How policy can ensure affordable and reliable building heat in Canada's net zero transition

The document outlines the necessity of shifting Canada's building heat from gas to electricity to meet net-zero targets cost-effectively. It warns that continued expansion of gas networks risks creating stranded assets and higher costs for ratepayers. The author argues that current utility regulation is insufficient for the energy transition and recommends that provincial governments legislate net-zero targets, prioritize electrification over gas expansion, and implement managed contractions of gas networks while centering equity in policy design.

• Electricity is expected to power the majority of space heating in Canada on a cost-optimal path to net zero, regardless of the province or sensitivity scenario. The primary challenge for electric utilities will be managing peak demand to minimize the required scale of electricity system expansion.
• Expanding gas networks is inconsistent with a cost-effective transition to net zero, as overall gas demand will fall dramatically. This risk applies even when using hybrid heat systems (heat pumps paired with gas furnaces), low-carbon gases, hydrogen, or biomethane, as these do not justify continued network expansion and may lead to stranded assets or higher costs for ratepayers.
• Current utility regulation is not aligned with the interests of ratepayers during the energy transition. While electric utilities are only beginning to plan for significant capacity increases, gas utilities are incentivized to expand infrastructure despite uncertain long-term demand. Regulators currently lack the tools to address these transition risks.
• Provincial and territorial policy is essential to achieve climate goals while maintaining affordability and reliability. Governments must equip regulators to handle the energy transition to ensure energy remains safe and reliable at reasonable rates.

APA

Canadian Climate Institute (2024). How policy can ensure affordable and reliable building heat in Canada's net zero transition. https://climateinstitute.ca/wp-content/uploads/2024/06/Heat-Exchange-Briefing-Note.pdf

Chicago

Canadian Climate Institute. How policy can ensure affordable and reliable building heat in Canada's net zero transition. 2024. https://climateinstitute.ca/wp-content/uploads/2024/06/Heat-Exchange-Briefing-Note.pdf.

Wikipedia

{{cite report |author=Canadian Climate Institute |title=How policy can ensure affordable and reliable building heat in Canada's net zero transition |date=June 2024 |url=https://climateinstitute.ca/wp-content/uploads/2024/06/Heat-Exchange-Briefing-Note.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{canadianclimateinstitute2024how, author = {{Canadian Climate Institute}}, title = {{How policy can ensure affordable and reliable building heat in Canada's net zero transition}}, institution = {Canadian Climate Institute}, year = {2024}, month = jun, url = {https://climateinstitute.ca/wp-content/uploads/2024/06/Heat-Exchange-Briefing-Note.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }