The federal government’s fully subsidized heat-pump pilot program for lower-income households in much of Atlantic Canada has tripled the cost of the federal heating retrofit policy, bringing the total price tag to $750-million.
Prime Minister Justin Trudeau announced the program more than a week ago as part of what the government called an “energy affordability package.” The program is eligible only to households that currently use heating oil. The suite of changes also exempted home heating oil from the carbon price for more than three years and doubled the rural top-up for the carbon-price rebate.
More than a week later, Ottawa has not yet published background documents to explain the costs and technical details of the program.
When Mr. Trudeau made the announcement on Oct. 26, The Globe and Mail asked how much more the heat-pump program would cost. No price tag was provided.
Since then, Finance Minister Chrystia Freeland’s office told The Globe that the new initiative has in fact tripled the cost of the government’s heat-pump program. Spokesperson Katherine Cuplinskas has said Ottawa estimates that it will cost a further $500-million. The money will come from Ottawa’s $2.2-billion Low Carbon Economy Fund.
A previous program announced last year was expected to cost $250-million over four years. Under that program, all households had to pay for some of the costs of a new heat pump.
In a statement, Carolyn Svonkin, a spokesperson for Natural Resources Minister Jonathan Wilkinson, said this week that the extra $500-million will be available for four years, beginning in the current budget year.
Lower-income households that qualify for a fully subsidized heat pump, will get $15,000 from Ottawa and $5,000 from their province. The federal government says that will cover the average cost of switching from heating oil to a heat pump.
It is also offering lower-income households a $250 signing bonus for the program.
Nova Scotia, PEI and Newfoundland and Labrador have all joined the program. Ottawa is in talks with New Brunswick and British Columbia to launch it in those provinces as well.
Mr. Wilkinson’s office said depending on how many other provinces sign on, the new $750-million cost estimate could still change.
Heating oil is disproportionately used in the Atlantic provinces.
According to the most recent data from Statistics Canada, in 2021, three per cent of Canadian households used home heating oil. On the East Coast, that rate is sharply higher. In Nova Scotia, for example, 41 per cent of households rely on oil to heat their homes; in PEI, it’s 54 per cent.
Heating oil is more expensive than other fuels and has higher emissions.
The disproportionate relief that the government’s new programs give to people on the East Coast – where the Liberals have their only rural stronghold – has prompted a firestorm of criticism and accusations of regional favouritism.
The government has tried to rebut those claims, noting that heating oil is also used in other provinces. Mr. Wilkinson has also insisted that the new heat-pump installation program is national in scope.
But British Columbia says that until Mr. Trudeau announced the program for three Atlantic provinces, it wasn’t getting traction in its requests for a similar pilot program. The province says it never received a response to a proposed pilot program sent to Mr. Wilkinson in May.
“B.C. has been trying to work with the feds on co-delivery for months,” said spokesperson George Smith.
On Friday, Mr. Wilkinson’s office said he met with his B.C. counterpart about the program a day earlier and that talks are “active.”
Other premiers are rejecting the federal request to share costs on the heat-pump program.
“This is a federal program to address the consequences of a federal tax. It’s up to the federal government to fund it,” said Ivana Yelich, a spokesperson for Ontario Premier Doug Ford.
According to Statistics Canada, 87,639 households in Ontario rely on home heating oil. That amounts to 2 per cent of households. Conversely, 67 per cent of Ontario homes use natural gas.
Mr. Ford on Friday challenged the federal Liberal Party’s 76 Ontario MPs to ensure that their constituents get equal treatment, by also scrapping the carbon price from natural gas used for home heating.
Conservative Leader Pierre Poilievre will force a vote on the issue in the House on Monday.
Ottawa has said that the expanded heat-pump program is needed for lower-income families because they otherwise cannot afford the upfront costs of switching to a lower-emissions heating system.
Brendan Haley, the research director with Carleton University think tank Efficiency Canada, said the new heat-pump program will have a significant impact and could lead to retrofits for almost 30 per cent of low-income, oil-heated homes.
He said that without the extra support for low-income households, those individuals were left having their tax dollars go to green home retrofit programs that they themselves can’t afford to take part in.
Still, Efficiency Canada said the oil to heat-pump program “leaves out the vast majority of Canadians.”
“The federal government should be creating an energy-efficiency program accessible to all low-income Canadians, regardless of their heating source,” Prof. Haley said.