Price Advantage of Low-Carbon Propane Over Heating Oil Will Continue to Grow in Canada in Coming Years

OTTAWA (June 30, 2023) — Carbon tax projections show that low-emission propane will continue to be the best option for heating in Atlantic Canadians’ homes, says the Canadian Propane Association.

“Because propane, like natural gas, has much lower emissions than furnace oil, it is taxed less. As a result, the carbon tax on propane under the federal fuel charge on July 1 will be 7 cents a liter less than furnace oil. By 2030, the difference will be about 19 cents per liter,” said Shannon Watt, president and CEO of the Canadian Propane Association.

By 2030 when the federal fuel charge reaches $170 per tonne, the carbon tax on furnace oil will total 45.57 cents per liter. For propane, it will be 26.30 cents per liter.

Another price advantage for propane will come into play with the implementation of the Clean Fuel Regulations. By 2030, Atlantic Canadians will also see the full pricing effect of these regulations. According to the federal Parliamentary Budget Officer, at that point, furnace oil will increase another 16 cents, which will bring the total amount to 61.57 cents a liter.

“Propane is a gaseous fuel and is not subject to the Clean Fuel Regulations,” said Watt. “As a result, by 2030, the carbon tax on propane will be over 35 cents less than the charge on a liter of furnace oil. We are also looking at ways to further decarbonize propane to ensure that propane remains an affordable, low-emission energy source for Atlantic Canada for today and tomorrow.”

Unlike the federal fuel charge, there will not be any offset payments to consumers for price increases due to the Clean Fuel Regulations.

“With the costs of home energy, transportation, groceries and other essentials on the rise in Atlantic Canada in part due to carbon taxes and regulations, the expansion of propane will be critical in efforts to keep home energy as affordable as possible,” said Watt. “The propane industry is ready to work with governments to ensure that Atlantic Canadians can benefit from the propane advantage.”