On April 1, 2019, the federal government began implementing a carbon tax in provinces that didn’t already have their own carbon taxing plans in place (Ontario, Saskatchewan, Manitoba, and New Brunswick). The goal of this carbon tax is to encourage consumers to change their habits and reduce their use of CO2-emitting fuel and energy sources, ultimately reducing the amount of greenhouse gases released into our atmosphere. But how exactly is this supposed to work? And how can you reduce your carbon footprint to keep more money in your pocket? Let’s take a look at how carbon tax works and a few ways you could save.

How does carbon tax work?

To put it simply, carbon tax puts a price on each tonne of emissions from fossil fuel sources, including coal, natural gas, and gasoline. At this point, the federal carbon tax isn’t charged directly to consumers in the form of a standalone bill (like property taxes, for example), but it will directly affect large industrial emitters and fuel production and distribution companies. As a result, there are a few changes you’ll likely start seeing as a consumer (if you haven’t already), including an increase in the price of gas at the pump and higher energy bills.

How much carbon tax does the average household have to pay?

In 2019, the federal carbon tax costs $20 per tonne, or about 4.4 cents per litre of gasoline. For the average household, this will work out to about $200 to $400 per year, depending on where you live and your habits. The good news is carbon tax may not end up costing your household as much as you think it will, since the federal government aims to return the revenue to households through rebates.

How can you reduce your carbon footprint and pay less carbon tax?

Since the main purpose of the carbon tax is to encourage people to reduce their CO2 emissions, you can reduce the amount you spend on carbon tax if you do just that. Here are a few ways you can reduce your household’s carbon dioxide emissions:

  1. Change your driving habits. Instead of driving every day, consider carpooling, taking public transit, or biking to work instead — even once a week will help. You can also learn how to drive for fuel efficiency to save on gas and reduce your carbon emissions when you do get behind the wheel.
  2. If you’re thinking of buying a new vehicle, consider going for a hybrid or electric model, both of which reduce your carbon footprint. Learn the pros and cons of hybrid and pure electric vehicles before you start taking test drives.
  3. From layering up to installing a smart thermostat in your home, there are plenty of ways to save energy and lower your heating bills in the winter months.
  4. Limit your air conditioning use in the summer months and consider these seven tips to beat the heat without AC.
  5. Use cold water for your laundry and hang your clothes to dry instead of using the dryer. Consider these other green cleaning tips, too.

Making home upgrades for energy efficiency can not only help you save on carbon tax, but certain upgrades can help you save on home insurance, too. If you decide to make any upgrades to your home to make it more energy efficient, be sure to let your licensed insurance broker know so they can look into available discounts for you.

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