Due to lack of support from the Liberals and the Bloc, the Conservative motion to extend the carbon tax exemption to all heating fuels was not adopted by the House of Commons on Monday afternoon. Explanations in six questions of this controversial federal tax, once again at the forefront of debates in Ottawa.
What are the changes to the carbon tax?
The announcement took many by surprise. The Trudeau government announced, towards the end of October, that it was suspending the carbon tax on domestic heating oil for three years.
The federal carbon tax, introduced by the Liberal government in 2019, aims to incentivize individuals and businesses to consume less fossil fuels and change their behaviors to adopt cleaner options. It does not apply to hydroelectricity or other energy sources that do not emit any carbon pollution.
Prime Minister Trudeau also announced an increase in financial assistance (from $10,000 to $15,000) granted to households who want to switch from oil heating to a heat pump.
Who is affected by this measure?
The vast majority of Canadians are not covered by this exemption. According to Statistics Canada data, only about 3% of Canadians heated their homes with oil in 2021, and most are concentrated on the Atlantic coast. Nearly 30% of homes in the eastern provinces rely on fuel oil for heating.
In addition, a temporary suspension of the application of the fuel charge to deliveries of light fuel oil will also be in effect in the provinces and territories where this charge applies. These are Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Nunavut, Ontario, Prince Edward Island , Saskatchewan and Yukon.
The measure therefore does not apply to Quebec, British Columbia and the Northwest Territories, which have their own taxation system.
What do the other provinces say about it?
If the government was trying to calm discontent over this tax in the Atlantic, its measure has instead created even more discontent elsewhere in the country.
Western Canadian premiers sharply criticized the Liberals, accusing them of regional bias — as the announcement will not benefit the majority of households in the region who use natural gas to heat their homes.
The prime ministers of Alberta, Danielle Smith, and of Saskatchewan, Scott Moe, called for this pause to also apply to natural gas, the fuel mainly used in homes in their provinces. Ontario Prime Minister Doug Ford is outright calling for an end to the carbon tax.
At a meeting of provincial premiers in Halifax on Monday, British Columbia Premier David Eby said the relief measure was “unfair” to governments like his, which collect its own fuel tax.
Will the exemption be extended to other types of heating?
The leader of the official opposition, Pierre Poilievre, has been making this turnaround his favorite during debates in the chamber for several weeks. To increase pressure on the Liberals, he tabled a motion last Thursday to extend carbon tax relief to all heating fuels.
The Conservative motion was rejected during the vote in the chamber on Monday afternoon, with 186 votes against and 135 for. Almost all Liberal and Bloc elected officials opposed it. However, some deputies did not vote.
In a press scrum on Monday, the leader of the Bloc Québécois, Yves-François Blanchet, explained that his party “will not support a maneuver by the Conservatives whose environmental impact is negative”, especially since the carbon tax is not does not apply in Quebec.
To the surprise of many, members of the New Democratic Party (NDP) rallied behind the Conservatives and supported the motion proposed by Mr. Poilievre. NDP MP Peter Julian explained that the caucus decided to support the Conservative motion because it “does not deny the existence of climate change.”
“I’m fascinated by the fact that the NDP’s friendship with the Liberals is fading. […] It is the extremes of Parliament who will hug each other during a vote against the environment,” said the Bloc leader with irony.
Having just left the House after the rejection of his motion, Pierre Poilievre described the voting process as a “costly coalition with the separatists”.
Why is the announcement coming at this time?
In the context of the rising cost of living, the Liberals have faced pressing demands, particularly from MPs from the Atlantic provinces, to relax their carbon pricing policies.
Until last summer, heating oil was exempt from carbon pricing in the Atlantic. That’s when the four provinces were added to the national carbon pricing system, replacing a provincial version previously in place.
Prime Minister Trudeau also made the controversial announcement at a time when Pierre Poilievre’s Conservatives are rising in the polls in the east of the country.
According to the most recent projections from 338Canada, the Conservatives hold an eight-point lead over the Liberals in voting intentions in the Atlantic provinces, a traditionally liberal region. The Liberal Party currently holds 24 seats out of 32 in the region.
What are the effects in Quebec?
Quebecers are not affected by these exemptions, as the majority of the population heats with carbon-free electricity, therefore exempt from the carbon tax. The federal tax does not apply to Quebec either since the province established its own cap-and-trade system for emissions rights 10 years ago.