Evidence of meeting #49 for Environment and Sustainable Development in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was building.
A recording is available from Parliament.
Liberal
The Chair Liberal Shannon Miedema
Thank you very much.
We'll now turn to Mr. Larmer for five minutes.
Kevin Larmer Senior Director, Policy, Government Relations & Communications, Canadian Gas Association
Thank you kindly, Madam Chair and members of the committee. Thank you for the opportunity to appear today.
My name is Kevin Larmer. I'm senior director of policy, government relations and communications at the Canadian Gas Association. I represent the companies that deliver approximately 40% of Canada's end-use energy through more than 600,000 kilometres of pipeline infrastructure, serving roughly 20 million Canadians each day.
Our members have been helping Canadians improve energy efficiency for decades. Long before retrofit programs became a national priority, natural gas utilities were delivering programs to help households use less energy, lower their bills and improve the comfort of their homes. These programs support insulation upgrades, air sealing, energy assessments and high-efficiency equipment. Since 2010, Canada's natural gas utilities have invested $3.6 billion in these types of energy efficiency programs.
Importantly, these programs operate under regulatory oversight. Provincial regulators assess the costs, expected savings and bill impacts before approving them. As a result, our members have extensive experience in designing energy efficiency programs and delivering measurable results while remaining affordable for customers.
Today, I'd like to focus on four areas—affordability, energy-saving retrofits, technology neutrality and the cost of meeting peak energy demand.
First, retrofits must be affordable. Energy affordability matters to Canadians. Polling released last month by Positive Energy and Nanos Research found that affordability was Canadians' top energy priority ahead of emissions reductions and reliability. Households considering retrofit options need transparent information about both upfront costs and ongoing operating costs. This includes understanding whether electrical service upgrades may be required and how long it may take for energy savings to offset the investment.
In Canada, natural gas remains the most affordable heating option. In Manitoba, where electric rates are among the lowest in Canada, Manitoba Hydro estimates that heating a home with a high-efficiency natural gas furnace costs approximately half as much annually as heating the same house with a cold-climate heat pump. The relative benefit of gas only increases in other provinces where electricity rates are higher.
Second, prioritize retrofits to reduce energy use, regardless of the energy source. The most cost-effective energy is often the energy that never needs to be consumed. Attic insulation, air sealing, improved windows and better building envelopes reduce the amount of energy required to heat and cool a home, whether that home uses natural gas, electricity or a combination of both. These measures also have a proven track record. Between 2000 and 2024, average residential natural gas consumption in Canada fell by approximately 45%, from 155 gigajoules per household to 85 gigajoules per household. More efficient homes and equipment help deliver those reductions while continuing to meet Canadians' energy needs.
Third, maintain a technology-neutral approach. No single retrofit solution will be right for every home. Canada's housing stock, climate conditions and household circumstances vary significantly from region to region. Public policy should focus on outcomes such as energy savings, emissions reductions and affordability, rather than on prescribing a single technology pathway. Whether a homeowner chooses natural gas, electricity, renewable natural gas, a heat pump or a dual-fuel system, support should be based on achieving measurable results.
Fourth, consider the broader energy system. When discussing home heating, it's important to consider not only individual buildings but also the infrastructure that supplies them. Canada's energy networks are built to meet peak demand during the coldest and hottest days of the year. Those peaks drive infrastructure investment and ultimately influence what ratepayers pay. During Alberta's January 2024 cold snap, the province's natural gas system delivered energy equivalent to about 110,000 megawatts, compared with roughly 12,000 megawatts from the electric system. That example illustrates the scale of energy Canadians require during extreme winter conditions and the important role both systems play in maintaining reliability.
Dual-fuel heating systems are one example of how both networks can work together. Heat pumps can provide efficient heating during milder weather, while natural gas can support heating requirements during periods of extreme cold. Retrofit policies should help Canadians use less energy, lower their energy bills, reduce emissions and remain comfortable during extreme weather.
The natural gas delivery industry has spent decades helping Canadians improve energy efficiency through practical, regulator-approved programs that deliver measurable results. As Canada considers future retrofit policies, we encourage a continued focus on affordability, energy efficiency, technology neutrality and full consideration of the energy systems that Canadians rely on every day.
Thank you. I look forward to questions.
Liberal
The Chair Liberal Shannon Miedema
Thank you, Mr. Larmer.
Now I'll turn to you, Mr. Finet. You have the floor for five minutes.
Jean-Pierre Finet Analyst, Regroupement des organismes environnementaux en énergie
Thank you.
Good afternoon. My name is Jean‑Pierre Finet. I am an analyst and spokesperson for the Regroupement des organismes environnementaux en l'énergie, made up of nine environmental groups, including Greenpeace, Nature Québec, Fondation Rivières and the Association québécoise des médecins pour l'environnement.
We mainly take action with the Régie de l'énergie on gas and electricity matters, as well as in parliamentary committees, mainly in Quebec City, and in public hearings on environmental issues.
I prepared my points in the form of a list, because I didn't have a lot of notice. I tried to answer your questions. I wanted to talk about various things, but the government's announcement today has slightly changed what I had to tell you.
We're talking about end-use electrification, but we have to be careful about peak demand, as the previous witness from the Canadian Gas Association told you. Gas is not necessarily a necessary evil.
There are various strategies that can help reduce greenhouse gas emissions. These include electric technologies such as heat pumps. However, if they are ordinary heat pumps, whose limit is -8°C or -10°C, they won't do the job. We need cold climate heat pumps.
Even with those, there is a way to manage peak demand without having to use gas. It can be done, including through heat accumulation systems, such as bricks, which, in Quebec, are subsidized by Hydro-Québec to the tune of $22,000 for a combined heat pump and heat accumulator. We are very much in favour of shifting loads over time rather than eliminating loads in favour of a polluting fossil fuel.
I also wanted to talk to you about the problem of shared incentives. When tenants pay the bill, the landlord doesn't necessarily have an interest in making energy efficiency improvements. That seems to be another weakness in the program that has just been announced.
The program that was announced today seems to avoid targeting gas, when gas consumption is the first thing we should reduce. In Quebec, we have a dual-energy program that aims to efficiently convert about 70% of the volumes of gas used for electricity, thanks to heat pumps. We are in favour of dual energy using existing equipment. What we don't want to do is upgrade gas equipment just to handle peak demand. There's a way to manage the peak by shifting the load over time, and you don't need gas for that.
If you really want to target low-income clients, I can say, as EfficiencyOne does, that the direct installation programs do the job, because low-income clients often don't have the down payment to contribute to them. Even if they are subsidized, it is often not enough.
That's pretty much what I wanted to talk to you about. There is techno-economic potential to improve energy efficiency, but there are barriers, particularly the problem of shared incentives between landlords and tenants. That means that even tenants who pay the bill often have to get permission from landlords before they can install a heat pump.
There is also dynamic pricing, which shifts expenses over time. For that, ideally, heat accumulation systems need to allow loads to shift over time. On that note, this fall, we are going to test wall heat accumulators. They are a bit like convection heaters, electric baseboard systems with bricks in them. In Nova Scotia, for example, this type of system is subsidized for apartments. Ideally, heat pumps should be installed in homes and combined with heat accumulators, which will save money on bills by shifting loads through dynamic energy distributor pricing. In fact, BC Hydro also has a time-of-use pricing program, which means that electricity is less expensive outside peak demand and more expensive at times of peak demand.
At those times, the heat stored in the bricks is used to provide heating rather than electricity from the grid, which is in high demand. We will have the results of our pilot project soon and will be able to share them.
What we are promoting is really removing fossil fuels, including gas, which is not necessary for new buildings. There are ways to construct buildings without using gas. We don't need to perpetuate the use of gas. Ideally, before installing heat pumps, it would be a good idea to reduce building consumption and improve building envelopes rather than oversizing a piece of equipment, a heat pump, on a building that is a sieve.
Thank you.
Liberal
The Chair Liberal Shannon Miedema
Thank you, Mr. Finet.
We'll now turn to questions from the members.
We'll begin with Mr. Bexte for six minutes.
Conservative
David Bexte Conservative Bow River, AB
Thank you, Madam Chair.
Thank you, witnesses, for being here today. I'm really looking forward to your wisdom and to the deliberations.
Mr. Larmer, I have a lot of questions for you. We talked a lot during this study about impacts in isolation. It's very segmented. We haven't really addressed the possibilities and impacts of regional bias on solutions. We talked a little bit about different parts of the country maybe having more suitable solutions.
What can you tell me, first off, about the broader energy system, peak demand design and how the programs that we have proposed today may be suitable or not suitable for different regions of the country?
Senior Director, Policy, Government Relations & Communications, Canadian Gas Association
I assume we're talking about the program announced today.
Conservative
David Bexte Conservative Bow River, AB
You can take that in context, but also more broadly. Natural gas is abundant in western Canada. It's the energy that we have. Electricity is abundant and relatively cheap in Quebec. It's the energy that they have.
I think the low-hanging fruit would be to optimize the energy you have first. Further to that, we tend to look at energy efficiency in isolation, as if it stops at the property line. There's a whole system behind that. There's a loss on transformation when you convert gas to electricity and transmission. It's the same thing with electricity when you convert hydro to transmission. There are losses.
That total system efficiency matters, and we don't tend to talk about it very much.
Senior Director, Policy, Government Relations & Communications, Canadian Gas Association
The energy system itself is very complex. Gas and electric work together to supply the energy that Canadians need every single day. I'll use the example of Ontario and Quebec in the winter time. Quebec is a hydro-rich province with lots of electric heating. In the middle of winter, when they have their peak needs, Ontario is exporting megawatts of electricity that is created by natural gas, so natural gas is supporting the electricity system, even in provinces that are electric-heavy.
When we talk about regional differences across Canada, yes, I think it makes sense that we harvest the low-hanging fruit—or “shoot the ducks” is what I heard earlier today. There are regional differences that need to be taken into account in any program that we put in place when it comes to fuel switching or looking at what that heating appliance is in the home. What works in Alberta is different from what works in Ontario and different from what works in Nova Scotia. These things all need to be taken into account.
At the same time, the economics and the affordability of doing so are front and centre in most Canadians' minds right now. Programs that are being put in place need to have the economics make sense to that homeowner so that the bill they get at the end of the month actually lowers with whatever retrofit situation we're putting them into.
Conservative
Senior Director, Policy, Government Relations & Communications, Canadian Gas Association
Some of our member utilities have done studies. I'm thinking of FortisBC, which conducted a study called “Electrify Kelowna”. FortisBC is a dual-utility electric and gas company. They have the electric franchise in the Kelowna area. They looked at what it would take to electrify 5%, 25% and 100% of Kelowna. The costs to do so are extreme—in the billions of dollars. This is for a city that's just over 100,000 people.
Again, it's—
Conservative
David Bexte Conservative Bow River, AB
In the interest of time, could you provide that study or ask your member to provide that study or any other relevant studies to the committee? I'd sure appreciate that.
I was really taken by your comment earlier that a high-efficiency gas system costs half as much—I presume, to operate, not just to install—as a cold-climate heat pump. Could you provide the analysis that led to that conclusion?
Senior Director, Policy, Government Relations & Communications, Canadian Gas Association
If we're looking at a high-efficiency gas furnace in the mid-90% range and a cold-climate heat pump that has a COP of roughly, on average, about 2.5, we see that the COP or efficiency of the heat pump as the weather gets cold begins to drop. It can drop to the point—some of them at around -25°C—where they're basically a resistance electric baseboard heater.
With natural gas, obviously the furnace does not have that same drop-off, and efficiency remains the same. The cost of the product, or the cost of the energy source, is at times four times cheaper, natural gas versus electricity. I think here in Ontario the delivered cost of natural gas to your home is approximately five cents per kilowatt hour, and your delivered electricity is around 18¢ or 19¢ per kilowatt hour. The efficiencies of a heat pump in cold weather situations don't justify the economics. You don't get that energy cost savings.
Conservative
David Bexte Conservative Bow River, AB
Then, all the comfort analysis and all that stuff just goes out the window if you can't deliver at peak.
Senior Director, Policy, Government Relations & Communications, Canadian Gas Association
That's correct. When an energy system is designed, it's designed around meeting the peak, either the summer peak or the winter peak, so that energy is there when Canadians need it.
Conservative
David Bexte Conservative Bow River, AB
I appreciate that.
What's the motivation for natural gas companies and natural gas industries to invest in home efficiency? What I'm getting at is this: Do we really need a lot of government funding to motivate this, or can we leverage industry to reach an objective, whether it's through building codes or other...?
Senior Director, Policy, Government Relations & Communications, Canadian Gas Association
In my remarks, I talked about the energy savings that we've realized over the last couple of decades. This is something that we in the gas industry are very proud of. Our customer base grows by about 2.5% every year—80,000 to 90,000 new customers come online—yet our energy use per home keeps going down. We're very proud of this, and this is through higher-efficiency equipment and better-built homes.
With regard to your question about federal funding for a program, it would be our opinion that any energy that is saved is good energy that is saved, so they should include gas equipment within those programs.
Liberal
The Chair Liberal Shannon Miedema
I'm sorry. We're out of time, Mr. Bexte.
Mr. Fanjoy, you have six minutes, please.
Liberal
Bruce Fanjoy Liberal Carleton, ON
Thank you.
First of all, I'd like to welcome Dr. Hunter to ENVI. Dr. Hunter is a much respected and valued member of our community in Carleton. I was one individual who benefited from one of his famous tours of his retrofitted home. Another piece of information I think the committee would be interested in knowing is that Dr. Hunter is one of the leaders who delivered the Canadarm for the space shuttle.
It is a great honour to have you here, sir, and I'm grateful that you've turned your attention, after conquering space, to conquering space heating.
Now, before you began your retrofit, you were living in a conventionally heated home. Was that home heated with natural gas, propane or...?
Liberal
Liberal
Bruce Fanjoy Liberal Carleton, ON
How comfortable is the home? Has this come at a sacrifice to your comfort? Are you more comfortable?
Scientist, As an Individual
I would say that there's no difference. It's transparent to us in terms of comfort.