And how do you propose to make the distance from the East Coast of Canada to the West Coast of Canada closer? How do you get the lumber to grow in cities, or move the minerals and ores in the ground closer to urban centers?
You can't.
Europe is 10180000 km2 with 852 million people, Canada is 17075000 km2 with 34 million. It's not quite as bad as it seems because of how the population is distributed here in Canada, but these numbers should give you a pretty good idea of how much ground is needed to cover here in Canada to make things functional. If you have a business or industry that needs to service 4 million people, unless you happen to be in the Greater Toronto Area, you're going to have to cover a lot of ground. Currently the only way to do this is with fossil fuel based machinery.
That's just talking about the area, that says nothing about the energy intensive industry here in Canada; mining, manufacturing, forestry, fishing, farming.
Think about it, if you live in a town that primarily deals with the service industry you're going to have considerably less energy needs than the same size town that smelts ore as its primary industry. You can extend that all the way up to the economies of countries; ones that manufacture need considerably more energy than ones that deal in services.
And what happens if Canada stops making steel? China picks up the business. But China's energy needs are more fossil fuels based than Canada's, so the net emissions world wide increase.
Heavily taxing fuel in an economy that relies on fuel as heavily as Canada and even the US doesn't make any sense at this time. The notion is absurd.