On March 14, 2025, Prime Minister Mark Carney issued an Order in Council to remove the consumer carbon tax on fuels effective April 1, 2025.
The Greenhouse Pollution Pricing Act (GGPPA) received royal assent in 2018 and placed a consumer tax on fossil fuels used in transportation and heating, as well as on industrial emitters. The consumer carbon tax rate was increased annually.
What this means for Ontario farmers
As of April 1, the carbon tax will not be collected on fuels used for agricultural production, including natural gas used for grain drying and barn heating, which have placed a significant cost burden on farmers since the tax was first implemented in 2019.
Based on estimates in 2023 from the Parliamentary Budget Office, removing the consumer carbon tax will save Canadian farmers over $100 million a year.
OFA position
OFA welcomes this change in policy that provides much-needed relief for farmers from the negative impact carbon pricing has had on their businesses and their ability to remain competitive in a global marketplace.
OFA had long urged the federal government to remove the carbon tax on fuels used in agricultural production, including grain drying and heating of barns and other production facilities, as there are currently no viable, affordable alternative technologies available that could reduce consumption. These fuels are essential in the production of food, feed, fibre, flowers and other agricultural products.
OFA, along with the Canadian Federation of Agriculture and other agricultural organizations, was a vocal supporter of Bill C-234, which was a private member’s bill that would have exempted these fuel uses from the carbon tax. The bill did not pass in the Senate and had been sent back to the House of Commons before Parliament was prorogued in January 2025.
Ontario farmers are committed to doing their part to reduce emissions in the fight against climate change, while remaining global leaders in the production of sustainable food.
OFA continues to encourage government to implement programming that will help Ontario farm businesses become more efficient and recognizes the great strides the industry has already taken voluntarily to lower its environmental footprint and support sustainable agricultural production.