ARTICLE
21 March 2025

Carney Kills The Fuel Charge: Impacts On The Oil And Gas Sector

BL
Borden Ladner Gervais LLP

Contributor

BLG is a leading, national, full-service Canadian law firm focusing on business law, commercial litigation, and intellectual property solutions for our clients. BLG is one of the country’s largest law firms with more than 750 lawyers, intellectual property agents and other professionals in five cities across Canada.
Mark Carney wasted no time after being sworn in as Prime Minister of Canada on Friday, dismantling the federal consumption-based carbon tax, the fuel charge...
Canada Energy and Natural Resources

Mark Carney wasted no time after being sworn in as Prime Minister of Canada on Friday, dismantling the federal consumption-based carbon tax, the fuel charge, by way of an order-in-council on the same day. The new Federal Government described the policy as part of changes "...refocusing pollution pricing on industrial carbon pricing by effectively eliminating the fuel charge and removing the requirement for a consumer carbon price." Notably, the Output-Based Pricing System (OBPS) will remain, and it is only the regulatory Fuel Charge being removed. This raises questions about the future regulation of industrial facilities, how the price on carbon will be impacted over time, and if there can still be a reduction on emissions in Canada.

The changes were implemented by way of amendments to the Fuel Charge Regulations and were in effect as of Friday March 14, 2025. The key takeaways are as follows:

  1. As of April 1, 2025, the rate of the Fuel Charge will be changed to zero (as listed in Schedule 2 of the Greenhouse Gas Pollution Pricing Act).
  2. Every registration under Part 1 of the Greenhouse Gas Pollution Pricing Act will be cancelled on November 1, 2025.
  3. As of April 1, 2025, there will be no requirement to be registered as a distributor, emitter, importer, user, user of combustible waste, air carrier, marine carrier, rail carrier, or road carrier.
  4. As of April 1, 2025, there will be no requirement to file Fuel Charge returns.

British Columbia has already announced that they intend to follow suit and eliminate their provincial consumer carbon pricing legislation.

As the fuel charge is inherently interconnected to the OBPS regime imposed under Part 2 of the Greenhouse Gas Pollution Pricing Act, the authors anticipate further changes to Canada's federal carbon tax framework to come.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More