Federal Government Announces $2 Billion in Rebates for Heat Pump Installations

Prime Minister Mark Carney has announced $2 billion in funding over eight years for home retrofits, including rebates for homeowners who install electric heat pumps.

The National Heat Pump Rebate program is estimated to provide rebates to up to 820,000 homeowners, with the federal government projecting annual energy-bill savings of more than $1,400 for households currently using oil, propane, or electric-resistance heating.

“When fully taken up, these upgrades will save Canadian families more than $1 billion every year on their energy bills,” Carney told reporters in Sherbrooke, Que. on Oct. 8.

Eligible households with incomes below the median could receive up to $10,000 toward an eligible electric heat pump, while other eligible homeowners could receive $2,000, the Prime Minister’s Office said in a release. The federal rebates can be combined with existing provincial programs.

Carney said heating a home with oil now costs 70 percent more than it did two years ago, adding at least $2,500 in annual costs per household. He also said households using electric baseboard heating are paying up to 45 percent more.

The Liberal government under former Prime Minister Justin Trudeau had adopted a similar program in 2022, which aimed to help low and middle-income Canadians replace oil furnaces with electric heat pumps. That program stopped accepting applications this summer.

Carney said the newly announced program targets homeowners with heating systems that have broken down or nearing end of life.

“This winter, tens of thousands—in fact hundreds of thousands—of those furnaces will stop working and now those families will have a better option and help to pay for it right when they need it,” he said.

Carney argued that heat pumps are safer than oil and electric furnaces, are more energy efficient, and can work during the summer to cool homes.

Homeowners will apply through an online government portal, with eligibility decisions available within 24 hours. After an eligible heat pump is installed, homeowners will submit their receipts through the portal, with payments to be approved within five days.

The federal government says it will also work with the Canada Mortgage and Housing Corporation (CMHC) and the Canada Infrastructure Bank (CIB) to support retrofits in up to 280,000 units in multi-unit residential buildings over the next eight years.

CMHC will support up to 250,000 additional units through financing measures, including its Multi-Unit Mortgage Loan Insurance product, while the CIB will support 30,000 units through its Building Retrofits Initiative. CMHC says its mortgage-insurance product has already supported more than 140,000 energy-efficient units.

The federal government estimates the combined measures will support 1 million home retrofits.

Speaking to reporters at Parliament on Oct. 8, Conservative Leader Pierre Poilievre criticized the program, saying it amounted to the government taking $2 billion from taxpayers to “give it to companies, like those owned by Brookfield, to give people back a small amount on applications for heat pumps.”

“Why don’t you leave the $2 billion in the pockets of Canadians?” Poilievre said. “If you want to spend your money on a heat pump, then the government should leave the money in your pocket for you to do so.”