Canada’s Premiers Take Aim at Trudeau’s Signature Climate Policy

(Bloomberg) -- The cornerstone of Prime Minister Justin Trudeau’s climate policy is being chipped away at after his government announced a three-year pause on the carbon tax applied to home heating oil, which is primarily used in the Atlantic provinces. 

Several Canadian premiers are now demanding the same exemption on fossil fuels used to heat their residents’ homes, arguing the break is essential to combat rising prices.

“During this inflationary moment right now, people are suffering. The temperatures are getting colder,” said Manitoba Premier Wab Kinew. “In light of that, we do think there should be similar consideration given to the people of Manitoba.” Kinew, the first person of First Nations heritage to be elected to run a Canadian province, made the comments at a news conference Monday after a gathering of the country’s premiers in Halifax, Nova Scotia. 

Trudeau announced the tax pause on home heating oil, mostly used in the four east coast provinces, last month after weeks of sinking poll numbers. His Liberal Party holds 24 of the 32 House of Commons seats in Atlantic Canada, and constituents had been complaining to lawmakers about higher costs. 

But the move, which Trudeau billed as his government “doubling down” on climate action by giving residents the time and money to switch to electric heat pumps, sparked an outcry from premiers across the country. Saskatchewan’s Scott Moe vowed to stop collecting the tax on natural gas in his province and said he’s looking into halting the levy for other types of fuel as well.

The tax is “not effective” in Atlantic Canada, said Nova Scotia Premier Tim Houston, who’s sympathetic to other premiers’ demands. “I think they should get rid of the carbon tax and move on to working with us on other initiatives,” he said. 

When Trudeau announced the pause on the tax on heating oil, he also unveiled a pilot project in Atlantic Canada to install free heat pumps for people with incomes at or below the median, as well as an increase to carbon-rebate checks for people living in rural Canada. Residents of most Canadian provinces receive hundreds of dollars a year in rebates from the federal government to offset higher costs caused by the carbon tax.

British Columbia, Quebec and the Northwest Territories collect their own carbon payments and are not subject to the federal tax, so they aren’t asking for the exemption. BC Premier David Eby, holding up a T-shirt that said “I (Heart) Heating Pumps,” urged the federal government to expand its pilot project to his province as well.

Trudeau’s partial reversal on the carbon price has also left him politically vulnerable at the federal level. Conservative Leader Pierre Poilievre put forward a non-binding motion in the House to exempt all forms of home heating from the tax. The New Democratic Party caucus, which has a power-sharing agreement with the Liberals, reluctantly supported the motion, with Leader Jagmeet Singh describing it as a vote against the government’s “divisive” decision to favor one region over another. 

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