How Carbon Taxes Affect Your Home Heating Costs

With various forms of carbon pricing rolling out across the country, most homeowners have been left in the dark about how a carbon tax will affect their heating costs and what steps they can take to save money.

There’s also variation on how carbon pricing is being implemented, because each province is responsible for creating its own regulations that meet federal guidelines, leading to even more confusion. If you live in Atlantic Canada, read on to see exactly how the new carbon pricing plans will affect you.

Considering switching from a furnace to a heat pump? Read this heat pump vs. furnace comparison first!

Nova Scotia — Cap-and-Trade

Nova Scotia’s carbon pricing plan is actually what’s known as a cap-and-trade program rather than a straightforward carbon tax. Like all carbon pricing plans, Nova Scotia’s cap-and-trade program is intended to create a cost for carbon emissions. However, unlike a carbon tax (which often acts as an additional sales tax), cap-and-trade means that industrial emissions are “capped” at a certain level. Companies that emit less than their allowance can trade their excess emission allowance to companies that need to emit more.

What this means for homeowners and consumers in Nova Scotia is that they will not be taxed directly for carbon. Instead, Nova Scotians can expect to see their energy bills and the cost to fill their gas tanks increase slightly—the Nova Scotia provincial government anticipates it will add roughly $0.01/litre to the price of gas and a 1% increase in electricity rates in 2019.

New Brunswick — Federal Carbon Plan

Because New Brunswick’s government couldn’t put together a plan that met the minimum federal requirements for carbon pricing, consumers and homeowners in New Brunswick are stuck with the federal plan.

Under the federal plan, the average New Brunswick home will be receiving Climate Action Incentive payments of $248 in 2019 in an effort to offset the increased carbon costs (which the government estimates will be $202 in 2019). The Climate Action Incentive payment is not tied to actual costs, so it’s in New Brunswickers’ best interests to reduce their carbon footprint by as much as possible.

Prince Edward Island — Provincial and Federal Mix

Prince Edward Island has taken a mixed approach, with a straightforward carbon tax on fuel oils, while asking the federal government to manage larger industry emissions. What this means for consumers in PEI is that they can expect modest cost increases for fuel in 2019. However, the province is giving homeowners a grace period for furnace oil and propane—there will be no carbon tax levies on these items until January 2021, providing homeowners with the opportunity to switch to a greener home heating option before that tax kicks in.

Newfoundland & Labrador — Home Heating Not Included

Newfoundland and Labrador’s carbon tax plan is perhaps the easiest on homeowners of any provincial plan in the country. For now, home heating fuels are exempt from the carbon tax in Newfoundland and Labrador, with no plans for a set date on when they will be added to the lists of fuels that are taxed. In the meantime, homeowners in Newfoundland and Labrador will still benefit from improving their home heating efficiency.

Improve Efficiency to Reduce Costs

Whichever province you live in, the easiest way to reduce household costs going forward will be to switch to a more energy-efficient home heating source. For many homeowners in Atlantic Canada, this usually means switching from a furnace to a heat pump.

While every homeowner can benefit financially from using less energy to heat their homes, this is especially important in provinces like New Brunswick and Nova Scotia who will be seeing charges directly on home heating oil, with the costs increasing every year. Contact an authorized Daikin dealer near you for a free in-home assessment to learn exactly how much you’ll save.