Trudeau just blinked on his premier climate change initiative, the carbon tax

By Brian Zinchuk

With Atlantic Canada in revolt over the carbon tax on fuel oil, Trudeau suspends carbon tax for three years (until after the next election)

OTTAWA – Late in the afternoon of Oct. 26, the staunch federal Liberal policy of climate change priorities conquers all just cracked.

With Atlantic Canada, once a solid Liberal base, up in arms over the federal carbon tax on fuel oil used for home heating, Prime Minister Justin Trudeau blinked.

For the next three years (which would put it beyond the next federal election), fuel oil will be relieved of the federal carbon tax. While most of Canada stopped using fuel oil (very similar to diesel) for home heating years ago in favour of natural gas, up to 40 per cent of the population of certain Atlantic Canada provinces still use it. Up until July, fuel oil for home heating had been exempt from the carbon tax. And as those provinces recently adopted the federal carbon tax this past summer as it applies to fuel oil, those constituents were about to see major hikes in their heating bills as winter comes to bear.

Prime Minister Justin Trudeau announcing a three-year pause on the carbon tax on home heating fuel oil in Atlantic Canada. Notably, while Trudeau had no jacket and his sleeves rolled up, all 16 MPs standing behind him were more formally attired, with all the men wearing suit jackets. CPAC

During those three years, the federal government will heavily subsidize the adoption of electrically-powered heat pumps as a replacement for current fuel oil heating systems.

The announcement from Prime Minister Justin Trudeau also comes at a time when he and his party have been tanking in opinion polls. The “Atlantic caucus” of Liberal MPs flanked Trudeau as he made the announcement.

The pause was announced with the federal carbon tax currently at $65 per tonne of CO2 equivalent (CO2e). In three years, the carbon tax will be $110 per tonne, nearly double its current level. Trudeau did not specifically say what would happen at the end of the three year relief period.

Price on pollution

Trudeau opened by saying, “Let me first talk a bit about the price on pollution. Economists and experts around the world have long known that putting a price on carbon emissions is the best way to drive down those emissions that caused climate change. It’s the cheapest, most efficient and most impactful way and it’s working. We are bending the curve leading the G7 countries because of our price on pollution. And then we design that price on pollution. So that incentivizes people to choose less-polluting ways to live and work and it puts money back in the pockets of eight out of 10 households where the federal system applies.”

However, apparently not enough people in Atlantic Canada to date have been incentivized to get off of fuel oil heating, so Trudeau announced a massive subsidy to a new technology, and a short timeline for it to be put into place.

He said, “We’ve heard clearly from Atlantic Canadians through our amazing Atlantic MPs, that since the federal pollution price came into force this summer, replacing provincial systems, certain features of that pollution price needed to be adjusted to work for everyone.”

Trudeau continued, “Specifically, as Kody (Blois) said, many people in Atlantic Canada and in rural communities across the country rely on home heating oil. To be blunt, the price signal on heating oil is not resulting in enough people being able to switch to electric heat pumps, despite people wanting to move to these cleaner home heating options.”

Heat pumps for all

He continued, “Atlantic Canadians understand as well as anyone else in the country why we need to fight climate change, and what the impacts of extreme weather are on people. But we have to make sure we’re fighting climate change in ways that supports all Canadians that has been at the centre of our choices as a government for the past eight years, fight climate change, while supporting Canadians in how we do it. That is why today we are announcing a three year pause on the federal pollution price on heating oil, so that we can give everyone the time and ability to switch to heat pumps.”

Those three years will be spent implementing a massive conversion from fuel oil heating to electrically-powered heat pumps. Heat pumps have become the key technology the federal government has been pushing in the last couple years to replace combusting fossil fuels for space heating. Similar in operation to an air conditioner, they don’t burn fuel, but rather extract heat from the outside environment, which can be problematic when temperatures get extremely cold and there’s precious little heat outside to extract.

In making his pitch, Trudeau said, “Switching to an electric heat pump from oil heating, which is very vulnerable to volatile global market prices, can save people a lot of money. In fact, it can mean as much as 1000s of dollars a year less spent on energy bills. So the second part of our announcement today is that, piloting in the Atlantic, we’re working with provinces to install a free heat pump for people who are making at or below median household.”

That means half the population would get a taxpayer funded “free” heat pump. The press release noted, “A strengthened Oil to Heat Pump Affordability program that will partner with provinces and territories to increase from $10,000 to $15,000 the amount of federal funding eligible homeowners can receive for installing a heat pump, adding up to an additional $5,000 in grant funding to match provincial and territorial contributions via co-delivery arrangements. This would make the average heat pump free for lower income households as we continue to minimize upfront costs and make federal programs even easier to access for all households.”

Surprise money, more money

And Trudeau surprised his own MPs by promising a $250 incentive to sign up right now. “Didn’t how about that one, guys?” he said to the applause of his Atlantic caucus.

“And for everyone else, we’ve got an enhanced program that will deliver heat pumps upfront, to be paid off with the savings you’ll be getting over the coming years.

“We are switching to heat pumps, off home heating oil, as a region in Atlantic Canada, and as a country.”

Trudeau said rural Canadians will be getting more money as well. He said, “One more thing today, we are doubling from 10 to 20 per cent the rural top up that people get as part of their quarterly pollution price rebates. Because if you live in a rural community, you don’t have the same options that people who live in cities do. We get that. So this is more money in your pocket to recognize those realities, even as we continue to fight climate change and build a stronger economy.”

Why now?

When asked, “Why wait until now to do this?” Trudeau said, “This is an important moment where were adjusting policies so that they have the right outcome. We are doubling down on our fight against climate change and keeping true to the principles that we are supporting Canadians while we fight climate change. We recognize that for many people, particularly in Atlantic Canada, where the proportion of home heating oil is higher than elsewhere across the country, regardless of the price signal, they were unable to make the switch to heat pumps, for example.

“So we decided to take a slightly different tack of suspending the price on pollution on home heating oil for three years, while we ensure that everyone can get access to a heat pump and get it installed, free, working with the provinces, for people on the below the median income scale, and upfront with an interest-free loan to pay it back with the savings they’re going to make on electricity for higher income people.

“This is a program that continues to push what we need, which is to reduce our emissions, and to support families as we do it. It’s a program that took a lot of hard work and a lot of discussions in terms of getting it right. But the various elements that we’re announcing today, I know are going to be extremely well received by people across Atlantic Canada.”

Undermining

Asked if he was undermining his own policy by granting a carbon tax exemption, Trudeau replied, “It’s actually enhancing our own policy. This is about accelerating the adoption of heat pumps. What we heard very clearly from Atlantic Canadians over the past months was the pricing signal on home heating oil was not, in itself, sufficient to be able to transition, to be able to have people say ‘Okay, it’s worth it for me to invest in a home heat pump.’

“And the conversations we had with people we realize that that’s what we want, as we’re getting off coal as we’re electrifying our grids across the country, as we’re looking to reduce our emissions. We know the solution. Heat pumps are a massive, clear solution to fighting climate change, and to creating more affordability for families across the country. But Atlantic Canadians in particular, were unable, many of them were unable to make that switch,” he said, reiterating the “free” aspect of the program.

He said, “So the point of our fight against climate change, the point of our price on pollution and all the measures we put forward is to get people to change behaviors in ways that are affordable to them that are going to save them money and leave them better off. And that’s exactly what this announcement does.”

Re-electing Atlantic MPs

The National Post reporter challenged Trudeau about fairness for people in rural Ontario, Alberta and Saskatchewan who have been paying the carbon tax on heating for years, with no exemptions. “What do you say to those people? Is that about a real change or is this about not wanting to lose a bunch of Atlantic Canadian MPs?” the reporter asked. Sixteen of those Liberal MPs were standing behind Trudeau for the cameras.

Trudeau replied, “The highest proportion of people with home heating oil across the country are in Atlantic Canada, and that’s why this hit them particularly hard, as the provincial pricing systems were replaced by the federal pricing system. But people across the country are going to benefit from the  suspension of the price on pollution on home heating oil and benefit from the programs we’re putting in place to make sure that they can switch to heat pumps. Right now, low income families across the country can access the $10,000 grant to switch to heat pumps. Those who are in provinces that will work with us to cover the rest of the amount, as three provinces in Atlantic Canada are right now, with the forth coming on shortly, I am certain, we are going to be able to make sure that people across the country make the switch from home heating oil to heat pumps. Because that’s the kind of thing that we’re both save people money, right across the country, and fight climate change in all the ways that matter.”

When asked about people who use natural gas for heating, Trudeau replied that home heating oil was a much less environmentally efficient way to heat homes and it was “one of those low hanging fruits.”

Pierre Poilievre responds

The announcement came well after the typical news cycles, meaning social media was where most commentary was found. Leader of the Opposition Conservative Leader Pierre Poilievre was just heading into a “Axe the tax” rally in Nova Scotia with what he said were 1,000 people attending when the news broke. He said on X, “After plummeting in the polls, a flailing, desperate Trudeau is now flipping and flopping on the carbon tax as I am holding a gigantic axe the tax rally in a Liberal-held Atlantic riding. He is admitting he’s not worth the cost.”

And then he added, “Last year, Trudeau voted AGAINST our motion to take his tax off home heating oil. After plummeting in the polls and minutes before my axe the tax rally, he…panicked and promised to delay his home heating oil tax until after the election. I will keep the heat on and take the tax off.”

Premier Scott Moe

Saskatchewan Premier Scott Moe responded on X, saying, “After years of telling us that most households are getting more money back from the carbon tax than they pay, Trudeau today announced a three year pause of his carbon tax on home heating oil to make life more affordable.

“So isn’t that an admission that the Trudeau carbon tax is making life a lot less affordable?

“And of course, it doesn’t do much for Saskatchewan. The carbon tax is still being fully applied to natural gas and over 90% of Saskatchewan households are heated with natural gas.

“Just axe the tax on everyone and everything.”

Premier Danielle Smith

Alberta Premier Danielle Smith said on X, “Although I congratulate Atlantic Canadians for a well deserved break from the carbon tax on home heating oil, I am frankly disturbed that same break will not be extended to Albertans and those from Saskatchewan and elsewhere in Canada who heat their homes with natural gas.

“Question for the Liberal Government: Are we not Canadians too?

“What a terrible message this sends about how dysfunctional and divisive Ottawa has become.”