This study seeks to investigate the role of Calluna vulgaris canopy height in the CO2 balance of ombrotrophic peatlands to address what implications this relationship may have for management of these peatlands for maximal carbon storage. This study uses a monthly dataset of CO2 flux and associated environmental variables gathered from three localities in the South Pennines and the Peak District National Park of northern England between 2007 and 2010, covering a range of C. vulgaris canopy heights. It was found that both gross fluxes of CO2 (ecosystem respiration and photosynthesis) were modelled best by models incorporating a dependence on canopy height. Ecosystem respiration was positively correlated and photosynthesis was negatively correlated to canopy height. It was found that as canopy height increases, the amount of photosynthesis per unit respiration decreased and thus that net ecosystem exchange became more positive. Despite the relationship between the gross fluxes and canopy height, models of net ecosystem exchange suggested that there was no canopy height at which blanket peat dominated by C. vulgaris would be a net annual sink of CO2. This was due to the relatively deep water tables at the sites which served to enhance ecosystem respiration. Looking at the dataset as a whole, for a 10 cm increase in canopy height there was a median increase of 0.829 ± 0.583 g CO2m2 d−1 in net CO2 flux, with considerable seasonal variation. Managers interested in minimising CO2 losses from blanket peat should note that C. vulgaris on blanket peat in the areas studied is predicted to be a net source of CO2 to the atmosphere for all canopy heights. As such, vegetation management away from C. vulgaris dominance is recommended to improve the functioning of these bogs. If vegetation management away from heather on climatically marginal blanket peat is infeasible then managers should avoid taller canopies, where day time photosynthesis is almost always less than day time respiration.