CALGARY – Prime Minister Mark Carney has taken significant steps to alleviate the financial burden on Canadians by eliminating the consumer carbon levy, effective April 1, 2025. This recent policy change means that the price consumers pay for emissions will drop to zero, a move anticipated to yield various financial impacts across different sectors.
Fuel Prices
According to Patrick De Haan, head of petroleum analysis at GasBuddy.com, the removal of the retail carbon charge is expected to result in a notable decline in fuel prices within 24 hours. The current carbon price on gasoline stands at 17.6 cents per litre, and the reduction in costs is anticipated to reflect this change. However, De Haan cautioned that various factors could influence the final retail price at the pump, including crude oil costs, U.S. tariffs, and seasonal adjustments associated with the transition to summer gasoline.
Despite the expectation of a decrease in prices, the total savings for consumers may vary due to market conditions. De Haan stated, “There are multiple ways that consumers may not fully realize the (entire) savings, depending on the energy market,” though he noted that consumers would likely see "the bulk" of the reduction.
Utility Costs
The elimination of the carbon levy will also affect utility bills, though electricity prices remain unaffected. For natural gas consumers, the charge, typically around $4 per gigajoule, will no longer apply starting April 1. For an average household in Alberta that uses about 10 gigajoules per month, this change could result in a monthly savings of approximately $40. Blake Shaffer, an economist at the University of Calgary, mentioned that while the benefits will be significant in winter, they might be less noticeable during summer months.
Utility providers such as Enmax, Calgary's main utility service, have confirmed that consumers will continue to see the prior charges for natural gas on their upcoming bills until all costs incurred through March 31 are settled. Similarly, Enbridge Gas, which supplies gas in Ontario and Quebec, has issued comparable notices on its website.
Food Prices
The potential savings from the carbon levy removal may take longer to reach consumers shopping for groceries. As Kevin Grier, a livestock and grocery market analyst, pointed out, the current stock of grocery products has already been purchased and priced before this change, meaning immediate price reductions on grocery shelves are unlikely. Grier noted that during supplier negotiations, grocery chains may leverage the absence of the carbon tax to negotiate better prices, but the timeline for consumers to experience any price cuts remains uncertain.
Nonetheless, Grier is optimistic that, "eventually in a competitive market, everything does get passed along" to consumers, suggesting that any savings might gradually become visible over time as market conditions adjust.
Carbon Rebate Program
Previously implemented to offset the costs associated with the carbon levy, the Canada Carbon Rebate program will also be discontinued as of April 1. The last rebate distribution will be initiated on April 22 for those filing their tax returns before April 2, 2025. The amount of the rebate has varied across provinces, with Alberta families receiving as much as $456 quarterly. Small businesses will see the cessation of rebates starting in the 2024-25 fuel charge year, alongside the discontinuation of a tax credit designed to mitigate pollution costs for farmers.
This comprehensive change in policy marks a significant shift towards financial relief for Canadian consumers while posing new challenges ahead in terms of market dynamics and consumer behavior regarding energy prices and related costs.
