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The Price on Pollution Works. Here’s how:

The impacts and costs of climate change are being felt first-hand by communities in Canada and around the globe. Extreme weather events threaten people’s safety, their health, their homes, and their livelihoods.

In 2023, we saw the most destructive wildfire season ever recorded, with more than 6,132 fires and 16.5 hectares of land burned.

With Canadians forced to pay for these impacts, there’s a clear cost of a changing climate. That’s why we’ve ensured that it’s no longer free to pollute in Canada.

In 2019, we introduced the Carbon Pollution Pricing System, which creates a financial incentive for people and businesses to pollute less and has been recognized as one of the most effective and efficient approaches to reducing greenhouse gas emissions.   

What does this mean?

In Ontario, the federal fuel charge system applies. This means that the usage of fossil fuels, such as gasoline and natural gas, will have an added charge varying on how much carbon dioxide is released when burned.

The aim is to encourage Canadians to switch to clean, non-polluting fuel sources, such as hydroelectricity. The carbon tax does not apply to energy sources that don’t release any carbon pollution.

Where does the money go?

None of the money collected from the price on pollution goes to the federal government. All of the money goes directly back to benefit Canadian families, businesses, farmers, and Indigenous groups—in the same province or territory where it was collected.

Because Ontario follows the federal fuel charge, the money collected goes directly back into your pockets through the Climate Action Incentive Payments.

What are the Climate Action Incentive Payments?

Four times a year, our government delivers the Climate Action Incentive Payments (CAIP) to Canadians, putting 90% of the proceeds from the fuel charge directly back into the pockets of individuals and families., with 8 out of 10 households receiving more money back than they back. 

The other 10% is used to support small businesses and Indigenous groups.

These payments are delivered in January, April, July, and October of each year.

In order to receive the CAIP, you must be:

  • A resident of Canada in the month before the payment.
  • A resident of an applicable CAIP province on the first day of the payment month.

You must also be either:

  • At least 19 years old in the month before the CRA makes a payment, or
  • under 19 and meet at least one of the following conditions:
    • You have or had a spouse or common-law partner
    • You are or were a parent, and live(d) with your child.
The system also considers where people live, acknowledging the reality that Canadians who live in rural and smaller centres don’t necessarily have the same options, particularly when it comes to clean transportation. That’s why, for people in these communities, the Government applied an additional 10 per cent top-up to their CAIP.
 
In 2024, a family of four will receive up to $976 in Ontario.
 
By using less energy—for example by biking, driving a more fuel-efficient car, or insulating their homes to reduce energy use—Canadians can reduce the price they pay on pollution while still collecting the full Climate Action Incentive payment.

How does this help the environment?

Putting a price on pollution is a cornerstone of our plan to tackle climate change and works by encouraging businesses and consumers to choose less carbon-intensive options for energy production, home heating, and transportation.
 
According to the World Bank, there are 73 carbon pricing initiatives currently in place or scheduled to be implemented across the globe, both national and subnational. Together, these initiatives cover 23 percent of global greenhouse gas emissions.
 
Estimates show that pollution pricing contributes roughly one-third of the greenhouse gas emissions reductions achieved by Canada’s Emissions Reduction Plan in 2030.

How do I switch to cleaner energy?

We know that as the cost of living continues to rise, Canadians’ last priority is saving up to replace their home heating system or switch their car.
 
That’s why we’ve implemented measures to make it more affordable for Canadians to switch, saving them money in the long term.
 
Through the Canada Greener Homes Initiative, Canadian homeowners can apply to receive loans or grants to complete deep energy retrofits. This includes:
 
  • The Canada Greener Homes Grant, which provides grants from $125 to $5,000 to cover the cost of eligible retrofits like home insulation, windows, heat pumps, solar panels, and more.
  • The Canada Greener Homes Loan, which offers interest-free financing from $5,000 to $40,000 to help you complete some of the more major retrofits recommended by your energy advisor
  • The Oil to Heat Pump Affordability Program, which provides eligible households who are currently heating their homes with oil up to $10,000 to make the transition to a cleaner, more efficient option.
  • The Canada Greener Affordable Housing program, which provides community and affordable housing providers with up to $130,000 in contributions for pre-retrofit activities and loans of up to $170,000 per unit for eligible retrofit costs.
Transportation accounts for almost 25% of Canada’s emissions. To combat this, our government is incentivizing the use of zero-emission vehicles (ZEVs) by giving Canadians who purchase one up to $5,000.
 
Additionally, we’re taking measures to increase the supply of ZEVs and related infrastructure, like electric chargers.
 
We’ve also temporarily paused the carbon tax on home heating oil until April 1, 2027.
 
Oil-heated homes in Canada can expect to spend $2,100 to $3,000 per year on heating fuel alone. With this pause, the roughly 1.1 million homes in Canada using home heating oil will be able to switch to heat pumps more easily.
 
 
Our government reiterates its commitment to pollution pricing and Canada’s crucial role in meeting targets to cut emissions by 40 percent below 2005 levels by 2030 and achieve net-zero emissions by 2050.
Tony Van Bynen

Member of Parliament for
Newmarket—Aurora

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