OTTAWA -- The federal government expects to spend nearly $1.5 billion helping small and medium-sized businesses adapt to carbon pricing over the next five years -- but it will not exempt them from the new carbon tax regime.

Environment Minister Catherine McKenna says the government is no longer allowing anyone in Canada to pollute for free but that there will be supports to help small businesses adapt by making their operations more energy efficient.

McKenna's remarks come amid intense questioning by the Conservatives over why small businesses are being treated differently than big industrial emitters under the government's new carbon pricing system.

Big emitters will pay the carbon levy but only on a portion of their emissions based on the average emissions for their entire industrial sector.

Small and medium-sized businesses with smaller emissions will pay the tax on input fuel costs.

The government expects most of those costs to be passed on to consumers via higher prices which is why 90 per cent of the promised rebate will go to individuals and households while the other 10 per cent -- an estimated $1.455 billion between 2019-20 and 2023-24 -- will be used to help smaller businesses directly.