Atlantic premiers welcome federal retreat on carbon pricing policy

HALIFAX -

East Coast premiers are welcoming Ottawa's retreat from its carbon pricing policy in Atlantic Canada, saying it will help the region cope with heating costs that some residents are struggling to bear.

Nova Scotia Premier Tim Houston said Friday the three-year "pause" on the carbon pricing of home heating oil is a move he favours, but added that leaving the pricing on gasoline and other fuels "is still very punitive."

The Progressive Conservative politician said his government has never believed the tax would be effective in curtailing use of home heating oil or cutting emissions.

"There's a lot of home heating oil used in Nova Scotia so the changes will help them heat their homes this winter and make life a little more affordable ... which is a good thing," he said.

The issue of pricing on home heating oil resonates in Atlantic Canada, where one-third of homes still use heating oil, a far higher proportion than in the rest of Canada.

Prince Edward Island Premier Dennis King said in an interview Friday he'd been lobbying Ottawa for "months and months, trying to make them aware that adding 18 cents a litre to home heating fuel was going to put thousands of Islanders in a very precarious situation."

King said until the province has better access to other fuel options, "all the tax does here is add to the cost at the pumps."

Newfoundland and Labrador Premier Andrew Furey said in a written statement his Liberal government is pleased the prime minister was listening to the provincial premiers' requests.

New Brunswick Premier Blaine Higgs emphasized that Trudeau didn't go far enough, urging Ottawa to cancel the carbon tax altogether. "It is costing us more money to live and work, and it's the root cause of the situation we're in. So, let's get rid of it," he said Friday at the legislature.

The federal government announced the measure on Thursday, along with an increase in the carbon price rebate for rural Canadians and added incentives to purchase heat pumps, as affordability concerns have left the party flailing in the polls in Atlantic Canada.

The retreat has provided federal Conservative Leader Pierre Poilievre fuel for a series of "Axe the Tax" rallies he's hosting in the region. He held one Thursday night in Windsor, N.S., and he was set to host one on Friday night in St. John's.

At a press conference in St. John's, N.L., on Friday morning, he called the three-year suspension on home heating fuel a "tiny gimmick." He noted that while those who heat their homes with oil will get a temporary break, the federal carbon pricing still applies to all other fuel.

"Remember, he (Prime Minister Justin Trudeau) is saying if he gets re-elected in the next election, a year later, he will put the tax back on home heating oil," Poilievre told reporters.

The four Atlantic provinces only started paying the carbon price in July, after provincial systems to reduce greenhouse gas emissions were deemed as failing to comply with federal standards.

At the same time, Ottawa introduced a new clean fuel standard to offset emissions from gasoline and diesel, which saw the public utilities board that set gas prices in the Atlantic provinces raise prices by as much as eight cents a litre.

The effects of both policies combined meant that gasoline alone went up 20 cents or more per litre in a matter of days throughout the region.

The federal Liberals said on Thursday that taking the carbon price off home heating oil will save an average homeowner $250.

However, Lars Osberg, a professor of economics at Dalhousie University, said in an interview the shift won't make a major dent in the higher cost of living for Atlantic Canadians. He said inflation is mostly due to higher food prices and housing costs, as wage increases have remained stagnant.

"Perceptions of inflation are very much influenced by how often you purchase something and how visible the price is, and the price of gasoline at the pumps is very, very visible ... but it's not a large fraction of the average household budget," he said.

"A bunch of governments want to deflect blame for the discontent of their constituents and Justin Trudeau is currently a convenient punching bag."

Larry Hughes, a professor of electrical engineering at Dalhousie, said many Atlantic Canadians will remain interested in shifting over to heat pumps from oil, as Ottawa boosts the subsidies for the units.

"Many residents will look at going to a heat pump simply because of the rising cost of oil," he said in an interview Friday.

-- With files from Keith Doucette and Michael MacDonald in Halifax and Sarah Smellie in St. John's, N.L.

This report by The Canadian Press was first published Oct. 27, 2023.