October 26, 2023: The federal government sweetened its incentives for lower-income households in Atlantic Canada that replace oil furnaces with heat pumps, while suspending the federal carbon price on home heating oil for three years to give people time to make the switch.
Prime Minister Justin Trudeau said the extension of the $250-million Oil to Heat Pump Affordability Program will increase payments to households that are at or below the medium household income from C$10,000 to $15,000, making it essentially free to get a heat pump installed after factoring in contributions from provincial and territorial governments. The new measures are to be “piloted first in Atlantic Canada,” the Prime Minister’s Office said in a release.
Households that switch from oil to a cold-climate heat pump can expect to cut their heating and cooling bills by up to $2,500 per year, the PMO release said. The fuel charge freeze will come in the form of an up-front payment that saves the average household $250.
Ottawa is also increasing the rural top-up for its quarterly carbon price rebates from 10 to 20%, beginning in April, with the PMO release recognizing that “people who live in rural communities face unique realities”. Regular rebates in Atlantic provinces currently range from $92 for individuals and $138 for couples in New Brunswick, to $164 for individuals and $246 for couples in Newfoundland and Labrador. Of all the provinces, Alberta gets the biggest rebate, at $772 for individuals and $1,158 for couples, followed by Saskatchewan at $680 for individuals and $1,020 for couples.
Flanked by Liberal MPs from the region during a news conference Thursday, Trudeau pointed to the 30% of Atlantic households that still depend on oil heat.
“This is an important moment where we’re adjusting policies so that they have the right outcome,” he said. “We’re doubling down on our fight against climate change and keeping true to the principles that we’re supporting Canadians while we fight climate change,”
He added that, particularly in Atlantic Canada, the price signal delivered by a $65-per-tonne carbon price wasn’t enough to drive the switch to heat pumps. “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.” The devices are meant to be free for lower-income homes, while higher-income households receive interest-free loans that they can repay out of their energy savings.
The announcement comes with the federal Liberals well back in voter opinion polls, CBC notes, roughly two years ahead of an anticipated federal election. Opposition Conservatives and New Democrats dismissed the announcement, which followed intense pressure from Atlantic Liberal MPs who were rather more pleased with the outcome.
“This is about adjusting a national policy to ensure there is equity across the country,” Liberal Atlantic Caucus chair Kody Blois of Nova Scotia told CBC’s Power & Politics show. “This is not a step back on climate whatsoever.”
In his media statement, Trudeau acknowledged his Atlantic caucus for pushing for the program update, adding that it “took a lot of hard work and a lot of discussions to get it right.” In the video clip posted on CBC, a backbench MP can be seen nodding emphatically at those words.
The announcement got mostly positive reviews from climate and energy groups that have been prodding the government to simultaneously address energy poverty and drive down greenhouse gas emissions.
“Climate action and affordability must go hand in hand,” said Alex Cool-Fergus, national policy manager at Climate Action Network-Canada. “Canadians have been suffering from the volatile and rising costs of fossil fuels, and low-income households have been particularly vulnerable. Today’s announcement shows that moving away from fossil fuels can and must bring material benefits to Canadians.”
“The work of our Atlantic Chapter on energy democracy shows that people want to pitch in to address the climate emergency and shift to local clean affordable energy that benefits communities and prevents climate-driven disasters,” the Sierra Club Canada Foundation said, in a statement that warned Ottawa not to weaken its forthcoming emissions cap on oil and gas.
Betsy Agar, director of the Pembina Institute’s buildings program, called the new funding “an important step in moving to provide close to full financial support for heat pumps for low-income Canadians, who benefit most from more efficient, affordable heating and cooling.” But she added it was disappointing to see the government “enact a three-year pause of the carbon tax for rural home heating oil instead of investing in reducing heating energy demand through more efficient heating systems and home envelope upgrades.”