Alberta, Canada’s leading oil-producing province, has sued the federal government over its carbon tax exemption for home heating oil, claiming the exemption is unconstitutional and unlawful.

Premier Danielle Smith, leader of the United Conservative Party, serving as the 19th premier of Alberta, announced the judicial review, arguing that the exemption adds financial strain on households already facing high living costs on Tuesday, on 29 October 2024.

Smith said the tax is increasingly contributing to rising consumer costs, and taxpayers are being hit in other ways.She criticised the federal government for creating a system that favours specific regions and fuel types, calling it a double standard.

The premier said her government projects that Alberta school authorities will have to pay more than CAD 60 million per year by 2030 without receiving any rebates.

Canada’s carbon tax is currently set at CAD 80 per tonne and will rise by CAD 15 annually, reaching CAD 170 per tonne by 2030.

Smith highlighted that the exemption primarily benefits residents in Atlantic provinces, where approximately 40% of homes use heating oil, while only 1% of homes in Alberta rely on it.

“Given the cost of living challenges many households are facing, piling more financial burden onto Canadians is simply cruel and punitive,” the premier said.

Prime Minister Justin Trudeau’s Liberal government introduced a three-year carbon tax exemption for home heating oil last year, stating that the measures were designed to address affordability issues.

Trudeau’s Liberal government stated that the carbon tax is intended to fight climate change while providing Canadians with financial rebates.

“Alberta strongly opposes the federal carbon tax exemption on heating oil, as the federal government is no longer creating minimum national standards that apply evenly across the country, and is instead creating a regime that favours one region and fuel type over others,” the provincial government said in a statement.