Catherine McKenna, Prime Minister Justin Trudeau’s former environment minister, urged him on Wednesday to reverse his carbon price exemption for home-heating oil, saying the Liberals are “lurching” on climate change policy and should instead defend it against Conservative attacks.
At the same time, the Conservatives ratcheted up a pressure campaign intended to force the Liberals to further soften their carbon pricing policies. On Wednesday, a week after Mr. Trudeau announced the heating oil exemption, Conservative Leader Pierre Poilievre tabled a motion that will force all MPs to vote on whether the exemption should be expanded.
The Prime Minister has already said that the government won’t exempt any other heating fuels from the carbon price, and won’t make any other changes to the federal policy. But the non-binding vote in the House of Commons will put the spotlight on backbench Liberal MPs, as well as New Democrats, who support the minority government in Parliament.
What to know about Trudeau’s carbon pricing system and the Atlantic exemption
In an interview, Ms. McKenna, the minister responsible for establishing the federal carbon price, which took effect in 2019, said the government has “confused carbon pricing with affordability.”
The government announced last week that the exemption will be in place for three years. It said the change is needed because heating oil is more expensive than other fuels and also has higher emissions. Mr. Trudeau has said the pause will give households time to change their heating systems.
Ms. McKenna disputed the government’s rationale for exempting heating oil from the carbon levy, saying the carbon price is “critically important” to getting people to stop using the fuel.
“They have an opportunity to reconsider the decision they made,” Ms. McKenna said. The former environment minister is now the chair of a United Nations expert group on the energy transition.
“My advice to them is, this isn’t a winner.”
For years, the Liberals have rebutted Conservative arguments that the carbon price, which puts an increasing price on carbon emissions with the goal of incentivizing consumers to change their behaviour, hurts affordability. The party has pointed out that the accompanying rebate that the government sends households leaves the majority of Canadians better off.
Ms. McKenna said the exemption undercuts the argument for the carbon price, and lets oil companies, which she said are setting skyrocketing prices, off the hook.
“Not only is it not good to lurch on policy, it’s also not addressing the real problem,” she said. “It sends a very strange message. It is not true that the carbon pricing is a problem.”
“The problem is the massive profits that gas companies are making,” she said.
Ms. McKenna said the government should instead bring in a windfall tax on oil and gas companies, then return those revenues to Canadians. The NDP is also calling for this.
On Parliament Hill, the Liberals continued to defend their heating oil exemption while rejecting widespread calls for the government to extend the same exemption to other fuels.
The exemption has led to accusations of regional favouritism. Heating oil is disproportionately used in Atlantic Canada, where the Liberals have their only rural stronghold.
The government is also offering free heat pumps to low-income families on the East Coast. Ottawa has said the pilot program will also be available to people in other provinces, but there is no timeline for its expansion.
The government is also doubling the rural carbon-price rebate in provinces that are subject to the federal carbon levy, which excludes British Columbia and Quebec. That change will take effect next year.
“His latest tactic is to charge higher carbon taxes on some people than on other people, a divide-and-conquer strategy being condemned even by some New Democrats,” Mr. Poilievre said in a public speech to his caucus on Wednesday, referring to the Prime Minister.
The Conservative Leader’s motion will be debated in the House on Thursday. MPs are expected to vote on it on Monday.
The vast majority of Liberal and NDP MPs last year voted against a similar Conservative motion to exempt all forms of home-heating fuel from the carbon price. But on Wednesday, NDP Leader Jagmeet Singh said his party hasn’t yet decided how it will vote this time.
Mr. Singh has also accused the Liberals of dividing the country with their home-heating oil exemption. But, instead of more carbon-price carveouts, his party has called on the federal government to lift the GST from all home heating.
Mr. Poilievre’s motion says that “given that the government has announced a ‘temporary, three-year pause’ to the federal carbon tax on home-heating oil, the House calls on the government to extend that pause to all forms of home heating.”
The Conservative Leader said in his speech to his caucus that the carbon price exemptions should be expanded until the next election, which he said should serve as a referendum on the levy.
The Liberals have campaigned on a carbon price in each of the past three elections – all of which they won.
Asked Wednesday about fighting the next campaign on a carbon price, the Prime Minister told reporters outside his own caucus meeting that “Canadians are deeply, deeply concerned about the need to continue to fight climate change in ways that makes life more affordable.”
Mr. Trudeau did not mention the carbon price exemption he unveiled last week, but he defended the new heat pump program, saying lower income Canadians need the extra support to make the switch from higher-emitting and expensive heating oil.
At a sustainable finance summit in Ottawa on Wednesday, former Bank of Canada governor Mark Carney, who also holds a senior climate leadership position at the UN, both applauded the government’s work to date and called on Canada to do more, including by implementing mandatory climate disclosures for companies.
In an interview after his speech, he cautioned that there will be costs associated with the uncertainty that the Liberals have brought to carbon pricing. He echoed Ms. McKenna’s comments, saying the heating-oil exemption misidentifies the problem and is “unhelpful for business investment.”
Instead, he said, the focus should be on speeding up the energy transition through things like the program to fund heat pump installations.
“The big lesson that Europe took from their energy crisis since Russia’s illegal invasion was exactly that. It just underscores that we need to accelerate.”
Marieke Walsh