It is being described as a significant climb-down for the Trudeau government’s carbon pricing policy.
The federal government says it is pausing the carbon tax on home heating oil for the next three years.
It was part of an “energy affordability package” announced Thursday by Prime Minister Justin Trudeau.
“We have to make sure we are fighting climate change in ways that support all Canadians,” said Trudeau.
Trudeau said they are also doubling the carbon tax rural top-up rate, increasing it from 10 per cent to 20 per cent, starting in April.
In addition, the government is offering new initiatives to encourage homeowners to switch from heating oil to an electric heat pump, starting with a pilot project in Atlantic Canada.
Low-to-median-income households who heat with oil will get a $250 upfront payment when they sign up for a heat pump through a federal-provincial government program.
The amount of federal funding under the Oil to Heat Pump Affordability program will also increase from $10,000 to $15,000, which means most lower-income households would be able to get their heat pump for free.
“Many people in Atlantic Canada and in rural communities across the country rely on home heating oil,” said Trudeau. “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.”
Meanwhile, the federal Conservatives said the new initiatives are an admission by the Trudeau government that his tax is hurting Canadians.
Pierre Poiliever said the temporary pause on the carbon tax for home heating oil does nothing for 97 per cent of households.
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