He may be dubbed “Carbon Tax Carney” by his political rivals, but upon becoming Canada’s prime minister last Friday, Mark Carney cancelled the unpopular carbon levy on consumers.
The former governor of the central banks of England and Canada, who has never before held elected office, will lead the world’s second-largest country amid a punishing trade war with Washington and threats from US President Donald Trump to annex Canada.
His first order of business? With the cameras clicking, Carney slashed the carbon tax rate to zero for consumers, effectively ending what had been the governing Liberal Party’s signature climate change policy since its national launch in 2019.
“This will make a difference to hard-pressed Canadians, but it is part of a much bigger set of measures that this government is taking to ensure that we fight against climate change, that our companies are competitive, and the country moves forward,” Carney, 60, said on his first day in office after replacing Justin Trudeau.
The move signals an about-face for Carney, a former UN Special Envoy for Climate Action and Finance, raising broader questions about the best policy tools for cutting greenhouse gas emissions in today’s tricky geopolitical environment.
“Meaningful carbon prices are a cornerstone of any effective policy framework,” the former investment banker wrote in his 2021 book Value(s): Building a Better World for All. “To meet the 1.5C [global warming] target, more than 80 per cent of current fossil fuel reserves (including three-quarters of coal, half of gas, one-third of oil) would need to stay in the ground, stranding these assets.”
Analysts said Carney’s backpedalling on the carbon tax highlights the success of political attacks by the opposition Conservatives. But, they added, it does not undermine a broader strategy of asking large polluters to pay for their climate-damaging behaviour.
Industrial carbon price remains
While individuals, farmers and small businesses will no longer pay a carbon tax at the gas pump, industrial emitters will still be charged for their carbon footprint under national regulations launched in 2019.
“When it comes to reducing emissions, Canada’s industrial carbon pricing system has done most of the heavy lifting,” said Colleen Kaiser, program director of governance and policy innovation with the Smart Prosperity Institute, a Canadian research group. “It makes sense to continue this program.”
To get voters onside, Carney’s team ditched carbon levies on gasoline and heating oil for consumers – some of whom previously got rebates according to their income – in favour of increased support to go green by retrofitting homes or installing heat pumps.
Experts say using a carrot rather than a stick to catalyse energy-saving behaviour still needs to be funded somehow.
“My sense is the money to pay for that, instead of coming from a consumer carbon price, will come from large heavy emitters,” Chris Severson-Baker, executive director of the Pembina Institute, a clean energy think-tank, told Climate Home. “Something will need to be done to replace what the consumer carbon price was designed to do.”
Popular attitudes on who should pay for climate action have shifted since the carbon tax was announced. In 2020, when asked to choose between protecting the environment and creating jobs, 50 percent of Canadians said jobs should come first, according to polling data from the Consortium on Electoral Democracy, a research group.
Today, amid a cost-of-living crisis, 60 percent prioritise jobs over climate action.
Election politics in play
Against this backdrop, the opposition Conservative Party has rallied around the slogan “axe the tax,” suggesting Carney isn’t serious about doing that beyond a national election expected in the next few months.
“Carbon Tax Carney is pausing the carbon tax until after the election when he no longer needs your vote but still needs your money,” Conservative leader Pierre Poilievre posted on social media on March 14, when Carney became PM. “He’s flip-flopping on his beliefs to trick Canadians into a 4th Liberal government.”
The Conservatives had been far ahead in opinion polls prior to Carney coming onto the national scene and Trump’s tariffs. However, polling data released by Angus Reid this week, indicates a major shift in the political landscape.
“With the Liberals at 42 percent in vote intention, what was a tired, discardable brand just three months ago would be on its way to a fourth term, this time with a majority,” the pollster said.
Aside from ending the consumer carbon tax, specifics on Carney’s green policies remain sketchy. In his first speech after being sworn in as prime minister, he did not mention climate change or carbon taxes.
A spokesperson for Carney referred Climate Home to his official website but did not immediately provide responses to detailed questions about his proposals.
A spokesperson for Environment and Climate Change Canada, the national government department responsible for climate policy, said it “is currently in a period of transition”.
The oil lobby
In his acceptance speech to lead the Liberal Party, Carney said he wants to make Canada “an energy superpower in both clean and conventional energy”, echoing phrasing from a former Conservative prime minister who had close ties to the oil patch.
Canada is the largest foreign oil exporter to the US and fossil fuels are its most valuable export by far, worth $152 billion CAD in 2023, according to the Canadian Association of Petroleum Producers (CAPP), the main oil industry lobby group.
Much of this crude comes from the Alberta tar sands, which environmentalists consider some of the world’s dirtiest oil for carbon dioxide emissions. Expanded tar sands production stands in direct opposition to Canada’s pledge to hit net-zero carbon emissions by 2050, analysts say.
But public discussions around building new pipelines from western Canada’s tar sands to consumers in the country’s east have intensified amid Trump’s annexation threats.
The Pembina Institute’s Severson-Baker expects “lots of talk” about new pipelines in the coming months, even though he said “there is no actual economic case behind them”.
“The government truly has failed to reduce emissions from the oil sands sector,” he said. “That highlights how difficult it is for any government in Canada to regulate that sector.”
The CAPP did not respond to specific questions on Carney’s record and Canada’s shifting climate policies, but provided a statement.
“Canada is in a precarious position partly because for too long the federal government neglected the importance of our own energy and economic security,” said the group’s president and CEO, Lisa Baiton. “Following the imminent federal election, the next Government of Canada will need to address these critical issues with urgency, both for Canadians and for the oil and natural gas industry.”
Shifting business priorities
In what analysts consider an olive branch to the oil sector, Carney has removed carbon tax supporter Steven Guilbeault from the environment ministry, shuffling the former Greenpeace activist who regularly drew ire from Alberta politicians to culture minister and other roles.
The new environment minister is Terry Duguid, a lawmaker from Manitoba province who had not previously held a cabinet role.
Carney may also feel the need to appease members of the financial elite he once courted, as they jettison their support for net-zero investment goals.
Back in 2021, the central banker helped spearhead the the Glasgow Financial Alliance for Net Zero, an initiative of major investors that pledged to support companies with clear climate goals.
After the election of Trump, US stalwarts including J.P. Morgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo, Goldman Sachs and BlackRock quit the initiative. Most of Canada’s big banks followed later in another sign of shifting commercial priorities.
Back in 2021, making the financial case for investing in net-zero, Carney told an interviewer at the UN: “Don’t assume that your politician cares about this issue as much as you do.”
How much Canada’s new prime minister cares about the climate today – and the amount of political capital he’s willing to invest in protecting it – will be tested in the coming months by electoral pressures and businesses emboldened by the US dumping its climate promises.
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Canada’s new leader culls carbon tax seen as burden on voters
June Rubis is a steering group committee member for the Cali Fund, from Sarawak in Malaysian Borneo.
At COP16 in Cali, governments made a significant commitment: at least half of the funding from the new Cali Fund should support the self-identified needs of Indigenous Peoples and local communities, including women and youth. It was a watershed moment for multilateral benefit-sharing.
The challenge now is to translate that commitment into access arrangements that recognise the different institutions, priorities and decision-making processes of Indigenous Peoples and local communities.
For generations, biodiversity and traditional Indigenous knowledge have provided significant value to companies who depend on nature’s genetic diversity to discover new drugs that fight diseases, create products that improve health, and grow crops resilient to extreme heat and flooding events. While some compounds are sampled directly from the source country, increasingly the digital blueprints are held in online public databases which are freely accessible to use for innovation and research.
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The Cali Fund was established at COP16 to encourage commercial users of Digital Sequence Information, or DSI, to share benefits arising from its use. Estimates suggest it could generate over $3.5 billion a year – a stark contrast to the modest $10,656 currently committed to the fund from just five SMEs, underlining how much progress must be made at COP17 over the next two weeks.
The COP16 decision that set up the fund offers two routes for money to reach Indigenous Peoples and local communities: through government authorities, and through direct payments to institutions identified by Indigenous Peoples and local communities themselves.
Varied ways of organising
Indigenous Peoples and local communities organise through a wide range of institutions. Some have national or regional organisations experienced in managing international grants. Others work through territorial organisations, customary institutions, community associations, cooperatives or networks. Some have professional finance teams and audited accounts; others have extensive experience governing territories, collective resources or conservation work without having been organised around international funding requirements.
For direct access, some questions are already apparent. Which institutions should be able to receive funds? How should they be identified? What fiduciary standards should apply? How should safeguards and accountability work where institutional capacities differ? What support may be needed where institutions have strong community mandates but less experience with international finance?
Comment: Protecting nature is a public duty, not a Wall Street profit opportunity
If access is designed mainly around institutions that already meet the expectations of large international finance mechanisms, early funding will tend to favour those already familiar to funders. They will gain further experience and become better positioned for future funding, while institutions with less administrative capacity may remain outside the system despite strong community mandates and long histories of stewardship.
These first decisions matter most, because they set the terms for everyone who follows.
The role of intermediaries requires care. Some Indigenous organisations may want a fiscal host to hold and manage funds on their behalf. Communities may choose to work through an NGO they trust. Government-facilitated arrangements may work well in particular national contexts.
What matters is the function an intermediary performs and the authority that comes with it. Providing administrative support is different from deciding which Indigenous organisations qualify, which priorities can receive support, or how success will be assessed. Direct access means communities keep that decision-making authority.
Decision-making power
The COP16 decision refers to institutions that Indigenous Peoples and local communities identify. But authority among Indigenous Peoples does not sit in one kind of body. It may sit with territorial organisations, customary institutions, community associations or combinations of these. Legal recognition and customary authority do not always align neatly.
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An important feature of the Cali Fund’s governance is that Indigenous Peoples and local communities participate as full members of the Steering Committee, rather than as observers. Seven Indigenous Peoples and local community representatives, one from each of the seven socio-cultural regions, participate in consensus-based decision-making alongside representatives of governments and UN entities. Six additional representatives from civil society, scientific institutions and the private sector participate as observers.
That representation carries responsibility. Institutional legitimacy, access and representation take different forms across the seven socio-cultural regions. Indigenous Peoples and local communities members therefore have an important role in bringing those differences into the Fund’s governance and in ensuring that arrangements developed for one context do not become the assumed model for everyone else.
Safeguards and clear responsibilities
COP17 can establish the core principles and direction, while allowing operational pathways to develop in ways that respond to different regional contexts. The decisions countries take in Yerevan will shape how that flexibility is realised in practice.
The choices made around access will influence which institutions are able to participate, which routes become established and which forms of authority are recognised within the funding architecture. The aim should be an architecture with enough structure to maintain confidence while allowing for different forms of Indigenous and community governance.
A credible direct-access pathway will need safeguards, financial oversight and clear responsibilities. This would give the 50% commitment a stronger institutional foundation.
The Cali Fund’s importance will ultimately depend not only on how much funding reaches Indigenous Peoples and local communities, but on whether they are able to determine how the money is accessed, governed and used. This requires access pathways that recognise their institutions, priorities and decision-making processes, rather than requiring them to conform to a single predetermined model.
The post COP17 must settle who decides how Cali Fund money is disbursed appeared first on Climate Home News.
COP17 must settle who decides how Cali Fund money is disbursed
The UK government has approved extraction at the Jackdaw gas field in the North Sea, despite acknowledging that this decision could make it harder for Britain to convince other countries to move away from fossil fuel production.
UK energy secretary Miatta Fahnbulleh approved the drilling on Wednesday after months of high-profile debate, fuelled in part by interventions from US President Donald Trump. She argued that the project would boost energy security in the wake of the Middle East fossil fuel crisis, protect hundreds of jobs and add £2.9 billion ($3.88bn) to the UK economy.
She said Jackdaw’s gas would be cleaner than imported gas and would not prevent the UK from meeting its legally-binding carbon targets and its goal of net zero by 2050. As the field is already licensed, she said extraction was consistent with the Labour Party’s 2024 manifesto promise not to issue any new oil and gas licenses.
The same morning, the government announced a new Energy Wealth Fund to reinvest oil and gas revenues in the climate transition. It will start with £2 billion ($2.67bn) from the government and be topped up over time with tax revenues from offshore oil and gas production.
Climate campaigners in the UK and abroad were quick to condemn the decision, while a leading legal expert told Climate Home News it goes against the advice of the International Court of Justice. Meanwhile, the government’s own documents reveal that it recognises the drilling could damage the UK’s reputation and its ability to push forward the global transition away from fossil fuels.
“Climate leadership” blow
The 92-page decision document says Fahnbulleh “acknowledges that international standing on climate is important and accepts that a decision to grant consent may not further the UK’s international climate leadership.”
It adds: “She acknowledges concerns about the potential implications for the UK’s credibility and influence – including the difficulty inherent in encouraging other states to move away from fossil fuel production while the UK continues, in a limited and transitional way, to draw on its own domestic resources.”
While noting that Jackdaw has not been issued with a new license – just permission to extract gas – the document says Fahnbulleh “accepts this does not fully resolve the underlying tension in the UK’s position” but “considers this alongside the substance of the UK’s wider record [on emissions reduction], which remains significant”.
It continues that she accepts these concerns are “legitimate” and weigh against approving gas extraction, but only gives this argument a “moderate negative weight” set against the benefits of gas production.
“Huge” wrong signal
In international climate talks, the UK has long supported the transition away from fossil fuels and is one of very few major oil and gas producers to ban new licenses. Across the North Sea, the Norwegian government continues to make offshore areas available for oil and gas exploration through annual licensing rounds.
Climate experts and campaigners shared the concern, acknowledged in the decision document, that approving Jackdaw could set a precedent for fossil fuel production elsewhere. Sam Fankhauser, professor of climate change economics at Oxford University, said the direct climate impact of Jackdaw is “much smaller than the debate around it would suggest” but the “wrong signal it sends, however, is huge”.
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Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change, said that while Jackdaw’s output will be very small, “it will signal to other fossil fuel producers that they too should carry on with business as usual, less than a month before the COP31”.
Kenyan campaigner Mohamed Adow, director of Power Shift Africa, called the decision “a serious blow to Britain’s international climate credibility” as “the UK cannot expect developing countries to move away from fossil fuels while giving the green light to new drilling in its own backyard”.
International Court of Justice
In July 2025, the International Court of Justice (ICJ) advised that government failure to take appropriate climate action “including through fossil fuel production” may amount to an internationally wrongful act.
The UK voted in favour of a United Nations resolution welcoming the advisory opinion. Yet, in its Jackdaw decision document, it notes that the ICJ opinion is not legally binding and says the UK does not accept the court’s opinion that the customary international law duty to prevent significant harm to the environment applies to climate change.
Fahnbulleh concludes that, although it will have “significant effect on the environment”, gas drilling in Jackdaw “would not lead to significant harm to the environment” – and so does not breach any duty to prevent such harm. Instead, the government document says the duty should be considered “as a matter of policy rather than legal obligation”.
Margaretha Wewerinke-Singh, who led Vanuatu’s legal team pushing for the ICJ’s advisory opinion, told Climate Home News that treating the duty as a matter of policy rather than legal obligation is “not how international law works”. “An advisory opinion is not a judgement,” she said, “but it states the law as it stands, and that law binds the UK whether or not it accepts it.”
“Even as a matter of policy,” she added, “the decision asks the wrong question: whether Jackdaw on its own would cause significant harm. The Court found that accumulated emissions are already causing significant harm. What matters is whether approving new production is consistent with the stringent due diligence the duty requires.”
Public support for decision
While the decision was criticised by climate campaigners and the opposition Green party, polling reported by Politico suggests that 55% of British adults support drilling at Jackdaw, with just 14% opposed. Even supporters of the UK’s net zero target back new drilling by more than two to one, the polling found.
Jackdaw is one of two North Sea oil and gas fields the government has been debating whether to extract more from for months. While Jackdaw is a small gas field, the other, Rosebank, is a much larger field that holds mostly oil.
Rosebank’s emissions are estimated to be around seven times higher than Jackdaw’s. Fahnbulleh told Sky News that Rosebank is “different” to Jackdaw because its oil would be exported, whereas Jackdaw’s gas will be used in the UK, adding that she will consider it “in its own right”.
The Guardian reported on Wednesday that UK officials say Fahnbulleh is minded to refuse approval for Rosebank. She has not yet taken a final decision on Rosebank, the newspaper said, but a ruling is expected later this year.
The post UK approves gas drilling despite admitting blow to “climate leadership” status appeared first on Climate Home News.
UK approves gas drilling despite admitting blow to “climate leadership” status
A surge in wholesale costs driven by expensive gas is responsible for nearly 90% of the rise in UK household electricity bills since 2020, reveals new analysis.
The figures, shared with Carbon Brief by thinktank Nesta, show that wholesale gas costs are also behind the vast majority (77%) of the increase in household gas bills.
The analysis firmly contradicts the idea, which has become embedded in UK media and political narratives, that the UK’s net-zero target is to blame for high energy bills.
Andrew Sissons, director for sustainable future at Nesta, tells Carbon Brief that net-zero is, in fact, “helping to shelter Britain from the impact of expensive gas”. He adds:
“Rising gas prices, not net-zero, have driven most of the recent surge in Britain’s energy bills. Britain is particularly exposed, with over 80% of households connected to gas mains, while our electricity system still relies too much on gas as the marginal unit.”
The analysis comes after the UK government gave its approval for the Jackdaw gas field to be developed in the North Sea, despite stating that it “would not…affect prices”.
Another gas crisis
In January 2026, Carbon Brief reported that two-thirds of the rise in electricity bills since before the 2022 global energy crisis was due to high gas prices.
Now, amid ongoing conflict in the Middle East, wholesale gas prices are at their highest levels since Russia’s 2022 invasion of Ukraine.
Indeed, as of 19 October, UK wholesale gas prices stood at 220p per therm (£75 per megawatt hour, MWh), above the average for 2022 of 210p/therm (£72/MWh).
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