Prime Minister Mark Carney announced Thursday that a new federal heat pump rebate program will launch in early 2027, even though full program details have not yet been finalized. The announcement was made at a heating and cooling system manufacturer in Sherbrooke, Que., with Environment Minister Julie Dabrusin.
The program will offer up to $10,000 to households switching to heat pumps, with eligibility geared toward homeowners whose heating systems are broken or nearing the end of their life. Although the program launches early next year, it will be retroactive to this fall. Ottawa is budgeting $2 billion over eight years, with a target of retrofitting one million homes.
Households below the median income level can receive up to $10,000 back on a heat pump purchase, while other homeowners are eligible for $2,000.
Affordability Questions
Carney framed the announcement as an affordability measure, saying more than one million households in Canada still heat with oil, propane or diesel — fuels he described as more polluting, less efficient and subject to global market swings. He said heating a home with oil now costs 70 per cent more than in 2024, adding at least $2,500 per household annually.
However, government officials acknowledged at a technical briefing that switching from natural gas to a heat pump would not save money for some homeowners, particularly in regions where natural gas costs are lower than electricity. Officials said all homes would remain eligible for the program regardless, since heat pump adoption also reduces greenhouse gas emissions. They said the government would make clear to Canadians the cost implications of switching away from natural gas.
Replacing Earlier Programs
The new program is a successor to the Greener Homes Grant program, according to government officials, who also pointed to the Canada Greener Homes Affordability program launched last year and expanded to more provinces in June. Ottawa is winding down its existing Oil to Heat Pump Affordability program, which as of March had helped install more than 30,000 heat pumps nationally, about two-thirds of them in Atlantic Canada, where heating oil use is more common.
A government document on the new program said homeowners could apply for the rebate when their heating system breaks down or nears the end of its life. But officials briefing reporters on background said a system failure would not necessarily be required for eligibility. They cited government data showing 80 per cent of HVAC replacements in Canada happen only after a system breaks down, and said the new program aims to reach homeowners before that point — something officials described as a first for a federal rebate program.
Industry Reaction
The Heating, Refrigeration and Air Conditioning Institute of Canada welcomed the announcement, particularly the retroactive start date. Martin Luymes, the group’s vice president of government relations, said the industry had worked closely with Environment and Climate Change Canada to help shape a program intended to deliver value for consumers while remaining workable for businesses and tradespeople responsible for installing the systems.
The program fulfills a commitment Carney made during his Liberal leadership campaign last year, though his original pledge was to strengthen the existing oil-to-heat-pump program rather than create a new one. At the time, he also promised to renew funding for the Greener Homes Grant program for lower-income households and to explore discounts for low- and medium-income homeowners pursuing energy-efficient retrofits — a commitment he reiterated when questioned by reporters in April. Officials declined to say whether further announcements on the file are planned.
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