The federal carbon tax (officially the federal fuel charge) is a price on carbon pollution applied in provinces that don't have their own equivalent carbon pricing systems meeting federal standards. The carbon price adds costs to fossil fuels based on their carbon content, creating incentives to reduce emissions. For municipalities, the carbon tax affects operating budgets—heating buildings, fueling vehicle fleets, and other energy-intensive operations cost more. Municipalities that have reduced their carbon footprint face lower increases. Carbon pricing revenue is largely returned to residents through Climate Action Incentive payments, but municipalities don't receive equivalent rebates and must manage costs within their budgets. Some municipalities advocate for carbon tax exemptions or rebates for public services, while others embrace carbon pricing as motivation for accelerating climate action in their operations and communities.