Carbon tax exemption on home heating oil
On October 26, 2023, the Prime Minister announced a series of new measures to lower energy bills for Canadians, and to provide more time and new support to help Canadians to transition to cleaner, more affordable home heating options. These measures include:
Temporarily pausing the fuel charge on deliveries of heating oil in all provinces and territories where it currently applies, effective November 9, 2023;
Doubling the rural top-up for pollution pricing rebates (Climate Action Incentive payments) from 10 per cent to 20 per cent, with increased payments to rural residents starting in April 2024;
Making the average heat pump free for low- to median-income Canadians in provinces and territories that have agreed to support the delivery of enhanced federal heat pump grants; and,
Incentivizing the switch to heat pumps with $250 upfront payments for low- to median-income Canadians.
Pausing the Fuel Charge on Deliveries of Heating Oil
In order to provide more time and financial support for the roughly 1.1 million homes in Canada using home heating oil, to switch to heat pumps, the government announced that it proposes to temporarily pause the application of the fuel charge on deliveries of heating oil, in all jurisdictions where it currently applies, for a three-year period.
Heating oil costs and usage vary according to household size, the severity of cold weather, and whether a home is exclusively heated by oil or through a dual system. On average in Canada, a home that heats with oil will use 1,350 litres over a heating season. In Atlantic Canada, the average consumption can be up to 1,500 litres. Oil-heated homes in Canada can expect to spend $2,100 to $3,000 per year on heating fuel, not including the cost of the fuel charge on light fuel oil used for heating.
The federal government’s fuel charge pause will save the average Atlantic Canadian household, using 1,500 litres of home heating oil, about $261 this year.
Oil to Heat Pump Affordability program
The Oil to Heat Pump Affordability program (OHPA) was designed to help low- and middle-income households across Canada switch to a heat pump. As enhancements roll out, OPHA will remain available Canada-wide offering up to $10,000 in federal support.
More details are available here.
