Canada PM Trudeau rules out further carbon tax exemptions

Canada's Prime Minister Justin Trudeau speaks during the Canada-CARICOM Summit in Ottawa

By Ismail Shakil and Nia Williams

OTTAWA (Reuters) -Canadian Prime Minister Justin Trudeau ruled out any further carve-outs from the federal carbon tax scheme on Tuesday, amid mounting pressure from provinces seeking measures similar to an exemption on home heating oil announced last week.

Trudeau's Liberal government said it would pause the carbon levy on heating oil in Atlantic Canada for three years to offset the high price of the fuel, which is mainly used in the Maritime provinces, and help homeowners counter cost-of-living increases.

The move sparked dismay from some climate think-tanks who warned it risks undermining Ottawa's key emissions-reduction policy, and prompted other provinces to call for further carve-outs.

Trudeau said home heating oil had been exempted because it was so much more expensive and polluting than other types of fuel and disproportionately used by lower-income households.

"There will absolutely not be any other carve-outs or suspensions of the price on pollution," Trudeau told reporters in Ottawa.

On Monday Saskatchewan Premier Scott Moe vowed to stop collecting the federal carbon tax on homes heated with natural gas from 2024 if Ottawa does not expand the exemption.

Federal Natural Resources Minister Jonathan Wilkinson said the government expected Moe "to comply with the laws of the land" and it was a requirement that the carbon tax be collected.

Alberta Premier Danielle Smith has also complained that there will be no exemption for people using natural gas to heat their homes. Ontario Premier Doug Ford urged the government to eliminate carbon pricing altogether.

Canada, the world's fourth-largest oil producer, is aiming to cut emissions 40-45% below 2005 levels by 2030 and a steadily rising carbon price that will hit C$170 a tonne by 2030, from C$65 a tonne currently, is a key part of its climate plan.

(Reporting by Ismail Shakil and Steve Scherer in Ottawa; Editing by Chris Reese and Andrea Ricci)