is gone. He announced that his government was preparing legislation to repeal the tax and eliminate the scheduled increase that was set for April 1 of this year.

In the Northwest Territories, the government is also scrapping its consumer carbon tax, following the federal decision. CBC reports that the territory can't formally repeal its tax law right now because the legislature isn't in session, but it will set the tax value to zero starting April 1 — effectively ending it. Residents there will still get one last cost of living offset (COLO) payment in April, but like the federal rebate, that'll be the end of it.

As for Quebec, no announcements have been made about scrapping that province's carbon pricing. For now, it looks like the system will stay in place.

Will gas prices in Canada go down?

Expect a drop — but how much depends on where you are, what type of fuel you use and other factors.

"While the government doesn't control prices at the pump, we can confirm that the current fuel charge rate is 17.61 cents per litre of gasoline in jurisdictions where the fuel charge applies," a Department of Finance official told Narcity. "That charge will be removed on April 1st, 2025."

That said, there's a lot more that goes into gas prices in Canada beyond the consumer carbon tax, so the exact drop might vary. For example, the switch to summer-blend gasoline — a more expensive fuel that runs more efficiently in warmer temperatures — is set to hike prices up by about five to six cents a litre around the same time, gas analyst Dan McTeague told Narcity.

Still, most Canadians — with the exception of those in Quebec — should see a noticeable difference on April 1.

What's happening to the Canada Carbon Rebate?

The Canada Carbon Rebate is a federal quarterly payment sent out to residents in the provinces where the federal fuel charge system is in place — Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, P.E.I. and Saskatchewan. It offers up to $540 per quarter for a family of four, although amounts vary depending on where you live.

Because its purpose is to send back the money that the government collected through the consumer carbon tax, there's one more payment coming — and then it's over.

The government has confirmed that the final Canada Carbon Rebate payment will be sent out starting April 22 — a week later than it was originally scheduled for on April 15.

However, there's a catch: In order to get it by that date, you'll need to file your 2024 tax return electronically by April 2. If you file later, you'll still get the money, just a bit later — usually within six to eight weeks of the CRA processing your tax return.

A Department of Finance official confirmed to Narcity that "proceeds return mechanisms like the Canada Carbon Rebates for individuals will be wound down accordingly," meaning this will be the last payment. So if you've been counting on those quarterly deposits, April is the final one.

Is the carbon tax cut permanent?

That's the million-dollar question. Depending on who you ask, the answer isn't so straightforward — and it might not be what you want to hear.

Dan McTeague, President of Canadians for Affordable Energy, told Narcity that he doesn't believe Canadians will see any permanent relief under a Carney government. "Although it may be welcome news to people, it really depends who forms government," McTeague said.

He explained that unless Pierre Poilievre's Conservatives — who have pledged to repeal the entire Greenhouse Gas Pollution Pricing Act and permanently axe the tax for everyone, including industrial emitters — win a majority in the next election, Canadians will "continue to have a carbon tax at these levels, one way or another, going up every year until 2030."

McTeague, who served as a Liberal MP for 18 years, explained that as Carney hasn't announced any intentions to repeal the Act, the pollution pricing target of $170 a tonne "is either going to be met by a consumer carbon tax or an industrial one."

So, while the consumer carbon tax might never return in name, McTeague says pollution costs will inevitably be passed down to Canadian consumers through the industrial tax instead. "What's going to happen is that businesses will absorb it and pass it right on to consumers," he explained.

"Either way, you're going to pay for it."