The Liberal government’s decision to exempt home heating oil from the federal carbon tax has sparked disagreement. Former Bank of Canada governor Mark Carney praised the government’s plan to help Canadians transition to heat pumps but disagreed with exempting home heating oil from the carbon tax. Despite the controversy, the carbon tax exemptions may have boosted the momentum towards heat pumps, which are cost-effective and environmentally friendly. A study by the Climate Institute found that heat pumps were already the lowest-cost option in two-thirds of all cases modeled. However, there are still obstacles to their wider adoption, including a lack of familiarity with the technology and high upfront costs. The Liberal government’s “Oil to Heat Pump Affordability Program” offers support to low-income households using heating oil, but there are calls to extend the program to include households using other heating sources. A proposal from the Affordability Action Council called for a free retrofit program to make homes more affordable, energy efficient, and climate resilient. The New Democrats are also pushing for measures to make eco-energy retrofits and heat pumps accessible for low-income and middle-class Canadians. The Trudeau government has budgeted $750 million over four years for its heating oil program, but the proposed retrofit program would cost around $2 billion over four years. Despite the cost, it could assist low-income households and counter claims of unfairness in the carbon tax exemptions.


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