Ottawa to pause carbon pricing on home heating oil for 3 years, Trudeau says

The federal government will pause applying carbon pricing to home heating oil deliveries for three years in a bid to accelerate Canadians’ switch to more environmentally-friendly heat pumps, Prime Minister Justin Trudeau announced Thursday.

Flanked by Atlantic Liberal MPs, Trudeau said the government will be rolling out incentives to Atlantic Canada households who are more reliant on heating oil, including enhanced payments and grants to lower the cost of installing a heat pump. Those incentives will be piloted in the Atlantic beginning in two weeks and then rolled out across the rest of the country.

Rural communities across Canada will also see a doubling of the top-up afforded to them as part of quarterly carbon pricing rebates, the prime minister said.

“We have to make sure we’re fighting climate change in ways that support all Canadians,” Trudeau told reporters in Ottawa.

The temporary, three-year carbon pricing pause for home heating oil deliveries will take effect in two weeks and last until March 31, 2027, applying to every jurisdiction under the federal fuel charge. Only Quebec, British Columbia and the Northwest Territories are not part of the national program.

Atlantic premiers have said since the summer — when the four provinces switched to the national carbon levy — that the pricing scheme disproportionately impacts their region, where home heating oil is still used by almost one-third of households. That’s a far higher proportion than the rest of Canada.

1:34 N.S. residents who heat with oil trying to get ahead of carbon tax increase

The carbon price is also higher on heating oil than natural gas, which is more commonly used in other provinces.

Regional MPs have been lobbying Trudeau for months for relief, as the costs mounted in their ridings and voters grew increasingly angry about it, which Trudeau acknowledged Thursday.

“We are nothing if not a government that listens to people, that is focused on our goals and is willing to adjust as necessary,” he said.

The Liberals have seen their political dominance in Atlantic Canada plummet over the summer, as their poll numbers nationally have dropped.

Conservative Leader Pierre Poilievre has hammered the Liberals on its carbon pricing program and has repeatedly toured Atlantic Canada to highlight the program’s effect on the rising cost of living. He’s due to return to the region this weekend.

Trudeau denied that the decision announced Thursday was about saving Liberal seats — and many of the MPs standing behind him scoffed at the suggestion.

The federal Liberals say taking the carbon price off home heating oil will save an average homeowner $250.

2:59 Poilievre grills Trudeau over inflation, affordable housing in Canada

The carbon price is intended to make fossil fuels more expensive as an energy source to encourage people to find alternatives. But Trudeau acknowledged that rural Canadians in particular were having difficulty doing just that, as well as those in Atlantic Canada.

As part of the changes announced Thursday, low- to median-income households in Atlantic Canada that use heating oil will be eligible for a $250 up-front payment if they sign up for a heat pump through a joint federal-provincial program like the Oil to Heat Pump Affordability Program.

Maximum grants afforded through that program will also be raised from $10,000 to $15,000 to match provincial contributions.

The federal government says the increases will make an average heat pump free for lower-income households.

The carbon price already comes with a rebate, which is issued every three months to offset the cost and keep most families from being worse off as a result of the carbon price. Doubling the rural top-up on that rebate, from 10 to 20 per cent, will take effect in April 2024.

“After all our hard work, I am glad the Prime Minister has listened and recognizes the impacts of carbon tax on our region, as he has taken a positive step towards helping Atlantic Canadians with affordability,” Newfoundland and Labrador Premier Andrew Furey said in a statement.

But the announcement was criticized by opposition parties, western premiers and economic experts who pointed out the changes would not affect many Canadians in other provinces.

“This temporary pause does nothing for 97 per cent of Canadian households,” the Conservatives said in a statement, calling the other incentives “gimmicks.”

The NDP said the Liberals need to do more to address the cost of home heating, including dropping the GST on heating fuel, and should spread the benefits across the country.

“The Liberals seem to be hand picking who they help based on their own political interests, leaving families in Northern Ontario, Alberta and other parts of the country behind,” the party’s environment critic Laurel Collins and natural resources critic Charlie Angus said in a statement.

Saskatchewan Premier Scott Moe on social media suggested Trudeau’s announcement was “an admission” that the carbon price “is making life a lot less affordable,” and called on Ottawa to “axe the tax on everyone and everything.”

University of Alberta economics professor Andrew Leach similarly pointed to the regional disparity in home heating oil use, calling the pause “unfair.”

“I just don’t see how this is tenable,” he wrote on X, formerly known as Twitter.

More to come…