Trudeau moves to appease Atlantic discontent over carbon tax

After months of Atlantic Liberal MPs publicly criticizing their own party’s carbon pricing plans for pushing up the cost of living, Prime Minister Justin Trudeau is trying to steady the ship, announcing that the price applied to home heating oil will be paused for three years on the East Coast.

Speaking to reporters Thursday, Trudeau defended the carbon tax calling it an effective tool to bend greenhouse gas emissions while putting more money in the pockets of most Canadians, but conceded that after pressure from Atlantic Liberal MPs and their constituents, changes were needed.

“Many people in Atlantic Canada and in rural communities across the country rely on home heating oil, and 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,” he said. “Well, as a government that is focused on evidence and data and outcomes and is listening to Canadians, we heard you.”

Beyond pausing the carbon price applied to home heating oil, Trudeau also announced Ottawa would increase the rural top-up rebate from 10 per cent to 20 per cent from baseline payments generated from the carbon tax. This means residents in rural areas will see more money delivered to them. He further announced measures to make switching to heat pumps slightly more affordable, including an upfront payment of $250 for low- to median-income households and increasing federal grants for homeowners from $10,000 to $15,000.

That announcement is a clear response to requests from Atlantic MPs. A month ago, New Brunswick Liberal MPs Serge Cormier, René Arseneault and Wayne Long specifically called for the carbon tax on heating oil to be suspended and for the rural top-up to increase to 20 per cent.

Those MPs were just some of the Atlantic caucus to push cabinet to make changes. At the Liberals’ national caucus meeting in September, Atlantic MPs urged Trudeau to make exceptions to the carbon price to address affordability issues in rural areas. Some, like Liberal Atlantic caucus chair Kody Blois, said they supported the carbon price overall but wanted adjustments, while others have taken openly defiant positions, like Liberal MP Ken McDonald who voted with the Conservatives earlier this month on a non-binding motion to repeal the carbon tax.

McDonald told CBC: “I think they will lose seats not just in Newfoundland, not just in Atlantic Canada, but indeed right across the country if they don't get a grasp on this the way that I think they should… And if an election were called today, I'm not sure if the Liberal Party would actually form the government.”

University of Prince Edward Island political science professor Don Desserud told Canada’s National Observer that Trudeau’s announcement is a smart move that should take the wind out of the sails of critics looking to score points over the carbon tax, adding it would be a mistake to read the announcement as a backbench revolt.

“If push came to shove, [the Atlantic Liberal MPs] would line up and be loyal to their party as you would expect them to be,” he said. Responding to a regional caucus is good caucus management, Desserud says, in part because it’s useful for the prime minister to be able to say, “You've got really good MPs out here. Look what they're able to do, they talked to me and I listened because they're influential.”

“That is a message that helps the Liberals,” he said. “[Trudeau] can say we're not like Harper, who was infamous for having incredibly tight control over his caucus.”

Responding to Atlantic concerns also involves recognizing regional culture. There has long been a perception in Atlantic Canada that Ottawa isn’t responsive to their regional concerns as it is with larger, more influential provinces like Quebec and Ontario.

“Atlantic Canada tends to be the get-along guys that are there to co-operate and help, and that probably does us a lot better than people know, but it sometimes doesn't feel that way,” Desserud said. He added that being able to show voters their concerns can be heard is one way Atlantic Liberal MPs can convince voters they’re worth supporting again.

Still, Desserud said there are problems with the unfolding strategy. It will take time before any benefit is felt by prospective voters; by the time the next election is called, the relief offered Thursday could be a distant memory. It is also risky to state the pause on the carbon price being applied to home heating oil will last only three years, Desserud said. The set time frame gives opposition parties the opening to tell voters that to avoid the carbon tax being reapplied later on, they need to vote against the Liberals in the next election.

Conservative Leader Pierre Poilievre seized on that notion Friday where he played up what he called Trudeau’s “panic flip-flop” and took credit for the policy change.

“Justin Trudeau announced [Thursday] that if you re-elect him, he will put the tax back on your home heating oil,” Poilievre told reporters at a press conference in St. John’s, N.L.

“What caused Justin Trudeau to freak out [Thursday] and hold a sudden press conference to announce he was going to pause the carbon tax on home heating oil?” he said. “The answer is that he was plummeting in the polls, and Pierre Poilievre was holding massive rallies in Liberal-held ridings to axe the tax.”

NDP environment critic Laurel Collins and natural resources critic Charlie Angus said in a joint statement that Thursday’s announcement was a “long overdue reprieve for families in the Atlantic,” but questioned why the federal relief was only being applied in Atlantic Canada.

“The Liberals seem to be hand-picking who they help based on their own political interests, leaving families in northern Ontario, Alberta and other parts of the country behind,” the NDP MPs said. “For months, the NDP has urged the Liberals to drop the GST on home heating fuel to give hardworking Canadians a break on their bills. We also want to see programs like the one today for low-income families to get access to heat pumps expanded.”

Meanwhile, multiple environmental advocacy organizations took issue with suspending the carbon price on heating oil. The Pembina Institute called the pause “disappointing” and said now it was up to Ottawa to ensure the pause is used to focus attention on making life more affordable while making homes more energy efficient. Similarly, the David Suzuki Foundation (DSF) called the three-year pause “unfortunate.”

“With climate-fuelled weather events this summer on everyone’s mind, this is not the time to bring in exemptions to a levy that is doing its job,” DSF senior climate policy adviser Tom Green said in a statement. “It sends the wrong signal to those who are developing new clean technologies and making clean economy investments.”

Executive director of Clean Energy Canada Mark Zacharias said in a statement that temporarily exempting heating oil could give Canadians the impression that carbon pricing is responsible for high fuel prices, rather than fossil fuel-driven inflation.

“Since 2020, the carbon price on heating oil has increased by 12 cents per litre, while the average price for heating oil is now 75 cents higher,” he said. “Canadians are overwhelmingly feeling the impacts of geopolitics and fossil fuel inflation, not a climate policy.”