Homeowners who replace their furnace or boiler with an electric heat pump will be able to claim a federal rebate of up to $10,000 under a $2-billion program Prime Minister Mark Carney announced in Sherbrooke, Que., on Oct. 8, 2026.
Households below the median income can receive up to $10,000 toward an eligible heat pump, and other eligible homeowners can receive $2,000, according to the federal backgrounder. The money is budgeted over eight years and is meant to reach up to 820,000 homeowners.
The rebate is not available yet. Ottawa plans to launch it early in 2027, and program details have not been finalized, The Canadian Press reported. The Globe and Mail reported the rebate will be retroactive to this fall, which matters for anyone whose heating system fails in the coming months.
The program is aimed at the moment most people actually replace their heating. Officials said about 80 per cent of heating and cooling replacements happen when a system breaks, the Globe reported, and the government said the rebate targets homeowners who need an emergency replacement or whose systems are near the end of their life.
The government’s backgrounder said applicants will use an online portal with a short form, with approval confirmed within 24 hours. After installation, homeowners upload their receipts, payment is approved within five days and the money arrives by direct deposit. No energy audit is required before or after the work, a change from earlier federal retrofit grants.
Only cold-climate air-source heat pumps on the program’s eligible products list qualify, and the list includes more than 100,000 models, the government said. Each person can claim one rebate, so a landlord who installs a heat pump in a rental unit cannot also claim one for their own home. The federal rebates can be stacked with existing provincial programs.
“Over one million households in Canada still heat with oil, propane, or diesel,” Carney said, according to the Globe. He said heating a home with oil costs 70 per cent more than it did in 2024.
The government estimates that households heating with oil, propane or electric resistance heat, such as baseboards or an electric furnace, will save more than $1,400 a year on average after switching. Heat pumps also provide air conditioning in summer.
The savings are not universal. Officials acknowledged that some homeowners switching from a natural gas furnace would pay more, because gas is cheaper than electricity in parts of the country, the Globe reported. The government said it will make those cost implications clear to applicants.
The new rebate replaces federal programs that are winding down. Officials described it as a successor to the Canada Greener Homes Grant, and Ottawa is closing the Oil to Heat Pump Affordability program, which had helped install more than 30,000 heat pumps as of March, about two-thirds of them in Atlantic Canada, according to the Globe.
The heat pump rebate is the largest piece of a broader plan to retrofit one million homes. The rest relies on existing tools: a Canada Mortgage and Housing Corp. insurance product to help landlords finance upgrades in up to 250,000 rental units, a Canada Infrastructure Bank initiative covering up to 30,000 more units in apartment buildings, and nearly $110 million over three years, starting in 2027-28, for organizations that guide building owners through deep retrofits.
Martin Luymes, vice-president of government relations at the Heating, Refrigeration and Air Conditioning Institute of Canada, said the program “delivers real value for consumers,” the Globe reported. The government said consultations with heating installers began immediately after the announcement.
Homeowners who expect to replace a heating system before the portal opens should keep their receipts and the model number of the heat pump they install, and check the eligible products list once it is published.
Via The Globe and Mail and The Canadian Press.
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Sources: Environment and Climate Change Canada, The Globe and Mail and The Canadian Press. Photo: a residential air-source heat pump, by alpha innotec on Unsplash.
