What is the purpose of carbon pricing in Canada?

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The main idea behind carbon pricing is to create a financial incentive to emit fewer greenhouse gases. By attaching a cost to each unit of emissions, polluting becomes more expensive, so businesses and individuals compare the price of emitting with the cost of cleaner options, efficiency upgrades, or lower-carbon energy. This price signal drives investment in cleaner technologies, smarter practices, and fuel-switching, helping to reduce overall emissions over time. In Canada, carbon pricing is designed to encourage emission reductions and to generate revenue that can support climate programs or be returned to households, rather than funding roads or subsidizing fossil fuels. It’s not about banning emissions outright; it uses price signals to shift behavior and technology choices toward a lower-carbon economy.