Federal Government Unveils New Strategy to Promote Green Building Practices and Retrofit Homes

The federal government has released a comprehensive plan to phase out oil-fired furnaces in new constructions and encourage the adoption of heat pumps by homeowners and businesses over the coming years. The finalized Canada Green Buildings Strategy, unveiled today, outlines Ottawa’s priorities for decarbonizing buildings, which are the third-largest source of climate-altering carbon emissions in Canada.

The strategy does not address natural gas and propane heating sources. While the document lacks detailed explanations on phasing out oil-fired furnaces, Energy Minister Jonathan Wilkinson mentioned that the federal government will use regulations and investments to promote the transition to heat pumps.

“We will be moving to ban the use of heating oil in new construction. This decision reflects the availability of numerous alternatives to heating oil,” Wilkinson told CBC ahead of the strategy’s release. “Heating oil is enormously expensive and is the most polluting fuel used to heat our homes.”

The Canada Green Buildings Strategy commits to introducing a regulatory framework to phase out the installation of costly and polluting oil heating systems in new constructions by as early as 2028. Heat pumps, which use electricity and do not burn fossil fuels, are more efficient than traditional climate control systems because they transfer warm or cold air instead of generating it.

The strategy document notes that some heat pumps can warm a house even when temperatures fall below -30°C and cool it when temperatures exceed 40°C. Heat pumps are often paired with backup heating sources for extended periods of severe cold. These systems are more energy-efficient than oil furnaces, do not release toxic fumes, and avoid the risk of costly oil spills. Additionally, heating oil prices are subject to global price fluctuations.

However, heat pumps come with significant upfront costs. According to Efficiency Canada, the average cost of a heat pump in Canada is $18,400, compared to $6,500 for an oil furnace with a tank replacement. Wilkinson highlighted that federal affordability programs, co-delivered with some provincial governments, can help reduce the cost of heat pumps.

Through the Oil to Heat Pump Affordability (OHPA) program, homeowners can receive up to $15,000 to install a heat pump. This program is currently available in British Columbia, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, where it is co-delivered by federal and provincial governments.