Heat pumps are lowest-cost option for heating and cooling most households, new research finds

21 September 2023, OTTAWA—New research by the Canadian Climate Institute finds that heat pumps are already the lowest-cost way for most households across Canada to heat and cool their homes. 

The new report, Heat pumps pay off: Unlocking lower cost heating and cooling in Canada, examines the cost of heating and cooling options across building types in Vancouver, Edmonton, Toronto, Montréal, and Halifax. It compares the costs of different heat pump configurations against gas furnaces and air conditioning.

The research finds that heat pumps beat gas furnaces and air conditioners on cost in most cases. On average, the lifetime cost of a standard heat pump with electric backup is 13 per cent less than a gas furnace with air conditioning. This is in part driven by the high energy-efficiency of heat pumps, which are up to five times as efficient as gas furnaces, providing significant savings on energy bills.

In addition, those in the market for new heating or cooling appliances can use a new online calculator developed by the Institute (www.heatpumpcalculator.ca) to find out the lowest-cost option for their situation. The calculator provides detailed information that shows how heat pumps stack up against alternatives in each of the five cities modelled—both in terms of costs and emissions impact. 

Heat pumps are a vital technology for reducing climate pollution in Canada’s buildings and protecting people from extreme heat. They are highly energy efficient, run without burning fossil fuels, and double as a cooling technology, which will become increasingly important as extreme summer heat becomes more frequent.

The new report includes policy recommendations targeting barriers that are holding households back from installing a heat pump. These recommendations include maintaining existing government policies and rebates, streamlining supports for consumers, establishing maximum indoor temperature limits and cooling requirements, and requiring non-polluting, high-efficiency heating and cooling technologies in new buildings in regions where they are already cost-competitive. 

QUOTES

“We crunched the numbers and found that heat pumps are a lower-cost option than gas heating with air conditioning for most Canadians across the country. Heat pumps are a cost-effective way to stay warm in winter and cool in summer, all while lowering harmful emissions.” 

—Sarah Miller, Research Lead on Adaptation, Canadian Climate Institute

“Heat pumps offer a lower-cost way to heat and cool most  homes in Canada—beating out gas and air conditioning dollar-for-dollar. Canada has an incredible opportunity to help people save on energy bills, reduce climate pollution, and provide life-saving cooling in extreme heat like we saw this summer.”

—Rick Smith, President, Canadian Climate Institute 

“This new report and online calculator provide a detailed and very useful picture of how heat pumps compare to other heating and cooling systems across Canada. Installers and manufacturers are well-placed to accelerate uptake so that more households benefit from low-cost heating and cooling that reduces emissions and protects against extreme heat. ” 

—Martin Luymes, Vice President of Government and Stakeholder Relations, The Heating, Refrigeration and Air Conditioning Institute of Canada

CONTACT 

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(226) 212-9883
ctunnacliffe@climateinstitute.ca

RESOURCES

Electricity Trade Agreement creates mutual benefits for Ontario and Quebec

OTTAWA, August 30 2023 — Jason Dion, Senior Research Director with the Canadian Climate Institute, made the following statement in response to the new electricity trade agreement between Ontario and Quebec: 

“The electricity trade agreement announced by Ontario and Quebec today is a smart move which will create benefits that flow in both directions. 

“Trading electricity during periods when one province needs less and the other needs more allows provinces to tap into existing clean electricity sources before building new ones. This means more clean power is available during times of peak demand, which saves people and provinces money on electricity  costs. 

“Provinces need more clean electricity, quickly, to stay competitive with trading partners and attract investments in a global economy rapidly moving to net zero emissions. Building the electricity grids needed to meet rising demand is easier when provinces connect their grids, because they can leverage each other’s strengths to ensure more flexible, reliable supply. 

“Interconnected electricity grids are more resilient, and agreeing to trade electricity will make Ontario and Quebec electricity systems more reliable during extreme weather events and other grid disruptions, while also making them better equipped to meet growing demand from electric vehicles and heat pumps. 

“An electricity trade agreement is a positive step in the important work Ontario and Quebec are doing to build the bigger, cleaner, and smarter electricity systems the provinces need to support widespread electrification, stay competitive, and reduce the emissions that cause climate change. 

“Our research shows that switching to clean electricity will save Canadians money in the long run. Today’s announcement is an example of how collaboration between provinces can help build the grids needed to power Canada’s electric future and reduce emissions, while keeping energy affordable and reliable for people.”

Contact

Catharine Tunnacliffe

Communications Director, Canadian Climate Institute

(226) 212-9883

ctunnacliffe@climateinstitute.ca

Clean Electricity Regulations are crucial to attract investment, make energy more affordable and fight climate change

TORONTO, 10 August 2023 — Jason Dion, the Canadian Climate Institute’s Senior Research Director, made the following statement in response to the federal government’s proposed Clean Electricity Regulations. 

“The Clean Electricity Regulations announced today will be the cornerstone of a prosperous economic future for all Canadians. They will accelerate progress in fighting climate change while putting the country in a stronger position to attract new investment, create good jobs in growing sectors, and make energy more affordable. 

“Clean electricity is already the most cost-effective power in Canada, even after accounting for its variability. And there are many ways to ensure the grid remains reliable as the share of wind and solar electricity grows, including flexible electricity demand, battery storage, and greater provincial interconnection.

“Our research finds most Canadians will save on energy bills as they switch from fossil fuels to clean electricity, with the average household spending 12 per cent less on energy by 2050 compared to today. 

“A reliable supply of affordable, clean electricity is quickly becoming a competitive necessity for business—and demand is surging. Tens of billions of dollars are on the table to help provinces build bigger, cleaner, and smarter electricity systems. Now it’s up to the provinces and territories to seize this opportunity and put credible, ambitious clean electricity action plans in motion. 

“The reality of climate change has hit home this summer, with millions of Canadians experiencing wildfire smoke, flooding and extreme weather. Those experiences are creating a growing understanding that accelerating the transition away from fossil fuels is essential to slow global warming. Canada’s future climate progress depends on clean electricity, and switching to 100 per cent non-emitting power will be a major part of our global contribution to lowering emissions.

“All the G7 countries have committed to net zero electricity by 2035, and the U.S. is doubling down on clean growth with substantial incentives and new regulations. Canada has a head start with its abundant, low-cost clean electricity, but there’s a risk of squandering our lead unless we act quickly to capitalize on our advantages. Canada’s electricity vision, with today’s Regulations as a key part, will be critical to keep our economy competitive and prosperous into the future.”

RESOURCES
Fact sheet: Clean electricity in Canada
Media statement from 8 August: Federal electricity vision an important framework for economic growth, jobs and affordability
Opinion: Four conditions for the new Clean Electricity Investment Tax Credit

REPORTS
The Big Switch: Powering Canada’s net zero future
Clean Electricity, Affordable Energy: How federal and provincial governments can save Canadians money on the path to net zero

CONTACT 

Janina Stajic

Senior Communications Specialist, Canadian Climate Institute

(226) 212-9883
jstajic@climateinstitute.ca

Federal electricity vision an important framework for economic growth, jobs and affordability

VANCOUVER — Kate Harland, the Canadian Climate Institute’s interim mitigation research director, made the following statement in response to the federal government’s “Powering Canada Forward” electricity vision paper:

“The federal government’s electricity vision maps out a win, win, win: to grow  the economy, create jobs in growing sectors, and keep energy affordable for Canadians. The shift to clean electricity is also one of the country’s single-most important ways to reduce carbon emissions and fight climate change. 

“Canada needs to build a lot more clean electricity—and quickly—to stay competitive in a global economy that sees clean energy as a business imperative. Our G7 peers have already committed to net zero electricity by 2035, and the U.S. is supercharging clean energy growth through major incentives and new regulations. Falling behind would mean losing jobs and investment to other jurisdictions.

“Switching to clean electricity isn’t just good for the economy—it will save Canadians money. The costs of renewable electricity and electric technologies keep falling, and governments have tools to keep energy bills affordable. Our research has found most Canadians will spend less on energy over time as they make the switch from fossil fuels to more efficient equipment like heat pumps and vehicles powered by clean electricity.

“To be clear: there is no path to a prosperous net zero economy in Canada without making our electricity systems bigger, cleaner, and smarter. The forthcoming federal Clean Electricity Regulations will be a crucial next step in that direction. Simply put, the future is electric. The federal government’s electricity vision is grounded in that reality—but delivering on the vision will take a serious, coordinated effort from governments across the country.”  

KEY FACTS 

  • Our research has found that, on average, people will spend 12 per cent less on energy by 2050 than they do today as Canada makes the transition from fossil fuels to clean electricity. 
  • Switching from fossil fuels to clean electricity alone can get Canada 37 per cent of the way to its 2050 net zero emissions target. 
  • The federal government has offered over $40 billion in incentives to help provinces upgrade their clean electricity systems. 
  • Canada’s electricity grid has the advantage of already being 84 per cent non-emitting, compared to only 40 per cent in the United States. 
  • The cost of renewable power has fallen dramatically over the last decade, making it the cheapest source of new power, even after considering its intermittency.
  • On August 4, 2023, over 30 leading Canadian industries, labour associations, Indigenous energy developers, clean tech businesses and others published a letter stating they support a nationwide net zero electricity grid by 2035. 

CONTACT 

Catharine Tunnacliffe
Director, Communications
Canadian Climate Institute
(226) 212-9883
ctunnacliffe@climateinstitute.ca

Phasing out fossil fuel subsidies aligns Canada’s economic policy with its climate goals

OTTAWA — Jonathan Arnold, Clean Growth Research Lead with the Canadian Climate Institute made the following statement in response to the federal government’s announcement about the future of fossil fuel subsidies in Canada:

“Phasing out government subsidies for increased fossil fuel production is an essential step toward aligning Canada’s economic policy with its climate goals. This is the first time Canada has created a framework for distinguishing efficient and inefficient subsidies. This new policy will enable a renewed focus on emissions reductions and economic growth.

“Overall, the framework announced today strikes a positive balance. It will help ensure that any existing or new support for the fossil fuel sector is aligned with Canada’s climate goal of keeping global temperature rise to below 1.5C degrees. It provides a clear focus on supporting clean technology and clean energy, and also includes safeguards for the energy needs of rural, remote, and Indigenous communities. 

“Leveraging public funding to unlock rapid reductions in oil and gas emissions involves a delicate balancing act. On one hand, recent analysis from the Canada Energy Regulator shows global demand for oil and gas could drop dramatically if the world acts fast to reach net zero emissions. 

“Since production could be substantially constrained by international market forces, governments should proceed cautiously, given the risk associated with investing taxpayer dollars into projects that could become stranded assets amid declining global demand. A dollar spent on fossil fuels is a dollar less for projects and technologies like renewable energy that will be important for maintaining competitiveness as the global energy transition accelerates.

“On the other hand, there are cases where temporary government support for initiatives like carbon contracts for difference, or carbon capture utilization and storage, makes sense to drive emissions down at the speed that is required. The production of oil and gas in Canada accounts for over a quarter of Canada’s total greenhouse gas emissions. Without swift, transformative action to reduce emissions, Canada is unlikely to meet its 2030 or 2050 climate targets.

Today’s announcement demonstrates the need for a rigorous framework that would make sure public dollars only go to projects that are genuinely aligned with Canada’s long-term economic and climate goals.  It also shows why Canada needs to adopt the proposed climate investment taxonomy—supported by the country’s 25 largest financial institutions—to give governments clear guidance, ensuring resources only go to projects that reduce emissions and improve the sector’s long-term competitiveness as global demand shrinks. 

“By investing only in projects that contribute to Canada’s transition to a prosperous, net zero economy, the federal government can make the most of limited public dollars to lower emissions, protect jobs, and help Canada stay competitive in a changing global economy.”

Resources

Defining fossil fuel projects by climate impact is critical

5 big questions about Canada’s new Climate Investment Taxonomy

Cash-flow modelling shows carbon capture and storage can help meet climate goals

Contact 

Julien Bourque
Senior Policy Analyst
Canadian Climate Institute
(514) 292-9005
jbourque@climateinstitute.ca

New Ontario energy plan provides essential vision for electricity, but lacks detail on gas

OTTAWA — Jason Dion, Senior Research Director with the Canadian Climate Institute, made the following statement in response to the Ontario government’s announcement of Powering Ontario’s Growth, Ontario’s new long-term energy plan. 

“Ontario’s new energy plan makes it clear the province is moving toward an electric future. The plan is an important step toward building the bigger, cleaner, smarter electricity systems Ontario needs to meet its increasing demand for electricity, while keeping rates affordable for families and businesses. 

“Critically, the plan focuses on ways to reduce reliance on gas-fired generation, and will support the cost-effective alignment of Ontario’s electricity system with the upcoming Clean Electricity Regulations. 

“The development of non-emitting generation alongside solutions that can improve system flexibility, such as short- and long-term storage, energy efficiency and distributed energy resources, and improved transmission capacity will help Ontario transition to a grid fully powered by non-emitting sources. 

“However, the plan is silent on whether the province intends to construct new gas-fired generation facilities. The province should avoid building new gas plants since cost-effective alternatives are available, and such facilities are likely to end up as stranded assets. The province’s timeline for reaching net zero generation is also unclear. Canada and other G7 countries have set a target for 2035, something Ontario will need to address if it wants to remain competitive. 

“Despite these gaps, Ontario’s plan is an important, forward-looking commitment to building the bigger, cleaner, smarter systems Ontario and Canada needs on the path to net zero. Our research has shown that the average Canadian household will spend 12 per cent less on energy by 2050 compared to what they spend today as the country moves toward a net zero future. 

“Ontario’s energy demands are rising. By planning for future growth today, Ontario can ensure that its reliable, cost-effective clean power remains a competitive advantage.”

Ontario plans to expand nuclear capacity a positive step toward net zero electricity

OTTAWA — Dale Beugin, Executive Vice President of the Canadian Climate Institute, made the following statement in response to the Ontario government’s announcement about new nuclear at Bruce Power: 

“Investing in clean electricity is essential to meet Ontarians’ energy needs on the path to net zero while keeping life affordable and attracting new businesses to the province. By laying the groundwork to expand nuclear generation capacity, the Ontario government and Bruce Power are taking steps to make Ontario’s grid bigger, cleaner and smarter. 

“Today’s announcement is an important start. The Canadian Energy Regulator’s latest projections confirm that major growth in nuclear power is consistent with making Ontario’s electricity system carbon neutral—alongside massively scaling up wind and solar. Our research has shown that the average Canadian household will spend 12 per cent less on energy by 2050 compared to what they spend today as the country moves toward a net zero future.

“Ontario’s commitment to expanding nuclear power also sends an important signal ahead of the forthcoming federal Clean Electricity Regulations, which puts Canada in league with our OECD partners working to make electricity systems net zero by 2035.”

CONTACT 

Andrew Patrick
Senior Communications Specialist
Canadian Climate Institute
(236) 508-9593
apatrick@climateinstitute.ca

National Adaptation Strategy, a critical tool to protect Canadians from climate damages

OTTAWA—Ryan Ness, Director of Adaptation for the Canadian Climate Institute, made the following statement in response to the release of Canada’s final National Adaptation Strategy by the federal government:

“Climate change is already inflicting billions of dollars in damage to Canadian homes, businesses and infrastructure. And with wildfire smoke polluting the air in communities across the country, the threat feels especially close to home. It’s time for damage control.

“The National Adaptation Strategy is a strong tool to address the biggest climate risks facing the country. The federal government needs to move quickly to fund and implement it to insulate Canadians from the growing threat and mounting costs of climate disasters.

“Finalizing this national strategy is an important milestone. Ensuring it delivers the results Canadians are counting on will take significant new funding, sustained focus and coordinated action by governments across the country.”

KEY FACTS

  • Investing in adaptation makes good economic sense: every dollar invested today to prepare for future climate impacts will return $13 to $15 in avoided costs.
  • Climate change is already setting Canadians back $720 per year, on average, in repairs after flooding or wildfires and other impacts—and that price tag is expected to double or triple by 2050.
  • Estimates by the Canadian Climate Institute found the estimated health costs of recent wildfires in one province alone over a period of one week tallied nearly $1.3 billion.

CONTACT

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(226) 212-9883
ctunnacliffe@climateinstitute.ca

ADAPTATION RESEARCH FROM THE INSTITUTE

Toward a Safer and More Resilient Canada (December 2022): our independent assessment of the federal National Adaptation Strategy

Closing Canada’s Adaptation Gap (May 2022): a scoping paper outlining key elements of a potential National Adaptation Strategy

Our full series on the Costs of Climate Change for Canada, including:

Canadians will save money switching to clean electricity, research finds

22 June 2023, OTTAWA—Amid rising concerns over the cost of living, new research by the Canadian Climate Institute finds that the average Canadian household will spend 12 per cent less on energy in 2050 than they do today, as they switch from fossil fuels to power their homes, vehicles and businesses with clean electricity. 

The new report—Clean Electricity, Affordable Energy: How federal and provincial governments can save Canadians money on the path to net zero—finds these cost savings are expected despite gradual increases over time in electricity rates across provinces and territories. To ensure all households benefit, the report shows how provinces can use policy tools, like means-tested fixed charges on electricity bills, to help ensure the transition remains affordable for low- and middle-income households. 

The report also estimates how much each province and territory stands to benefit from the tens of billions of dollars in federal support for clean electricity identified in the 2023 budget.  These funds are intended to help provinces and territories upgrade and expand their grids with clean electricity. The funds can help accelerate the build out of clean, reliable electricity and ensure grids are ready to meet growing demand as Canada electrifies its economy and moves towards net zero emissions by mid-century. 

By signing on to high-level conditions for accessing federal support, provinces and territories can unlock significant benefits for their ratepayers and deliver the bigger, cleaner, smarter electricity systems that businesses are increasingly demanding as a requirement for their investment. 

Quotes

“Switching to clean, abundant, reliable electricity will save Canadians money on energy as the country moves towards a low-carbon future. Technologies like electric vehicles and heat pumps use much less energy and are typically cheaper to operate than fossil-fuelled alternatives, which cut energy costs and helps keep life affordable.”

—Jason Dion, Senior Director of Research, Canadian Climate Institute

“Bigger, cleaner electricity systems are now a must-have for businesses looking to make major investments. Producing 100 per cent clean electricity is now table stakes for provinces and territories wanting to ensure their future prosperity through the global energy transition.”

—Rick Smith, President, Canadian Climate Institute

“Canada needs to make massive investments in our electricity system to meet the needs of the energy transition. The scale is too much for ratepayers to cover alone. The 2023 federal budget made transformative investments in Canada’s electricity sector that will help electricity companies build the system we need at a price Canadians can afford.”

—Francis Bradley, President and Chief Executive Officer, Electricity Canada

CONTACT 

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(226) 212-9883
ctunnacliffe@climateinstitute.ca

RESOURCES

Energy Regulator report finds global pursuit of net zero will shape Canada’s economy

OTTAWA — Dale Beugin, Executive Vice President of the Canadian Climate Institute, made the following statement in response to the release of Canada’s Energy Future 2023 by the Canadian Energy Regulator: 

“This groundbreaking study by the Canadian Energy Regulator takes a clear-eyed look at the global energy transition and how shifting policy and market forces could affect Canada.

“The regulator’s modelling is neither a prediction nor a prescription, but it is a warning: Prudent decision-makers in the private and public sectors must manage the emerging risks and capitalize on the opportunities of a global energy transition. Canada’s future competitiveness depends on it. How effectively they do so will shape whether Canada’s economy sinks or swims as the world tackles climate change.

“This analysis underscores that Canada’s economic prospects will be profoundly affected by global forces outside our control, especially as market demand shifts in response to accelerating technological change and other countries’ policy ambitions. The global transition toward net zero will have big implications for Canada’s new and existing export markets—even if the world acts too slowly to stabilize warming at 1.5˚ C. The study shows that oil, gas and other transition-vulnerable sectors face clear risks from declining demand, while sectors such as hydrogen, renewables, batteries and energy storage stand to grow significantly.

“The regulator’s modelling also shows that Canada has a credible pathway to achieving its climate targets. The report finds implementing all of the policies proposed in the federal Emissions Reductions Plan could put Canada within striking distance of its 2030 target. Domestic policies will need to get stronger over time to keep Canada on a realistic path to reaching net zero emissions by 2050. 

“The modelling also demonstrates that building a bigger, cleaner, and more flexible electricity system is fundamental to achieving net zero. Across multiple scenarios and sensitivity analyses, a clean electricity system consistently emerges as the linchpin of Canada’s net zero pathway—and this finding is consistent with our independent analysis at the Canadian Climate Institute. Achieving an affordable, competitive pathway to net zero requires substantial growth in clean electricity, as well as transmission infrastructure and storage. 

“Neither Canada’s competitiveness nor its success in reducing emissions will happen in a vacuum. Time will tell how quickly the world reaches net zero, but Canadian governments, industries and investors can’t afford to assume that global efforts to reduce emissions will fail. The Canadian Energy Regulator’s new analysis provides a credible foundation for planning amidst the uncertainties ahead on the road to net zero.” 

CONTACT 

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(226) 212-9883
ctunnacliffe@climateinstitute.ca