Unclear how changes to federal carbon tax will affect N.W.T. residents, territory says

Prime Minister Justin Trudeau announced on Thursday that home heating oil will be exempt from the federal carbon tax for three years, raising questions over what these changes might mean for remote communities in the the N.W.T. 

The Northwest Territories, along with British Columbia and Quebec, follow an individual carbon-pricing mechanism independent of the federal rules. 

The N.W.T. carbon tax has been applied to heating fuels since April 2023, after the territorial government revised it to comply with Ottawa's requirements.

Calls for clarity over what the new rules mean for the North have been increasing. In an email, a representative of the territorial Department of Finance told CBC News they were working with Environment and Climate Change Canada to get further clarification.

CBC News also reached out to the premier's office but our request for a response was declined due to a media blackout during the ongoing election campaign. 

It remains unclear whether the N.W.T. government was informed of the federal decision before it was made.

Ongoing controversy

The carbon tax continues to be controversial in the Northwest Territories, a region that relies on heating fuel to get through long, frigid winters, and where fuel costs keep growing.

These costs continue to make life harder, says Jackie Jacobson, MLA for Nunakput. He's pushed for Northern exemptions from the carbon tax for years, and said his concerns often fell on deaf ears. 

Jacobson speculates that Trudeau's announcement stemmed from the Conservatives' current 'Axe the Tax' campaign in the Atlantic provinces. 

"They're being reactive to stuff, not proactive," he told CBC News. "And as the government of Canada, they have to represent all of Canada. Not just the Atlantic [provinces], not just the N.W.T., not just Yukon. It's everybody."

With the increasing cost of electricity in the North, it's unclear whether government-recommended heat alternatives such as heat pumps would have environmental or economic benefit. 

The N.W.T. relies primarily on hydroelectricity and diesel generators to power its grid. But this year, low water levels resulted in a huge increase in diesel consumption.