Guilbeault says no more carbon price carve outs on his watch

Environment Minister Steven Guilbeault said Monday he will not stand for any further adjustments to Canada's carbon-pricing system as a Conservative motion calling for more carve-outs failed in the House of Commons.

“As long as I’m the environment minister, there will be no more exemptions to carbon pricing,” Guilbeault told The Canadian Press in an interview.

“It’s certainly not ideal that we did it and in a perfect world we would not have to do that, but unfortunately we don’t live in a perfect world.”

The strength of the Liberals' carbon-pricing program was thrown into question after Prime Minister Justin Trudeau suddenly announced in late October that the government would provide a temporary, three-year pause from the carbon price for people who use home heating oil.

That exemption is set to take effect later this week.

Conservative Leader Pierre Poilievre called the move divisive and accused Trudeau of engaging in regional favouritism in a bid to reverse the Liberals' sluggish poll numbers in Atlantic Canada, where a disproportionate number of households still use home heating oil.

Last week, Poilievre introduced a motion in the House of Commons calling on MPs to back his call to take the carbon price off all forms of home heating until after the next election.

Poilievre wants the next vote — which could come as late as the fall of 2025 — to be fought over whether Canada should continue to have a carbon price or not.

The motion failed Monday by a vote of 186 to 135. The Liberals and Bloc Québécois voted against it, and the Tories and NDP voted in favour.

After the vote, Poilievre said the heating oil exemption proves the argument carbon pricing is not effective climate policy.

"According to him, you can remove the carbon tax off oil heat and it won't hurt the environment," Poilievre said, referring to Trudeau.

The Liberals defend offering a carve-out to their signature climate policy as a necessary move because the cost of home heating oil rose more than 70 per cent over the last two years and people were struggling to pay to replace it with alternatives such as heat pumps.

Trudeau also announced plans to increase the amount of grant money available to help low- and moderate-income Canadians replace oil furnaces with electric heat pumps. He said the pause gives people more time and money to make that change.

The Liberals also say that while the carbon-price rebate more than covers the associated added cost for natural gas, that isn't always true for home heating oil, which produces more greenhouse gas emissions and is charged a higher carbon levy.

Those rebates will be reduced to account for the home heating oil exemption. If natural gas were exempted, rebates would also fall, leaving most people using natural gas no further ahead financially.

About 1.1 million Canadians still have oil furnaces, and only about one in four of them are in Atlantic Canada, so a majority of those who will benefit from the policy live elsewhere.

However, as a share of total households, heating oil accounts for only about seven per cent of all homes nationally, but about 30 per cent in the Atlantic.

So the policy has a disproportionate impact in Atlantic Canada even though it applies countrywide.

Since the summer, consecutive polls have shown Poilievre's Conservatives well ahead of the Liberals. That includes across Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador, where Trudeau's Liberals have fared well since the 2015 election that returned them to power.

Most premiers decried the heating oil pause as fundamentally unfair, with Saskatchewan Premier Scott Moe threatening to stop collecting the federal carbon levy on all sources of heat in January if the Liberals do not expand the exemption.

At a meeting in Halifax Monday, provincial premiers released a statement calling on Trudeau to ensure federal policies, such as carbon pricing, are delivered in an equitable way, "particularly in light of the affordability challenges being faced across the country."

The Liberals have called on premiers to sign on as partners to the heat pump grant program. It was offered to all provinces, and can now provide up to $15,000 towards the cost of replacing an oil furnace with an electric heat pump. But only Nova Scotia, P.E.I. and Newfoundland and Labrador signed onto it.

Home heating oil was exempt from the carbon price in the Atlantic until July, when the four provinces began using the federal carbon price program, rather than their own provincial versions that until then Ottawa had approved.

Atlantic Liberals lobbied Trudeau hard for months before that change, and in the months since, to provide relief as concerns mounted about the cost of living.

Poilievre said the Liberal carbon-price about-face came as Trudeau panicked about his falling poll numbers.

The move from the Liberals came just before Poilievre was set to take the stage at a rally in rural Nova Scotia. It was part of a months-long "axe the tax" campaign, which the Conservatives are using to drum up support in key ridings.

Poilievre has promised to get rid of carbon pricing if he wins the next election.

The New Democrats' decision to vote in favour of Poilievre's motion came after failing to convince the Conservatives to push for the GST to be removed from home heating instead.

Siding with the Tories marked a shift for the NDP, which in early 2022 entered into a confidence-and-supply agreement with the governing Liberals.

This was not a confidence vote that risked bringing the government down, so that agreement did not apply.

Still, leader Jagmeet Singh said he was not happy to be on the Conservatives' side but the Liberals forced his hand.

"I'm always reluctant to vote alongside the Conservatives in any way," Singh told reporters on Monday, ahead of the vote.

"On this vote specifically, it is very clear that this is a vote to reject the divisive approach of the Liberals and I do reject their approach."

This report by The Canadian Press was first published Nov. 6, 2023.