Canada Doubles Carbon Price Rebate, Pausing Heating Oil Charge

On Thursday, Prime Minister Justin Trudeau said that the Canadian government is doubling the pollution price rebate rural top-up rate and placing a three-year stop in the federal carbon price on heating oil supplies in all provinces where the federal fuel charge is in effect.

Effective April 2024, the rural top-up rate for Climate Action Incentive Payments will increase from 10% to 20% of the baseline amount. Trudeau said the move was made considering the higher energy expenses that rural residents experience.

“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,” said the Prime Minister.

The temporary suspension of the fuel charge on heating oil for households and small businesses will take effect in 14 days and will apply to all areas where the federal fuel tax is in effect. According to the Liberals, this break, which is set to last until March 31, 2027, will save an average household that consumes heating oil $250 at the present rate.

Also, as part of what the Prime Minister’s Office describes as a “new energy affordability package,” the federal government is introducing plans to make it more accessible to Canadians to switch to electric heat pumps to heat their homes, beginning in Atlantic Canada.

This pilot project will provide a $250 upfront payment to low-to-medium-income families that use oil to heat their houses. It also contains plans to expand a program that gives funds to Canadian households to help them switch from heating oil to more efficient and sustainable electric heat pumps.

Trudeau announced that the Liberals will raise the maximum amount of support available for the purchase and installation of a heat pump from $10,000 to $15,000. They will accomplish this by providing up to $5,000 in “grant funding to match provincial and territorial contributions,” which, according to a PMO announcement, will allow most homes to receive their pump for free.

“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,” added Trudeau. “As a government that is focused on evidence, data, and outcomes, and that is listening to Canadians, we heard you.”