---
title: "Carbon Dividend Definition and Purpose | Model Diplomat"
description: "A carbon dividend is a per-capita cash rebate from carbon tax revenue, helping households offset higher energy costs. Ideal for policy researchers."
url: "https://modeldiplomat.com/learn/glossary/carbon-dividend"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- A carbon dividend is the per-capita cash rebate returned to households from revenue raised by a carbon tax or fee, designed to offset higher energy costs.
- How does a carbon dividend differ from a standard carbon tax?
- Why is the carbon dividend considered progressive?
- What is the theoretical basis of carbon pricing?
- Which case upheld Canada's carbon pricing scheme?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

A carbon dividend is the per-capita cash rebate returned to households from revenue raised by a carbon tax or fee, designed to offset higher energy costs.

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Canada's Climate Action Incentive, launched in 2019 under the Greenhouse Gas Pollution Pricing Act (2018), returned about 90% of federal fuel-charge revenue to households as quarterly carbon dividends in backstop provinces.

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