Federal Government Announces Relief on Energy Costs for Atlantic and Rural Canadians
Last week, Prime Minister Justin Trudeau announced some important changes in its approach to helping Canadians save energy and manage the transition to low carbon technologies.
First, the Prime Minister announced that the government will introduce a “temporary, three-year pause” to the federal price on pollution (fuel charge) on deliveries of heating oil in all jurisdictions where the federal fuel charge is in effect. The pause will begin on November 9th. While the fuel charge is already returned to consumers through the pollution price rebate, this temporary pause will save a typical household that uses heating oil $250 at the current rate.
Second, the government will double the pollution price rebate (Climate Action Incentive Payment) rural top-up rate, increasing it from 10 to 20 per cent of the baseline amount starting in April 2024. This change acknowledged that “people who live in rural communities face unique realities, and this measure will help put even more money back in the pockets of families dealing with higher energy costs because they live outside a large city.”
Third, the Prime Minister committed to work with provinces and territories to make it easier for Canadian homeowners to switch to an electric heat pump to heat their homes. He announced the following new measures that will be piloted initially in Atlantic Canada:
- An upfront payment of $250 for low- to median-income households, which will be available to those who heat their homes with oil and sign up for a heat pump through a joint federal-provincial government program (Greener Homes).
- A strengthened Oil to Heat Pump Affordability (OHPA) 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 change will make an average heat pump essentially free for lower income households.
There has been some speculation that the government might go further to appease concerns from Canadians about the perceived cost-of-living effects of the price on carbon, extending the relief to other parts of the country, but that remains to be seen. Government policy administrators note that “the federal fuel charge is implemented only in provinces and territories that request it or that do not have their own carbon pricing system. All direct proceeds from the fuel charge are returned to the jurisdiction where they were collected. Through the pollution price rebate, eight out of 10 families in backstop provinces receive more money back than they pay into the system.”
The carbon price has been an essential tool in federal efforts fight climate change. It was intended to make fossil fuels more expensive as an energy source and to encourage people to find cleaner alternatives. The Prime Minister said last week that it was becoming clear that the transition to heat pumps wasn’t happening quickly enough, in part because it takes time and investment to make the switch. The three-year relief is intended to give people more time to make the switch and to lessen the cost burden in the meantime.
According to Statistics Canada, in 2021 only 3% of households in Canada relied on heating oil, while 44% of households used natural gas and 40% used electricity.
HRAI will keep members informed as these changes are rolled out.
To see the official news release click HERE.
For more information or to share your views, contact Martin Luymes at 1-800-267-2231 ext. 235 or email mluymes@hrai.ca.
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