Carney promises heat pump rebate program coming in early 2027

SHERBROOKE — A new federal heat pump rebate program will launch early next year, even though the program’s full details have not yet been finalized, Prime Minister Mark Carney said Thursday.

It also might not be cheaper for all Canadians to switch to heat pumps because natural gas is less expensive than electricity in some provinces.

The program, which will make up to $10,000 available to households that make the switch to heat pumps, is being geared toward homeowners whose heating systems are broken or getting close to replacement. The program, which is being launched in early 2027, will be made retroactive to this fall.

Carney made the announcement at a heating and cooling system manufacturer in Sherbrooke, Que., alongside Environment Minister Julie Dabrusin.

The government is budgeting $2 billion over eight years with a target of retrofitting one million homes.

“Over one million households in Canada still heat with oil, propane, or diesel. These fuel sources are more polluting, less efficient and at the mercy of global markets,” Carney said.

“Right now, those markets are hitting families hard. Heating a home with oil costs 70 per cent more than it did in 2024, at least $2,500 more per household every year.”

While Carney is pitching this announcement as an affordability measure, government officials acknowledged that it would be more expensive for some homeowners to switch from their natural gas furnaces.

At a technical briefing on background for journalists ahead of the announcement, officials said that in parts of the country with lower natural gas costs, switching to a heat pump would not save money.

All homes would be eligible for the program and adoption of heat pumps serves to reduce greenhouse gas emissions, the officials said. They also said the government will make clear to Canadians the cost implications of switching from natural gas to a heat pump.

Households below the median income level can get up to $10,000 back on a heat pump purchase, while other homeowners can get $2,000 by switching to a heat pump.

Ottawa is in the process of winding down an existing program to subsidize purchases of heat pumps for homes heated with oil. As of March, the Oil to Heat Pump Affordability program helped to install more than 30,000 heat pumps across the country. About two-thirds of those were in Atlantic Canada, where heating oil accounted for a greater proportion of home heating systems.

Leaders of Canada’s HVAC industry applauded Thursday’s announcement — particularly the decision to make the program retroactive to the fall.

“Our industry group has worked closely with Environment and Climate Change Canada to help shape a program that, above all, delivers real value for consumers while being practical and workable for the businesses and skilled tradespeople responsible for delivering it,” said Martin Luymes, vice president of government relations with the Heating, Refrigeration and Air Conditioning Institute of Canada.

In a document detailing some elements of the new program, the government said homeowners could apply for the rebate when their current heating system breaks down, or when it’s approaching the end of its life.

But government officials briefing reporters on background said having a heating system fail isn’t necessarily a requirement for eligibility in the new program.

The officials said government data shows 80 per cent of HVAC replacements in Canada happen when current systems break and the new program is trying to target that group — something officials say is a first for a federal rebate program.

The new program delivers on a promise Carney made while running for the Liberal leadership last year, although his exact promise then was to strengthen the existing oil-to-heat-pump program.

Carney also promised at the time to renew funding for the government’s Greener Homes Grant program for lower-income households and explore discounts for low- and medium-income homeowners who make energy-efficient retrofits.

He recommitted to that pledge when pressed by reporters at an announcement in April.

Government officials said Thursday the new heat pump program is a successor to the Greener Homes Grant program. They also pointed to the Canada Greener Homes Affordability program, which launched last year and was expanded to more provinces back in June.

Officials wouldn’t say whether more announcements are coming.

This report by The Canadian Press was first published Oct. 8, 2026.

— With files from Nick Murray in Ottawa

The Canadian Press