Opinion: Carbon tax exemption for home heating oil unfair to propane users

Alberta’s decision to challenge the federal government’s carbon-tax exemption for heating oil highlights a critical issue: affordable energy for all Canadians. The Canadian Propane Association (CPA) believes this exemption is inequitable and undermines Canada’s broader goals for affordable, resilient, and low-emission energy across the nation.

When the federal heating-oil exemption was introduced in the fall of 2023, the CPA spoke out against the clear inconsistency from Ottawa. Unlike emissions-intensive heating oil, propane was not exempt from the carbon tax, despite lower emissions and its use as an essential energy beyond the natural gas grid. By choosing to exempt heating oil and undermining the very foundation of their carbon tax regime, the federal government missed an important opportunity to implement policy to address all Canadians’ concerns about the increasing energy costs.

Regional carbon-tax exemptions, or carve-outs, have practical, real-life consequences, particularly for those in rural and remote communities. Increasingly, people in these communities are choosing propane over heating oil as they look for cleaner and dependable energy. Many of these communities do not have access to the natural gas grid and rely on propane as a lower-emission alternative to other fuels.

In many Indigenous, northern, and remote communities, propane plays a crucial role in powering homes, businesses, and essential services. In addition to home heating, propane is used for cooking, backup power generation, and agricultural applications, making it indispensable in regions where energy options are limited.

Yet, under the current carbon tax structure, Canadians choosing propane are financially penalized while users of higher-emission heating oil are not. This disparity not only discourages a shift to cleaner fuels but also places an unnecessary financial burden on those already facing higher energy costs due to their geographic location, particularly for communities in Western Canada as heating oil is not a common energy source in that part of the country.

With winter approaching, the struggle to keep homes warm, businesses operational, and groceries affordable has become a crisis for many families. Energy poverty — the inability to afford basic energy needs — is a growing issue across Canada, particularly in colder months when heating becomes a necessity, not a luxury.

No Canadian should have to choose between heating their home and putting food on the table. And we are hearing from customers that this, in fact, is a choice many Canadians are facing this winter. Regardless of where they live, every Canadian deserves access to affordable energy without being penalized for political gain.

Heating homes is not a choice. A realistic and fair approach is essential to achieving emissions-reduction objectives without disproportionately burdening consumers and industries. Canada needs all forms of low-emission energy to ensure all Canadians have access to affordable and dependable energy.

The goal of public policy should always be for Canadians to be treated equally, regardless of where they live. It’s time for the federal government to rethink its approach to carbon tax policy. With winter setting in and energy costs on the rise, it’s time to make energy equity a priority. By treating propane (and all energies equitably) the federal government can start to ensure access to affordable, lower-emission energy for everyone.

Shannon Watt is the president and CEO of the Canadian Propane Association.