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Partners for Climate Protection

Carbon funds and carbon taxing

BC is currently the only province to institute a carbon tax, but municipalities in other jurisdictions could levy a similar tax on their own operations and use the funds to finance internal emission reduction initiatives. Carbon funds are similar to revolving funds, but may have more stipulations on the type of projects that can be financed.


Smaller or one-off infrastructure or community projects (carbon funds in Canada are typically less than $500,000).


  • Predictable, stable and secure source of revenue that can be used to finance future projects.
  • Keeps the municipality on track to reduce GHG emissions, as part of community energy or other official community plans.
  • Shows municipal leadership in putting a price on pollution, i.e. it removes the cost of pollution from the general tax base. 
  • Provides an incentive for municipalities to reduce their own emissions and encourages the public and private sectors to do the same.
  • Helps drive the local green economy.
  • Can insulate a community against rising energy prices.

Barriers and challenges

  • Could be politically unpopular, both at the political and public stages.
  • Administrative costs to set up, oversee and maintain the fund.
  • Municipalities may not have additional funds to bank as a carbon reserve fund.
  • Carbon neutrality is mandated or driven by carbon taxes, so many GHG reductions with the potential for offset market sale are excluded.
  • Benefits must be well communicated to the public.

Resources and notes

Municipal examples

  • Saanich, BC, was among the first municipalities to establish a Carbon Fund to finance initiatives that lower the municipality's corporate emissions. 
  • Dawson Creek, BC, established its Carbon Fund in a similar way as Saanich, but with a different pricing scheme.
  • In 2001, Laval, QC, began an offset program for GHGs aimed at development projects. Funds raised buy carbon credits that are recorded in a worldwide carbon credit registry managed by the Canadian Standards Association, and will be used to finance local or global GHG emission reduction projects.

Page Updated: 18/09/2015