B.C. ministers surprised by federal tax exemption on home heating oil, which excludes B.C.

Two B.C. environment ministers say they were caught off guard by a federal announcement on carbon tax exemption for home heating oil.

“We just learned of this federal announcement, which is unfortunate, because B.C. is leading Canada with our CleanBC climate action plan,” reads a joint statement by Josie Osborne, minister of energy, mines and low carbon innovation, and George Heyman, minister of environment and climate change strategy.

“We expect better partnership from the federal government.”

The tax exemption, announced Thursday, will pause the collection of fuel charge tax on light fuel oil used to provide heating to a home or building, and will apply to 10 provinces and territories where the federal carbon tax applies.

British Columbia, Quebec, and the Northwest Territories have their own fuel tax systems, and are not included in the federal exemption, which will come into effect Nov. 1 and continue until March 31, 2027.

The federal government also announced it is doubling a federal pollution pricing rebate for small and rural communities in Alberta, Saskatchewan, Manitoba and Ontario.

The Climate Action Incentive Payment is a fixed rate paid out to residents who qualify based on income. People living in small or rural communities in the province currently receive an extra 10 per cent on top of this fund, and the federal announcement doubles this to 20 per cent.

Osborne and Heyman acknowledged that using home heating oil is less common in B.C., although there are still households that rely on it.

Under B.C.’s fuel tax system, the current carbon tax rate for light fuel oil sits at 16.85 cents per litre. By April 1, 2026, that is scheduled to increase to 28.51 cents per litre.

The current federal carbon tax on light fuel oil is 17.38 cents per litre, and is set to increase to 29.41 cents per litre by the same date.

Osborne and Heyman were not available for comment Friday.

However, a spokesperson from Osborne’s ministry said the province wasn’t informed about elements of Ottawa’s announcement until a few hours before it was made.

The spokesperson said the province is looking at options to further assist households reliant on oil for home heating, and that it is “disappointed that Canada is moving forward first with other provinces that have weaker climate plans.”

In a Friday statement to CBC News, Canada’s Minister of Energy and Natural Resources Jonathan Wilkinson praised B.C.’s leadership in pollution pricing and said he has been in touch with the provincial government directly.

“As the first jurisdiction in Canada to adopt an economy-wide price on pollution, British Columbia has led the way in showing that pollution pricing can achieve the environmental goals and economic ambitions of British Columbians,” said Wilkinson. 

More money for heat pumps to come

Ottawa said it will also increase incentives to switch from home heating oil to electric heat pumps.

Currently, the program offers $10,000 for eligible low- to medium-income households across Canada to install an electric heat pump.

That will increase to $15,000, first in Atlantic Canada. No timeline was provided for when that would be expanded to other provinces and territories.

In their statement, Osborne and Heyman said these incentives are something their ministries have been calling for. 

“We’ve long been pushing the federal government for exactly this sort of joint rebate for people switching from heating oil. We expect the federal government to get this done without any further delay.”

The province said B.C. ministers will be meeting with their federal counterparts and will “insist” that British Columbians using heating oil have access to the same federal rebates.

Wilkinson stressed the importance of pollution pricing in fighting climate change, and said his ministry stands “ready to engage with all provinces and territories who wish to enter into a co-delivery arrangement with the federal government to access the new supports.”

The federal changes come after Liberal MPs in Atlantic Canada put pressure on the government to provide relief for rising cost-of-living pressures, particularly for rural residents.

Currently, B.C. offers a combined provincial rebate of up to $6,000 to switch from fossil fuel heating to an electric heat pump. These rebates are offered through B.C. Hydro and CleanBC.

The province also offers a Climate Action Tax credit to more than two million residents, which they say they will increase to capture 80 per cent of residents by 2030.

The credit is automatically determined by income declared on taxes filed for the previous fiscal year, and is paid out automatically every three months to eligible residents through the Canadian Revenue Agency.