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Canada Suspends New Carbon Tax Due To Popular Opposition

Canada's federal government has suspended a new carbon tax targeting heating oil after a wave of popular opposition from the country's eastern provinces where oil is an essential source of heating.

"We are switching to heat pumps off home heating oil, as a region in Atlantic Canada and as a country," Prime Minister Justin Trudeau said but after he announced a three-year postponement in the implementation of the tax.

When it does get implemented, the new carbon tax will affect 2.6 million people in Canada's eastern provinces.

Canada already has carbon taxes on fuels as part of its efforts to reduce carbon dioxide emissions by between 40% and 45% from 2005 levels by 2030. The additional tax burden has contributed to inflation that has made many Canadians struggle to make ends meet.

A recent survey from Postmedia-Ledger found that 55% of Canadians would rather the carbon tax be reduced while 37% wanted to see it go altogether. Only 18% were okay with the government's current policy of raising the price of CO2 every year.

At the moment, a ton of carbon dioxide costs C$65 per ton, which is equal to some $47, but plans are to have this rise to C$130 per ton, or $94, by 2030.

Commenting on his government's decision to postpone the heating oil carbon tax, Trudeau told media "This is an important moment where we're adjusting policies so that they have the right outcome," Trudeau told reporters in Ottawa. "We are doubling down on our fight against climate change ... (while) we are supporting Canadians," as quoted by Reuters.

Bloomberg noted that the move may be related to the Liberals' drop in the polls, attributable to the rising cost of living across Canada, which in turn can be causally linked to higher energy costs, including because of the rising carbon tax.         

By Irina Slav for Oilprice.com

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Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More

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