Over the last year and a half, Pierre Poilievre convinced a lot of Canadians that the consumer carbon price was increasing the cost of living.

For months, he’d been beating up Justin Trudeau on the issue, and he was hoping the next federal election would be fought out as a referendum on the carbon tax.

But on March 14, when Mark Carney, in his first act as Prime Minister, cancelled the carbon tax, it sent Poilievre into a desperate search for a new issue he and his Conservative party can use to whip up voter outrage and indignation.

Three days later, Poilievre announced that if elected, his government would completely eliminate the industrial carbon “tax”. In its place, he says, his government would increase incentives to encourage businesses to voluntarily adopt emissions-reducing technology.

The thing is, the industrial carbon price works very differently than the consumer carbon tax. It only affects a very small number of companies, doesn’t really add much to operating costs and is an enormously important policy to cutting Canada’s greenhouse gas emissions.

Because of that, Poilievre may have a difficult time getting the same kind of traction criticizing the industrial policy as he did with the consumer policy.

It’s a strategy that can only work if voters don’t understand how Canada’s industrial carbon price works.

LETS get this right, it’s not a tax.

Industrial carbon pricing cuts greenhouse gas emissions by charging a fee to a business for every tonne of CO2 equivalent emissions it emits. But it also establishes a lucrative system where credits for avoided emissions can be bought, sold and banked. That’s why it’s not really a tax. A better term is a Large Emitter Trading System or LETS.

Canada’s federal industrial carbon price is also a system of last resort. Provinces and territories can design and implement their own program so long as they meet or exceed the standards of the federal system.

Most provinces and territories have their own LETS – only Manitoba, Prince Edward Island, Yukon, Nunavut, and Saskatchewan use the federal plan.

But a cancellation of the federal program would remove any obligation for a province or territory to maintain its own system. Even if a province or territory chose to keep a LETS in place, the minimum national standards that make these systems effective would be eliminated.

Standing up for Canadians… 600 of Canada’s biggest polluters.

Poilievre is banking on the idea that “tax cuts” are popular with voters – but he’s also hoping that people don’t really look too closely at his proposal. 

That’s because industrial carbon pricing really only affects a handful of businesses in Canada, and it will be hard to convince Canadians that we should be making it easier for some of Canada’s biggest businesses to pollute the atmosphere.

The federal standard only automatically applies to companies that produce more than 50,000 tonnes of CO2 equivalent emissions annually. These are large businesses with the largest carbon footprints, such as oil producers, chemical manufacturers, automakers and coal or gas power plants. 

According to Environment and Climate Change Canada, in 2023, there were 602 facilities that reported emissions above 50,000 tonnes. Despite the small number of companies, these accounted for nearly 40% of all of Canada’s greenhouse gas emissions in 2023.

The People Pay vs. The Polluter Pays

Pollievre says that, if elected, his government’s approach to curbing industrial emissions would be “carrot, not stick”, meaning he would aim to replace Canada’s industrial price on pollution with a range of tax credits and other incentives to encourage businesses to voluntarily choose to invest in emissions-reducing technology.

Right now, it is these polluting businesses that pay the cost of the carbon-price stick. Eliminating it and replacing it with a larger tax credit carrot means that taxpayers will have to cover the cost.

Chris Severson-Baker, executive director of the Pembina Institute, a clean energy think-tank, described it this way:  ”This proposal really is to shift from a polluter-pays system … to taxpayer-pay system.”

Canada is already spending billions on tax credits to encourage businesses to invest in emissions reductions technology. The industrial carbon pricing scheme is one way our government raises revenues to fund those incentives from the emitting businesses themselves.

For instance, Environment and Climate Change Canada, recently released a list of 38 companies who have collectively received nearly $150 million in funds raised by industrial carbon pricing to implement decarbonization technology.

In a great irony, Poilievre chose to announce his plan to cut to industrial carbon pricing at a steel mill near Hawkesbury, Ontario, that was a beneficiary of this program. Turns out that the mill received $3.5 MM in federal funds raised through the industrial carbon price to replace its natural gas-powered furnace – they achieved a 17% reduction in their emissions.

Canada’s most effective tool to fight climate change

Among the 140 or so measures that make up Canada’s 2030 Emissions Reduction Plan, it is the industrial carbon price that is expected to cut the most emissions.  

That’s the conclusion of the Canadian Climate Institute (CCI), an independent, non-partisan climate change policy research organization that provides evidence-based advice to policymakers on clean growth and climate change.

The CCI estimates that by 2030, large emitter trading systems will account for between 53 and 90 megatonnes of reduced emissions and “can deliver 20-48 percent of incremental emissions reductions from all climate policies in 2030, more than any other policy.”

Canada already has to find a way to make up for lost emissions reductions from canceling the consumer carbon tax. The industrial carbon price is expected to produce at least three times as many emissions cuts as the consumer carbon tax.

Eliminating the federal industrial carbon pricing requirement would ultimately leave Canada without a credible climate plan, making the 2030 climate target impossible to reach, putting our future at greater risk.

Costs industry “less than a Timbit” per barrel

In practice, the Canadian Climate Institute has also concluded that the net costs of the industrial carbon price have been very modest:

Our analysis shows industrial carbon pricing adds next to nothing to the operating costs of large emitters—for example, it drives low-carbon innovation in the oil and gas sector at less than the cost of a Timbit a barrel.

Rick Smith, President of the Canadian Climate Institute.

The details get complicated, but the whole reason why we have a separate industrial carbon price system is so that its features can be adjusted to protect the cost competitiveness of our industries, particularly from competitors from other countries that may not have carbon pricing systems in place.   

In practice, due to these adjustments, industries pay far less than the headline price of $95 per tonne of CO2e as of April 1, 2025. 

To prevent increased operational costs, LETS also offers facilities various options to offset emissions. These include investing in emission reduction, trading or banking emissions credits, obtaining offset credits, or paying the carbon price.

This flexibility minimizes costs, and many facilities that have cut their emissions can make substantial profits by selling emissions reductions credits, generating returns on their emissions-reducing investments.

The end result, analysts say, is that industrial carbon pricing does not increase costs for consumers.

Undermining exports to priority trading partners

More than ever, Canada is looking to diversify its trading relationships. But eliminating industrial carbon pricing would undermine Canadian exports to new priority trading partners such as the UK and EU, which are introducing carbon tariffs that give low-carbon producers a competitive advantage.

Britain, for example, plans to implement a carbon levy on products imported from countries with less strict climate policies by 2027. The EU has announced plans to do the same by next year.

Above all, Canadians don’t want carbon pricing eliminated

Ultimately, for Poilievre, he still has the problem of presenting a credible climate plan because Canadians want to see more done about climate change – not less.

In a Léger poll conducted for Équiterre in December 2024, 71% of Canadians said they want their next federal government, regardless of its political stripe, to do more to address climate change, to adapt to its consequences and to protect nature.

And, despite all the repeated attacks on carbon pricing, a strong 57% of Canadians continue to support the policy.

Don’t get fooled again.

When you get into the details, it’s hard to see how cancelling the industrial carbon price would benefit Canadians. It only affects a small number of the largest polluters, does not add much to costs and generates funding for the de-carbonization initiatives that Canadians want.

Poilievere is smart enough to know this. But he also knows that he succeeded in convincing a lot of voters that the consumer carbon tax was driving up the cost of living even though most taxpayers got back more in rebates than they paid in fees.

Now he seems to be betting he can do it a second time.

Let’s hope that Canadian voters don’t get fooled again.