Former Bank of Canada governor Carney questions carbon price break on home heating oil

Mark Carney pressed for Canada to stick with predictable climate policy on Tuesday, as he questioned the federal government's move to lift the carbon price on home heating oil.

The former central banker, who has long been rumoured to be a possible future Liberal leadership candidate, said he would have looked for different ways to provide financial support to Canadians other than the government's chosen path.

But Carney, the United Nations special envoy on climate action and finance who was speaking at a net-zero conference in Ottawa, also said no other government in Canadian history has done more on climate and he applauded parallel moves to help households transition to greener heating alternatives.

"Many Canadians are struggling. They're struggling not because of the carbon tax, which gets rebated, they're struggling because of broad increases in energy prices and food prices, the impact on wages ... the lingering effects of COVID as well," Carney said during a question-and-answer session after delivering remarks at Tuesday's conference.

"I would have looked for other ways to provide that support than the route chosen, not least because what is important is that clarity in terms of the overall plan, the overall direction. Because that certainty helps to incentivize change, so you can provide support here, but keep this certainty there."

Liberals' first retreat on carbon pricing

Prime Minister Justin Trudeau's announcement last week to increase the carbon price rebate for rural Canadians and lift the price on home heating oil for the next three years marked the first time the federal Liberals have retreated in any way on their carbon pricing policy.

Affordability concerns have hit the party's polling numbers in four Atlantic provinces, where about one-third of homes still use heating oil, a far higher proportion than the rest of Canada, but Trudeau has denied the pricing change was about saving Liberal seats.

WATCH | Carbon tax pause on home heating oil ignites political debate:

Carbon tax pause on home heating oil ignites political debate | Power Panel

9 months ago

Duration 16:53

The federal government's decision to exempt home heating oil from the carbon tax for three years was intended by the Liberals to address affordability needs, but the move was criticized by opposition politicians and some premiers. CBC's Power and Politics discusses the broader implications of the tax and the exemption.

The Liberals have so far rebuffed calls from some provincial leaders and the Conservatives to extend carbon price relief to other forms of home heating.

The carbon price is intended to make fossil fuels more expensive as an energy source to encourage people to find alternatives.

Ninety per cent of the government revenues are returned to households through a rebate program and the other 10 per cent is directed to programs to help businesses, schools, municipalities and other grant recipients reduce their fossil fuel consumption.

Former environment minister blames 'obscene profits'

As part of last week's announcement, the government also announced it was expanding incentives for home heat pumps, which is set to begin as a pilot project in Atlantic provinces.

Carney said while home heating oil once made sense, it's subject to volatile global energy prices that can knock already tight household budgets "out of whack".

"We need to get to a system that's affordable, that's reliable, that's not volatile and that's sustainable. And that's what, you know, events of recent months and the decision of last week will hopefully help move forward," said Carney, the governor of the Bank of Canada from 2008 to 2013 before a term at the helm of the Bank of England.

Catherine McKenna, the former Liberal environment minister who helped implement the carbon price, called for Canada to "hold the course if we want to meet our targets." She criticized the "historic, record, obscene profits" reported by oil and gas companies.

"Why are people concerned about oil and gas prices, or oil and gas costs? Because oil and gas costs more. It's not carbon pricing, folks," she said at the same net-zero summit attended by Carney and hosted by the think-tank Canada 2020.