Canadian Prime Minister Mark Carney has abolished the consumer carbon tax effective from 1 April 2025. The change, enacted through Orders in Council (OICs) 2025-0446 and 2025-0447, removes the Canada fuel charge, introduced by former Prime Minister Justin Trudeau in 2019.

However, the Output-Based Pricing System (OBPS) will remain in effect, which aims to keep industrial polluters regulated under the federal system.

Under the Greenhouse Gas Pollution Pricing Act, the federal carbon pollution pricing system consists of two components: a regulatory charge on fuel, known as the federal fuel charge, and a regulatory trading system for industry, called the federal Output-Based Pricing System (OBPS).

The federal OBPS is designed to ensure there is a price incentive for industrial emitters to reduce their greenhouse gas emissions and spur innovation while maintaining competitiveness and protecting against “carbon leakage” (i.e., the risk of industrial facilities moving from one region to another to avoid paying a price on carbon pollution).

The changes implemented by the OICs were also incorporated into the notice – fuel charge notice (FCN 16) – released by the Canada Revenue Agency (CRA) on 17 March 2025. On 14 March 2025, the government announced that it will be removing the fuel charge, effective 1 April 2025, by setting all fuel charges rates to zero. The fuel charge no longer needs to be reported or paid on all types of fuel and combustible waste in listed provinces in respect of activities after 31 March 2025.

Additionally, changes were made to the Canada gazetted regulations under Schedule 2 of the Greenhouse Gas Pollution Act.

After 31 March 2025, registered emitters under provincial output-based systems will stop reporting facility changes, with obligations ending by 30 September 2025. Registration requirements will end, and existing registrations will be cancelled on 1 November 2025. Filing is only needed if a fuel charge is payable after 31 March 2025.

The elimination of the consumer carbon tax also halts the Canada Carbon Rebate (CCR). Final payments will be issued on 22 April 2025. To qualify, returns for the 2024 tax year must be submitted electronically by 2 April 2025.