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How does the climate action incentive payment work?

Most of us have heard of a carbon price, which is also known as pollution pricing. But what exactly is it and how does it work? What’s the point?

The idea is that putting a price on greenhouse gas and carbon pollution creates a financial incentive for people and businesses to pollute less.

Some provinces and territories have their own pollution pricing systems. When it comes to a carbon price on fuel, Alberta, Manitoba, Saskatchewan and Ontario currently use the federal system.

Money collected through the federal fuel charge system goes directly to Canadians in the same province or territory where it was collected. The money you get is called the Climate Action Incentive payment. It used to be paid out as a refundable credit claimed on income tax returns. Now, since July 2022, it is paid out quarterly as tax-free payments through the benefit system.

According to Environment and Climate Change Canada, eight out of 10 households actually get more money back than they spend on this fuel charge, so it’s not something to sneeze at. Farmers can also access incentives and rebates, and rural or remote Canadians can get a bonus amount too.

Find more information about the program at canada.ca/cai-payment.

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