UPDATE 17/08/2024: major updated costs and analysis
Warning: this article contains a lot of numbers. Numbers that tell a story. If you don’t like numbers, stop reading and spare yourself arithmetic anxiety.
It should not be news to you that people in Canada need to heat their homes. Some of us also need air conditioning if we want to be able to sleep in hot, humid July and August.
Home heating- emissions from residential combustion sources, resulted in 41 MT of CO2 equivalent emissions in 2017, or about 5.5% of Canada’s national GHG emissions. (2022 figures were 39 MT and still about 5.5% of total CO2e). In contrast, road transport represented 132 MT- about 17.5% of total GHG emissions (2022: 120 MT, about 17% of total). Public electricity and heat production, lumped together, are larger at 79 MT (2022: 56 MT). Oil and gas production and refining are larger still at 124 MT (2022: 123 MT). Home heating is actually a surprisingly small fraction of our national and per capita emissions, given our cold climate. Figures are from Table ES-2 in this reference:
(updated figures are from the 2024 executive summary which has figures for 2022. Note, the basis of comparison in some cases seems to have shifted between the two dates. Note also that fugitive emissions from fossil fuel production aren’t attributed to fossil fuel uses, but are listed as their own category likely because Canada is a major fossil energy exporter. Attributing all those emissions to our own consumption would be an error, as would ignoring them entirely, but splitting them equitably is also troublesome so it appears that MECC chose not to even try.)
About 75% of Canadians- those of us living in Ontario, Quebec, Manitoba and British Columbia for instance- have access to an electrical grid which is extremely low in CO2 emissions. Ontario is highest in that group with 40 g CO2/kWh on average (the actual figure in 2018 was about 25 g CO2e/kWh for Ontario). All of those GHG emissions comes from the 6% of our grid power produced using natural gas. We burned our last coal for power in 2013. (2024 update: our natural gas use is climbing in Ontario. It represented 12.8% of our kWh in 2023. Our grid intensity however is still only about 45 g CO2e/kWh, as the figure I used for 2018 was a high estimate. https://www.ieso.ca/Learn/Ontario-Electricity-Grid/Supply-Mix-and-Generation). It’s an enviable situation that much of the world can only dream of achieving decades from now.
Most Canadians, who live in major or secondary urban centres, also have access to the natural gas distribution system. And those who do, almost exclusively use natural gas to heat their homes through long Canadian winters.
Why? One reason: price. Natural gas is, and has long been, the cheapest source of heat available to homeowners- as long as they are in a city or town on the natural gas grid.
Those who don’t- people who live in rural locations or a few provinces without natural gas distribution- have four choices: wood or wood pellets, propane, fuel oil or electricity. Wood is often used as either a primary or supplementary heat source in rural locations or for cottages and hunting camps, with back-up often provided by electric resistance baseboard heaters. Rural homeowners are otherwise left with expensive options: propane sells at a premium to natural gas, oil tends to be used only in very old houses which haven’t had their heating systems retrofitted yet, and although electrical resistance heaters are 100% efficient at converting work (electricity) to heat, they are very expensive to operate.
So natural gas heating is king in Canada. My own home is heated with a modulating condensing boiler with an annual fuel utilization efficiency (AFUE) of about 94%. . My domestic hot water is similarly produced by a flow-through modulating condensing water heater with an AFUE of 98%. AFUE is a measure of how much of the chemical potential energy of a fuel, measured by its HIGHER heating value (HHV), is converted into useful heat in the home. High AFUE appliances not only extract the heat from the combustion product gases, but also extract heat by condensing the water produced by combustion.
Natural gas is very cheap per unit of chemical potential energy. One cubic metre of natural gas has a typical HHV of 37 MJ – for comparison, that’s about 10.3 kWh. But it is important not to confuse heat energy (which the HHV of natural gas represents) with thermodynamic work- which electricity can be readily converted to, but heat cannot without very significant losses.
https://www.linkedin.com/pulse/primary-energy-fallacy-committest-thou-2nd-sin-paul-martin-nty3e
My house used 2677 m3 of natural gas in 2018, which cost including taxes $1184 CDN, or $0.42 per m3. (2023: 2328 m3 costing $1580, or $0.69 per m3, including the carbon tax and HST and all fees) Of that, $271 were account fees and taxes on those fees, rather than the marginal cost of extra gas and its delivery.
Fed into my 94% AFUE boiler, that’s about 4.3 cents/kWh worth of useful heat, i.e. when compared to using electricity fed to an electric resistance heater which is 100% efficient (2023: about 7 cents/kWh of heat delivered into the home. For reference, that’s $19.40/GJ or $20.50/MMBTU- retail gas is a lot more expensive than wholesale gas. For reference, the Gulf Coast Henry Hub price for wholesale gas was about $3 USD or $4 CDN/MMBTU. Those who confuse wholesale with distributed retail prices- and that happens frequently for instance when people foolishly consider wasting hydrogen as a fuel- really do us all a great disservice!).
To look at it another way, for every m3 of gas I burn in my boiler, I get about 9.7 kWh worth of useful heat in my house. The average cost of electricity for us in 2018 in contrast was about 17 cents per kWh (2023: 15.5 cents per kWh, because in May 2023 we bought our Tesla Model Y and signed up for the ultra-low overnight rate program. This program drops the cost per kWh to 2.8 cents plus 2.6 cents delivery, taxes and fees charged per kWh, between 11pm and 7am, i.e. 6.2 cents per additional kWh consumed in total).
In GHG emissions terms, combustion and upstream/transmission energy use result in emissions of about 1.9 kg CO2/m3. That means for every kWh of heat my 94% boiler puts into my house, carbon emissions are about 0.2 kg or 195 g. In comparison, Ontario’s electricity CO2 generation is about 40 g total per kWh. In direct CO2 emissions from source, that’s about 4.9 times what I’d emit from my house if I used electric resistance heaters instead.
If we were to add estimates of methane leakage in production and distribution per my other paper:
https://www.linkedin.com/pulse/natural-gas-better-than-coal-paul-martin
-of 2.5 to 5% of the methane fed, using the 20 yr 84x factor for methane’s GHG equivalence to CO2, that would increase my heating plant’s GHG emissions from 195 g of actual fossil CO2 emitted to between 343 and 491 g of CO2 equivalent per kWh. That’s between 8.6 and 12.3 times as much total CO2 (equiv) on the 20 yr time horizon as if I heated with electric resistance heaters. Environment Canada estimates fugitive emissions of GHGs from oil and natural gas production to be about 54 MT- more than the amount produced by all residential heating combined. They no doubt use the 100 yr 33x factor for methane vs CO2 in this estimate.
The house used 2677 m3 of natural gas last year. That’s all heating, domestic hot water and our cooktop and oven, but not the clothes dryer which is electric. My CO2 emissions were therefore 5.06 T of direct or 8.9 to 12.7 T of total CO2(equiv) including the 2.5 to 5% methane leakage factor. $1124 per year to meet all the heating needs of a roughly 2400 sq ft 2 storey house and a family of four. It’s a relatively efficient house, about half renovated 1920s and half modern, well-insulated addition with careful detailing. Better than average, not best in class.
For comparison, I commute 4 days per week, 122 km total per day. (2023: ZERO- I no longer commute at all for work- yay! My driving emissions related to work transport are now near zero as I meet with almost all of my consulting clients via teleconferencing). My commute in my 5L/100 km Prius C amounts to some 3.4 T of CO2 emissions from source, plus the associated toxic emissions breathed by the people I drive by on my way to and from work. That’s for one person to earn a living. A substantial fraction of the direct GHG emissions to keep a family of four warm through a Canadian winter, despite this being the most efficient IC engine car you can currently buy in Canada that doesn’t also have a plug. (Sure- I could move closer to work- but my options there are putting my wife out of HER career, and also quite likely a divorce. Not a practical option I’m afraid!)
Also in comparison, we have high speed internet, a VoIP home phone plan, and three cellphone plans, all modest and none with cellular data. Telecom services cost our family a total of $1650 per year. Yes, telecom services are expensive in Canada due to lack of competition and low population density. But we pay about 1.4 times as much for telecommunications as we pay to heat our house, in part because in 2018 we paid nothing to dump CO2 and methane to the atmosphere. Is that a correct statement of our relative values?
Recently, Canada’s federal government implemented a minimum carbon tax standard for the country. Ontario had a working cap and trade system with Quebec and California, but our provincial government elected about a year ago, spent hundreds of millions to destroy that working system- only to have it replaced by the federal government’s tax. The tax, per my most recent bill, was 3.91 cents per m3, or $20 per tonne of direct CO2 emissions ($8.50 per tonne of total 20 yr equivalent emissions at the 5% leakage figure). That would have increased my 2018 bills by $105, or nearly 10%. (2023 update: $0.11/m3 carbon tax, $85/tonne CO2, which increased my bills by $266)
My average electricity use costs me 17 cents per kWh- that’s the total of my 2018 bills divided by my home’s total kWh consumption. (2023 update: the average is now 15.5 cents as noted above)
Electricity in Ontario has time of use rates, so electricity is cheaper at night than during peak hours during the day. But if I were to use my average cost per kWh to run resistance heaters, my heating bill would have been $4420 last year (2023: a little less than that, using the 2023 average cost including fees and taxes). My CO2 emissions would have dropped to about 1 tonne. That’s a $3300/yr increase in cost, to save 4 tonnes of real or up to 11.7 tonnes of CO2 equivalent emissions. A cost of between $820 and $280 per T of emissions averted.
Needless to say, we’d have noticed that extra cost- if we were to increase our heating costs by a factor of almost four!
(2024 update: per the 2023 costs for gas and electricity we paid, the premium would still be considerable. However, if we were strategic about the use of electric heating only between 11pm and 7am, we could save at least a small amount of money due to the ultralow overnight rates. Electricity during that time range costs us only 2.8 cents per kWh plus 2.6 cents for delivery and regulatory fees, plus taxes, for a total of about 6.1 cents per kWh in marginal terms (i.e. for new kWh added, assuming that our existing uses of electricity bear the cost of the rest of the bill)- and then only between 11pm and 7am. In marginal terms, that 6.1 cent/kWh fee is less than the ~7 cents per kWh we paid for gas including carbon tax and HST- but again, that is a bit of an apples to oranges comparison, because the cost of gas includes fees and taxes. But when you add a heatpump…well, see below!)
Of course there are alternatives to resistance heaters! A heat pump can use work (electricity) to pump heat from a cold place (the air, or the subsurface). Air source heatpumps became briefly popular in Canada after the 1973 energy crisis, but fell rapidly out of favour again due to the poor durability and performance of the first generation units in extremely cold weather. Modern air-source heat pumps can generate a coefficient of performance (COP) of up to 2 at temperatures as low as -20 C. It rarely gets colder than -20 C in Toronto or Vancouver, but does in places like Calgary, Edmonton, Regina and even Montreal. Air source heat pumps are a modest cost increase over air conditioners, which happen to also be basically necessary in the warmer parts of Canada due to hot, humid summers.
Small Mitsubishi air source heat pump units deliver their full heating load at 21 C return air temperature and outdoor temperatures of -15 C. Coefficients of performance- the kW of heat pumped into the interior per kW of power used- range from about 1.5 at -25 C outdoor to about 3.4 at 5 C outdoor. An air-sourced heat pump unit returning a COP of 2.2 would have reduced my electric heating cost to $2010/yr. if I were to go all electric- again this is an approximation because the HP system wouldn’t heat my domestic hot water or fire my cooktop or oven. That is still almost twice what I paid for natural gas last year. There is therefore no payback to be had from installing an air-source heat pump, until carbon taxes become very substantial indeed.
2024 update: amazing how things change, so quickly! If we were to strategically use an air source heat pump just between 11pm and 7am, the ultralow overnight electricity rates combined with a coefficient of performance of more than 2.2- the seasonal average is definitely higher than that for a good heatpump- would definitely save us operating cost year round- not just in the “shoulder seasons” where we likely wouldn’t need the gas unit at all. If we look at the marginal electricity price of 6.2 cents/kWh between 11pm and 7am, and apply a COP of 2.2, we’d effectively be paying only 2.8 cents per kWh for heat delivered into our home- that’s already way cheaper than gas. Even using the entire average cost of electricity we currently pay (15.5 cents per kWh), ignoring the fact that we’d need heat more at night than during the day even in mid winter- 15.5/2.2 is itself even a little cheaper than gas!
Since we would be smart about using the heatpump, and we would also keep our gas boiler as a backup system, a payback on a bidirectional air source heatpump to replace our existing air conditioning unit, just jumped up on the priority list of home investment tasks. It’s still down well below replacing the garage roof- that’s happening this fall. And as to the payback period…well, that depends on how long you figure our existing air conditioner system would last if we didn’t replace it, and whether or not we add a 2nd heatpump system to increase comfort as our house is currently only air conditioned on the top floor.
Another alternative is ground sourced heat pumps. In urban areas, groundsource heat pumps require vertical wells to be drilled as there is insufficient land for heat collection trenches to be effective. Drilling costs vary, as do the cost of the equipment and installation, but it is clear that the costs of a groundsource heat pump system are many times the cost of a conventional furnace and air conditioner which they replace. Ground source systems can have coefficients of performance ranging from 2.5 to 5 for heating, with the bonus being that the COPs for cooling are very high indeed- air conditioning basically becomes “free”.
As a best case, assuming a system with a heating COP of 5, my electric heating costs would drop to $882 per year, a savings of $241 per year versus my current cost for natural gas heating. But $241 per year would never pay back the extra cost of that GSHP system. Real savings would be modestly larger because it would drop my cost for air conditioning. A rough estimate is that we spent a whopping $95 on air conditioning in 2018 as best I can estimate, by comparing our June, July, August and September electricity bills against our May and October bills- so not much to be saved there.
(2024 update: no real change here. Groundsource represents a huge increase in capex, and we have no plans to live in this house long enough to make it even worth considering)
Significant carbon taxes would be required to make this investment make economic sense to someone whose primary interest was saving money rather than the planet. And frankly, if we’re honest, our actions and decisions reveal that most of us don’t care much about either: we care far more about our own comfort and convenience.
Perhaps this analysis explains why my focus has been on the electrification of transport, rather than on heating. Savings in operational GHG emissions of 97% (94% relative to our Prius) and a halving of daily operating costs can be achieved simply by switching from IC engine to battery electric cars and light trucks. (2024 update: whoa, that was an under-estimate! Our model Y is currently costing us about $0.91/100 km to recharge on the ultralow overnight rates, including taxes. That’s relative to a current cost for driving our Prius C, the most efficient gasoline car you can buy here without a plug, of $8.50/100 km (5 L/100 km, $1.70/L for gasoline retail. We only use superchargers for about 8% of our kWh so far, so their cost (less than 10x what our home charging costs) is really irrelevant to us. That’s almost a factor of ten reduction in operating cost, not a factor of two!) The electrification of light personal transport is some of the lowest hanging fruit in the battle against global warming in my opinion. Heating, on the other hand, will definitely have to wait.
2024 update: electric heating is, as noted, looking much more promising in Ontario due to the ultralow overnight rate program. But of course such programs don’t exist everywhere!
Why do we have such a program? Because nuclear and hydropower together make up over 78% of our electricity supply (2023 figure)- and these meet substantially all of our power needs at night. Because most of Ontario’s hydropower is “run of river”, which is “use it or lose it”, rather than hydropower derived from dams which can store water and deliver power only during peak periods, hydro and nuclear in Ontario are very similar in that both of these power sources cost the same, more or less, whether you use the power or not. In past we sold this power at a discount to nearby US states- but a wise piece of public policy now offers this power to ratepayers who choose to sign up for it. What you get in return is a very much higher rate between 4 and 9pm, Monday through Friday, when gas peakers are at the margin. In our home we avoid using electricity during this time period, by for instance avoiding doing laundry, washing dishes, using the air conditioner or charging our EVs. But if we heated the house electrically, that would be a harder ask in terms of comfort.
Disclaimer: this article was written by a human, and humans are known to make mistakes from time to time. Show me where I’ve gone wrong, with good references, and I’ll be happy to correct my mistake.
If however you don’t like what I’ve written because it takes a dump on your pet idea, then please contact my employer, Spitfire Research Inc., who will be happy to tell you to piss off and write your own article.