Why has Justin Trudeau Diverged his Tracks and (Kind of) Axed the Carbon Tax?

By Lisa Fuda

October 26, 2023

Perhaps the word “axed” is too forceful to employ to describe the changes Canadian Prime Minister Justin Trudeau made to the country’s carbon pricing policy in October. Nevertheless, Trudeau’s three-year carbon tax exemption on home heating oil, inherently in conflict with his previous hardline support for carbon pricing in Canada, is shocking yet welcome news to some voters - or perhaps those pragmatists by whom idealistic ends facilitated by exclusively rational and realistic means are desired. 

When Trudeau announced this change on October 26, he stood with members of his Atlantic caucus. A coincidence this was not. Atlantic provincial systems for applying carbon pricing were deemed ineffective in July, and it was only then that home heating oil came to be included in carbon pricing in these provinces. Voters in Atlantic ridings, traditionally Liberal strongholds, were infuriated. The cost of living, for them, had simply been getting too high. Now the feds agree. They say taking the price off home heating oil will save the average homeowner $250. 

Trudeau, however, insists that this move was not good politics, but rather good policy. The carbon tax’s purpose is to discourage the usage of dangerous and archaic fossil fuels as popular energy sources and instead facilitate a transition to more eco-friendly sources. Making the change from heating oil to heating pumps is costly and time-consuming. The tax would not be grossly higher than that of making the switch, so there would be no tangible reward of a carbon tax on home heating oil. 

Despite this move, which many might consider a concession of sorts, Trudeau is unwilling to admit defeat to climate change. Incentives, as opposed to increased taxes and perceived pressure from governments, are often considered more effective means of shifting demographic trends and influencing change. Thus, the federal government is offering an upfront payment of $250 to low and median-income households that use a joint federal-provincial program to sign up for a heat pump. The government is also increasing, from a maximum of  $10,000 to $15,000, a grant for switching to heat pumps. 

Despite the varying motives many believe Prime Minister Trudeau had for announcing a three-year carbon tax exemption on home heating oil, the political and practical impacts of such cannot be overstated. On X, previously known as Twitter, Conservative Opposition Leader Pierre Poilievre attacked Trudeau, saying, “After plummeting in the polls and minutes before my axe the tax rally, he [Trudeau]… panicked and promised to delay his home heating oil tax until after the election. I will keep the heat on and take the tax off.” The move also drew criticism in Alberta. Why, Albertans inevitably questioned, should the carbon tax on natural gas remain, but that on fuel oil be waived? 

It is true that Trudeau responded to genuine concerns in Atlantic Canada and consequently appeased Atlantic voters by implementing this carbon tax exemption. However, he may have alienated more urban and cosmopolitan Ontario voters, those by whom the benefits of incentivization, as opposed to taxation, are unknown. In terms of policy, one must keep an eager eye on Canada’s transition to net-zero emissions and heat pumps’ role in such. In theory, they hold great promise, and the most attractive means of getting them into Canadian homes, also known as incentives, might be a crucial step toward achieving such a goal. Essentially, it will be a matter of time before one can fully grasp the political ramifications and determine the efficacy of Trudeau’s decision, whatever its underlying motive, to diverge from his tracks and partially axe his contentious carbon tax. 

Citations: Canada's National Observer, CityNews  Click to learn more!