Carbon price proceeds to go directly to Ontario residents: Trudeau

Prime Minister Justin Trudeau says the federal government will impose a carbon tax on Ontario and return the proceeds directly to the province's residents.

Trudeau made the comments moments after he met with newly elected Ontario Premier Doug Ford, who has begun the process of scrapping the province's cap-and-trade system.

A spokeswoman for federal Environment Minister Catherine McKenna said Wednesday that the $420 million earmarked for Ontario under the Low Carbon Economy Leadership Fund was under review.

The funding was contingent on the province agreeing to the fund's framework, which includes imposing a carbon price.

Ford campaigned on a promise to cancel cap and trade and has vowed to join a legal challenge of the federal government's ability to impose a carbon price on the provinces.

Cap and trade was introduced by Ontario's former Liberal government to put limits on the amount of acceptable emissions and create incentives for industry to invest in reducing their carbon footprint.