The Greenhouse Gas Pollution Pricing Act is Canada’s 2018 federal carbon pricing law. It originally had two parts: a consumer fuel charge on gasoline, diesel, natural gas, and other fossil fuels, and an industrial pricing system for large emitters. The consumer fuel charge ceased to apply on April 1, 2025, and was formally repealed when Bill C-4 received Royal Assent on March 12, 2026.1Canada Revenue Agency. Fuel Charge Rates The industrial Output-Based Pricing System under Part 2 of the Act is still in force and continues to apply to heavy emitters through at least the end of 2026.2Environment and Climate Change Canada. Output-Based Pricing System
How the Act Was Built
The GGPPA works as a backstop. It applies in provinces and territories that do not have their own carbon pricing system meeting federal stringency benchmarks. Where a province’s own system meets the benchmark, the federal law stays out of the way. Where it does not, the federal law fills the gap.
Part 1 imposed the consumer fuel charge on producers, distributors, and importers, who registered with the Canada Revenue Agency, filed monthly returns, and remitted the charge.3Canada Revenue Agency. Fuel Charge Part 2 set up the Output-Based Pricing System for large industrial facilities, administered by Environment and Climate Change Canada. The two parts operated together, but they were built to work independently, and that separability is why one could be removed while the other continues.
The Constitutional Question Was Settled in 2021
Saskatchewan, Ontario, and Alberta each challenged the Act. The Saskatchewan and Ontario Courts of Appeal upheld it; the Alberta Court of Appeal struck it down.4Environment and Climate Change Canada. Supreme Court of Canada Rules on the Constitutionality of the Greenhouse Gas Pollution Pricing Act On March 25, 2021, the Supreme Court of Canada ruled that Parliament has the authority to set minimum national standards for greenhouse gas pricing under the Peace, Order, and good Government clause of the Constitution Act, 1867.5Supreme Court of Canada. Reference re Greenhouse Gas Pollution Pricing Act The Court found carbon pollution to be a transboundary problem needing a coordinated national response, and held that a minimum price floor does not prevent provinces from designing their own systems above that floor.
The Fuel Charge Has Been Repealed
The fuel charge started at $20 per tonne of carbon dioxide equivalent in 2019 and climbed $10 per year to $50 in 2022. From 2023, the annual step increased to $15 per tonne, on a path toward $170 per tonne by 2030.6Government of Canada. The Federal Carbon Pollution Pricing Benchmark That trajectory was cut short. On March 15, 2025, the government made regulations setting all fuel charge rates to zero, and the charge stopped applying on April 1, 2025. Bill C-4, the Making Life More Affordable for Canadians Act, then removed the consumer fuel charge from law on March 12, 2026.1Canada Revenue Agency. Fuel Charge Rates
The repeal is being carried out in phases. Charging provisions were retroactively repealed to April 1, 2025. Rebate provisions for fuel exported with embedded charges remained available until October 1, 2025. Registration provisions expired November 1, 2025. The remaining administrative and procedural rules of Part 1 stay on the books until April 1, 2035, so the CRA can process reassessments and amended returns for obligations that arose before repeal.7Government of Canada. Removing the Consumer Carbon Price from Canadian Law
What Still Applies: The Output-Based Pricing System
Part 2 of the Act continues to operate. The Output-Based Pricing System covers facilities that emit 50,000 tonnes or more of carbon dioxide equivalent per year, and smaller facilities emitting between 10,000 and 50,000 tonnes can opt in voluntarily.2Environment and Climate Change Canada. Output-Based Pricing System Environment and Climate Change Canada sets a performance standard for each sector based on emissions intensity, meaning pollution per unit of output.
The mechanics reward efficiency. Facilities that stay below their sector benchmark earn surplus credits, which can be banked for up to five years, traded with other covered facilities, or applied to future compliance.8Justice Laws Website. Output-Based Pricing System Regulations SOR 2019-266 Facilities that exceed the benchmark can pay the excess emissions charge, surrender compliance units, or combine the two.
The excess emissions charge follows the same scheduled climb as the old fuel charge: $65 per tonne in 2023, rising $15 per year to $170 per tonne by 2030. For 2026 the charge sits at $110 per tonne.2Environment and Climate Change Canada. Output-Based Pricing System To keep the industrial system self-contained after the fuel charge ended, the government amended the OBPS Regulations in March 2025, including a change to the definition of on-site transportation emissions so that those emissions remain covered by industrial pricing.9International Carbon Action Partnership. Canada Federal Output-Based Pricing System
Compliance Deadlines and Penalties
Covered facilities face strict reporting dates. Annual emissions reports, verified by an accredited third party, are due by June 1 of the year after the compliance period.9International Carbon Action Partnership. Canada Federal Output-Based Pricing System The regular compensation deadline is December 15 of that same year. Miss it and the remaining obligation quadruples: a facility owing $1 million on December 15 would owe $4 million by the increased-rate deadline of February 15.2Environment and Climate Change Canada. Output-Based Pricing System
Verification must be carried out by a body accredited to ISO Standard 14065 by the Standards Council of Canada, the American National Standards Institute, or another International Accreditation Forum member, and it must achieve a reasonable level of assurance under ISO Standard 14064-3.10Government of Canada. Verification Guidance for the OBPS Regulations
Section 232 of the Act sets out the fines and imprisonment ranges for offences, and the numbers are large. For individuals convicted on indictment of a first offence, fines run from $15,000 to $1,000,000, with possible imprisonment of up to three years. Corporations face fines from $500,000 to $6,000,000 on a first indictable offence, rising to $12,000,000 for a repeat. Even summary conviction of a corporation carries a minimum $100,000 fine.11Justice Laws Website. Greenhouse Gas Pollution Pricing Act – Section 232
What Happened to the Canada Carbon Rebate
While the fuel charge was in effect, the federal government returned over 90% of its proceeds directly to individuals and families in provinces where the charge applied.12Government of Canada. Tax Credit Payment Rates to Return Fuel Charge Proceeds Those payments went out as the Canada Carbon Rebate, previously called the Climate Action Incentive payment. Amounts varied by province and household size, and rural residents received a 20% supplement.13Canada Revenue Agency. Canada Carbon Rebate for Individuals – How Much Remaining proceeds went to small and medium-sized businesses, Indigenous governments, and farmers.14Canada Revenue Agency. Canada Carbon Rebate for Small Businesses
The final quarterly rebate payment was issued in April 2025, and no further payments are scheduled.15Canada Revenue Agency. Canada Carbon Rebate – Payment Timing People who have not yet filed tax returns for the 2021 through 2024 tax years may still be able to claim outstanding rebate amounts by filing those returns.16Canada Revenue Agency. Canada Carbon Rebate for Individuals – What Has Changed
Where the Federal System Applies Now
Before repeal, the federal fuel charge applied in Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, and Nunavut.1Canada Revenue Agency. Fuel Charge Rates With that piece gone, the federal backstop now consists solely of the OBPS for large industrial emitters, applied in the jurisdictions listed in Part 2 of Schedule 1 to the Act.9International Carbon Action Partnership. Canada Federal Output-Based Pricing System Provinces with their own industrial pricing systems meeting or exceeding the federal benchmark, such as British Columbia and Quebec, stay outside the federal system.
The 2026 Review
The federal government committed to an interim review by 2026 to determine whether the benchmark criteria are sufficient to maintain pricing alignment across Canadian carbon pricing systems through 2027 to 2030.17Government of Canada. The Federal Carbon Pollution Pricing Benchmark The original plan guaranteed the OBPS would remain in place in backstop jurisdictions through the end of 2026. What comes after depends on that review and on whether provinces develop equivalent systems in the interim.
The Act itself stays on the statute books as a framework.18Justice Laws Website. Greenhouse Gas Pollution Pricing Act Part 1 is being phased out under the timeline described above. Part 2 keeps running, with the excess emissions charge scheduled to keep rising toward $170 per tonne in 2030. For covered industrial facilities, the per-tonne cost in 2026 is already more than five times what it was at launch.