Energy Magazine Category: Facts and Developments

What is energy efficiency? 

In the energy sector, there is an old adage that states that the best form of energy is the one that is not used. In practical terms, this usually refers to energy efficiency – the ability to use less energy to perform a specific task or produce a specific output. It is often expressed as a percentage of the energy input that is converted into useful energy output. Energy input often refers to a fuel source, such as natural gas and gasoline. Useful energy output may refer to heating for buildings, electricity production, or running the engine of a car. For example, something that is 50% energy efficient means that 1 kW of energy input will produce 0.5 kW of useful energy output.

Energy efficiency has become increasingly important in today’s conversations as a way not just to reduce greenhouse gas (GHG) emissions but to help maintain affordability. Over the years, technological advancements and innovations have made natural gas equipment significantly more efficient, allowing gas customers to realize energy and cost savings.  

Canada’s homes are getting more efficient 

One of the sectors where this has been most apparent has been the residential building sector. This is best illustrated by the data shown in Figure 1. The number of residential gas customers in Canada has steadily increased over the years. Between 2000 and 2024, the natural gas customer base has increased by a total of 65%, growing from 4.2 million to nearly 7 million.  

Figure 1 also shows the total natural gas demand in the residential sector. Regardless of year-over-year fluctuations due to weather, the overall trend indicates that the residential gas consumption has remained largely the same since 2000. Initially, this may seem surprising: how can the customer base have grown more than 65% across the sector without increasing the total amount of gas that is being consumed? The answer can be attributed to improvements in energy efficiency. Between 2000 and 2024, the average gas consumption per household decreased by 45% from 155 GJ to 85 GJ. 

Figure 1:

 

Adopting high–efficiency technology 

One of the most significant factors behind this improvement in energy efficiency observed previously has been the adoption of high–efficiency gas furnaces. Figure 2  illustrates the change in the gas furnace stock over the years. In 2000, about 50% of Canada’s households that heat with gas were doing so with normal efficiency furnaces, which are 62% efficient. In contrast, about 30% used medium efficiency furnaces (80% efficient) and only 20% used high efficiency furnaces (90% efficient). Today, high energy gas furnaces are the norm, making up almost 80% of the total gas furnace stock in the country. Meanwhile, normal efficiency furnaces have been entirely phased out. 

Figure 2:

Demand side management programs 

High-efficiency furnace upgrades, such as those that occurred throughout the 2000s and early 2010s, were done as part of what are known as Demand Side Management (DSM) programs. Utilities typically offer these programs to encourage customers to reduce energy consumption by incentivizing the adoption of energy-efficient technologies through rebates or other subsidies.  

Canada’s gas utility companies have had a long history of administering DSM programs. The very first DSM program for natural gas utilities started in Ontario in 1995. Since then, Canada’s gas utilities have continued to invest millions annually to help customers save energy. Over the last decade alone, Canada’s gas utilities have invested over $2.1 billion in DSM programs, resulting in 1.9 billion m³ less of natural gas that would have been otherwise consumed. 

As the conversation on energy efficiency continues to evolve, it is important to acknowledge the progress that has been made but also recognize the opportunities that still exist. High-efficiency furnaces are only one aspect of these programs. Today, DSM programs are offered across various types of customer classes to include all sorts of energy-efficient solutions, including home retrofits, smart thermostats, and even gas-absorption heat pumps. Canada’s natural gas industry is constantly innovating, including its continued commitment to energy efficiency. The effort is a key reason why natural gas remains Canada’s most affordable energy choice. 

Spring has begun and while there may still be the occasional spring snowstorm in parts of the country, most of the cold weather is likely behind us. As furnaces start to wind down, this issue of Facts and Developments looks back on this past winter and the outsized role that natural gas has played in heating homes and businesses across the country. 

The 2024-25 winter was one of the colder ones in recent memory. The year started with a big winter storm, hitting most of Canada and the United States, resulting in an all-time high natural gas demand in the US Lower-48. On average, temperatures across the country had remained at colder-than-normal levels for the rest of the winter, especially compared to the prior two winter seasons.  

One way to measure the “coldness” of a season is through Heating Degree Days (HDD). HDD is defined as the difference between the daily outdoor air temperature below a baseline temperature of 15°C, the point at which energy input is needed to maintain indoor air temperatures. The higher the HDD, the more energy is required for heating a building. The graph below presents the average Heating Degree Days in Canada over the last three heating seasons from October to March. Through October to March, the heating needs in Canada were 2% higher than those of the 2022-2023 season and nearly 10% higher than the 2023-2024 season. 

The colder than typical winter meant that energy demand in buildings was higher this year compared to the prior two. And there’s no energy source that is relied upon more in Canadian households than natural gas. Natural gas makes up 46% of all energy used in the building sector. There are nearly 7.7 million natural gas customers across the country – nearly 50% of nearly 15.5 million households – using natural gas as the primary energy source for home heating. This percentage is even higher in the provinces of Ontario (71%), Saskatchewan (80%), and Alberta (84%). 

Between December 2024 and February 2025, a total of 14.7 billion cubic metres of natural gas was consumed in the residential and commercial sectors, equating to an increase of 3% and 13% compared to the 2022-2023 winter and the 2023-2024 winter seasons respectively. Typically, the gas consumed in the three winter months represents about 50% of the natural gas consumed in residential and commercial sectors throughout a typical calendar year. This seasonal consumption pattern underscores just how important natural gas is in the coldest months. 

The seasonal peak observed in the natural gas system further emphasizes its importance to Canada’s energy system. To put this into perspective, the daily natural gas demand in the residential and commercial sector was 6.3 million GJ or about 73,000 MW. By comparison, the total electricity demand in the same two sectors this winter was only 33,000 MW. This comparison emphasizes the significant delivery capability of the natural gas system and its superior capability for meeting demand, especially during periods of peak demand or inclement weather. It is critical to understand these consumption patterns when there is any discussion about the future of our energy systems. 

As the end of summer approaches, the fall season signals the return of crisp and cool temperatures. In the natural gas sector, this marks a period known as the pre-heating season, just before the onset of colder winter temperatures. With 7 million homes in Canada that rely on natural gas to stay warm, the gas furnace, which was likely been used sparingly in the summer, suddenly becomes the most important appliance in the home in the winter.

As such, the pre-heating season is usually the best time to perform some regular maintenance on your gas furnace. This helps to ensure that everything is running as safely, as reliably, and as efficiently as possible. After all, it is better to find a problem now than in the dead of winter in the middle of an extreme snowstorm. A sudden furnace breakdown in the winter is not just inconvenient; it can cause truly unsafe conditions.

Home heating tune-ups

There are several of actions that individuals can take to ensure that your gas furnaces are in tip-top shape prior to the start of the winter heating season.

Replace your furnace filters – this should also be done every three months or when the filter is dirty. A clean filter maximizes airflow and ensures that your furnace runs as efficiently as possible, minimizing your energy consumption and maximizing your cost savings.

Check your thermostat – turn on the thermostat and ensure that the furnace turns on as expected. Review your setpoints and programs to ensure that they are still applicable. If you have a smart thermostat, check for any software updates as well.

Check Air Supply and Flue Gas Vents – ensure that the air supply line and the flue gas vent outside of your home are clear of obstructions like furniture, dust, vegetation, or leaves that may have accumulated throughout the summer and fall.

Listen for strange noises or smell for odd odor – strange noises could be indicative of a mechanical issue and strange odors may be indicative of a leak. In either case, seek professional help to diagnosis and repair the problem.

Calling a professional

While the steps outline above are important, seeking professional help is the most prudent way to ensure everything is in working order. Make sure to schedule an inspection for your gas appliance with a licensed HVAC contractor in your area. A professional tune-up may include the following services:

• Inspection of mechanical components in the air blower, heat exchanger, and burners
• Cleaning and/or lubrication of mechanical components (like fans and motors)
• Inspection and cleaning of the pilot light system
• Inspection of the ductwork and vents
• Electrical inspection of the controllers, thermostat, or furnace switch.

Support from natural gas utilities

If you are looking to get your furnace ready for the winter, your local natural gas distributor is a good place to start to look for support. Gas utilities provide a wide range of supports for homeowners to seek help from professional maintenance services.

 

“If you are looking to get your furnace ready for the winter, your local natural gas distributor is a good place to start to look for support.”

The polar vortex that blanketed western Canada this winter made very clear how weather events can have a profound effect on energy demand in Canada: severe cold meant huge amounts of energy were needed to keep Canadians warm. It is reassuring therefore to know that energy utilities design delivery systems to handle extreme – or as the industry says – “peak” demand. In lay terms, that means systems are built to endure the coldest (or warmest) hour of the year.

In this issue, we examine the particulars of system design for peak demand – in both the natural gas, and the electricity systems in Canada.

ANNUAL DEMAND AND SEASONAL PEAKS:

Let’s start by first looking at two broader data points: annual demand and seasonal peaks for natural gas and electricity. According to the Canada Energy Regulator, Canada consumed about 580 TWh of electricity and 1230 TWh of natural gas in all of 2022. Simple math tells us that means 2.1x as much natural gas as electricity. However, this does not provide the full picture. For one thing, we know energy demand varies seasonally. So, let’s look more closely at the monthly energy consumption.

The breakdown by month in Figure 1 demonstrates much greater reliance on the gas system during the winter season, when the demand for space heating is higher. We see that during a month like January, the peak demand is more than 50% higher than that of the annual average monthly demand. Furthermore, the gap between the two systems has widened, with gas consumption growing from approximately 2.1 times to 2.5 times that of electric consumption.

FOCUSING ON DAILY PEAKS:

The significant discrepancies between the annual and monthly numbers beg questions about what happens on a daily basis? To answer them, let’s use some of the data from the polar vortex cold weather event that occurred between January 11^th – January 15^th this year in western Canada. The following is a summary of the peak energy deliveries in the provinces of British Columbia, Alberta, and Saskatchewan over that time period.

British Columbia:

On Friday, January 12^th, British Columbia was hit with extreme cold, with parts of the province reaching temperatures as low as -45°C. On the same day, BC Hydro advised that they delivered 11,300 MW of electricity, a record. On that same day, FortisBC also saw a record demand: 21,763 MW of natural gas – almost twice the electric demand.

Alberta:

In Alberta, temperatures also reached as low as -45°C. In response, the electricity consumption in the province peaked at 12,384 MW, a record according to the Alberta Electric System Operator. Throughout the weekend, ATCO Gas indicated that the natural gas system in Alberta delivered up to 110,340 MW of energy, nearly 10 times the amount that had been delivered by the electricity system.

Saskatchewan:

The weather event brought similar frigid temperatures to Saskatchewan, with parts of the province reaching lows of -44°C. The electric system in the province hit a peak of 3,810 MW on January 13^th, just 100 MW short of the all-time high. The same weekend, the province also set a new daily gas use record of 1.70 PJ/day¹ , which is roughly equal to 19,700 MW: over 5 times the electric demand of the next day.

The graph shown in Figure 2 summarizes the peak energy demands as outlined above. Furthermore, the graph also includes the annual gas and seasonal peak gas demands in each province, converted to average delivery in MW, according to the Canada Energy Regulator and Statistics Canada.

What jumps out from the data is how much more energy is delivered by the natural gas delivery system than by the electric system in these three provinces. At moments of peak energy demand – when Canadians needed energy the most – the gas systems in BC, Alberta and Saskatchewan were able to deliver as much as almost 10 times the energy that the electric systems delivered. Readers may recall Alberta was issuing alerts because of concerns that the electric system could not meet demand: no such alerts were issued about a gas system delivering over 9 times more energy.

So to answer the question “why is peak demand important?” we need only look at the graph in Figure 2. Across all three provinces, the peak demand was 20% higher than the average seasonal peak and more than 51% of the average annual demand. To put it simply, having a system capable of reliably meeting that demand is essential to preventing Canadians from freezing in the dark.

As noted earlier, peak demand is the basis on which our energy systems are designed. Though they are not running at maximum capacity for most of the year, designing for peak conditions ensures that they remain stable and reliable for those critical hours or days of the year. And there is no energy system in Canada that does this better than our natural gas delivery system.

---

¹https://www.saskenergy.com/about-us/newsroom/saskenergy-sets-new-daily-natural-gas-usage-record-0

Did you know that gas heat pumps can run at efficiencies beyond 100%, which can help you save you money on your utility bills and reduce the CO₂ emissions from your energy use?

Not surprisingly, given how cold Canada is, space heating accounts for the highest proportion of energy use in Canadian homes, at nearly 64% of total energy use. Most Canadians heat with high efficiency gas furnaces. Heat pumps however, can be even more efficient. Though electrically driven heat pumps are currently the most common, gas heat pumps (GHP) are emerging as a viable alternative, and offer unique advantages.

Fundamentally, a gas heat pump operates in the same way as an electric one. It absorbs heat from the ambient outside air and transfers the heat indoors; as such, it can run at efficiencies beyond 100%. The main difference, as the name implies, is that a natural gas heat pump uses natural gas as its energy source instead of electricity. But a gas heat pump is cheaper to use — as direct gas energy use is much cheaper than electricity — and a gas heat pump can function in colder temperatures because it is thermally driven — meaning it has higher reliability in our cold Canadian winters.

Energy reductions

According to NRCan’s Office of Energy Efficiency, an average residential home in Canada that has natural gas uses an average of 95 GJ per year for space and water heating. Switching to a natural gas heat pump could reduce annual energy consumption by 24 GJ / almost 620 m3 — a 25% energy reduction when compared to a natural gas furnace. In 2022, this would have resulted in average cost savings of $330 per household. Furthermore, it equates to CO₂ emission reductions of more than 1.2 tonnes per household per year.

Deployment projects

Gas heat pump manufacturers and many of Canada’s natural gas utilities have been piloting this technology in a variety of different applications throughout the country:

Enbridge Gas:

Enbridge Gas installed a 65kW absorption gas heat pump in 2022 to augment the domestic hot water supply for a multi residential building in Toronto. The monitored results to date show an estimated 25% annual natural gas saving.

FortisBC:

In 2022, FortisBC launched a pilot project to install gas heat pumps in 20 residential homes. Participants of the program could be estimated to save up to 40 GJ per year, equating to cost savings of $500 and emission reductions of nearly 2 tonnes.¹

As the projects outlined above have shown, Canada’s gas utility companies are working diligently to support innovative technologies and bring gas heat pumps to markets. The next time you need to replace your home heating system, consider a gas heat pump. As consumers, we often need to consider the energy trilemma: affordability, energy security, and emission reductions. And a gas heat pump may just check all the boxes.

---

¹ FortisBC brings high-efficient gas heat pumps into B.C. homes for the first time” (26 May 2022), online: FortisBC <www.fortisbc.com/news-events/media-centre-details/2022/05/26/fortisbc-brings-high-efficient-gas-heat-pumps-into-b.c.-homes-for-the-first-time>.

On April 18, 2023, Tourmaline Oil Corp., Clean Energy Fuels Corp., and Mullen Group Ltd. announced a groundbreaking $70 million Joint Development Agreement to construct a network of compressed natural gas (CNG) stations across Western Canada. The collaboration aims to revolutionize the trucking industry by transitioning heavy-duty trucks and commercial transportation fleets to the use of CNG, a lower emission alternative.

Canada’s largest natural gas producer, Tourmaline, in partnership with Clean Energy, a leading fuel service provider, will jointly invest in constructing and operating up to 20 CNG stations over the next five years. Mullen Group, one of North America’s largest logistics companies, is first to support the initiative, utilizing the network to fuel its growing fleet of CNG powered trucks.

With its first location operational north of Edmonton, a strategically located station, the venture has begun a transformative journey for Class 8 trucking in Western Canada. Additional stations in Calgary, Grande Prairie (Alberta), and Kamloops (British Columbia) are set to commence operations in the first half of 2024. This ambitious project aims to have around 20 stations fuelling approximately 3,000 natural gas-powered trucks daily, resulting in an impressive reduction of 72,800 tonnes of CO₂ emissions per year. This is equivalent to removing 15,690 passenger vehicles from the road. Furthermore, the adoption of CNG presents substantial cost savings, with fuelling vehicles currently offering up to 50% lower costs compared to retail diesel prices.

This joint effort not only aligns with the Government of Canada’s emission reduction targets but also embraces a free-market approach to emission reduction in the long run. It highlights the immediate and significant potential of CNG for lowering the environmental impact of trucking fleets. Moreover, it lays the groundwork for the future integration of renewable natural gas (RNG) as existing CNG infrastructure can seamlessly accommodate this resource as it becomes more readily available.

The collaboration between Tourmaline Oil, Clean Energy Fuels, and Mullen Group marks an important milestone in the journey toward lower emissions by providing an economical, convenient, and reliable pathway for the trucking industry to transition to CNG. It represents a pivotal step towards a cost-effective future for the trucking industry in Western Canada.

Renewable natural gas (RNG) is a GHG-neutral energy source that is produced from organic waste from farms, forests, landfills, and water treatment plants. At the molecular level, RNG is identical to natural gas. It can be blended seamlessly with conventional natural gas and injected into the existing natural gas infrastructure. Furthermore, it can easily be substituted for conventional natural gas in end-use applications without further adjustments.

While RNG is more costly than conventional natural gas, it remains a relatively cost-effective option compared with other energy sources. As shown in Figure 1, the current delivered cost of RNG is lower than that of electricity and hydrogen.¹

In 2017, Canada’s gas distribution companies set an aspirational target of five per cent RNG blends by 2025 and 10% by 2030. At that time, there were only eight production facilities in Canada, injecting about 4,500,000 GJ of RNG into the natural gas pipeline system annually.

Figure 1: Cost comparison of several fuel sources.

Source: CGA, Hydro-Quebec, NRCan Hydrogen Strategy for Canada.
Note: H2-SMR CCS reflects “blue hydrogen” and H2-Electrolysis reflects “green hydrogen.”

Just how much RNG development has occurred since then?

Today, the number of RNG projects has nearly doubled. Across the country, RNG producers have partnered with Canada’s gas utilities to build and commission 15 projects that are producing pipeline-grade RNG. The total RNG production of these facilities is almost 5,950,000 GJ per year, enough to heat close to 66,150 homes. That amount of RNG would offset nearly 310,000 tonnes of CO2e, equivalent to removing more than 67,250 passenger cars from the road.

Figure 2: Number of RNG projects and production capacity in 2017, 2021, and projections in 2025.

However, the growth in RNG does not stop there.

Several RNG projects are either currently in development or have been announced; by the end of 2025 more than 30 projects are expected to be online. The annual RNG capacity will nearly double to 10,250,000 GJ, enough to heat more than 115,000 homes. This would reduce GHG emissions by nearly 467,500 tonnes – equivalent to removing 102,000 passenger cars from the road.

Canada is among several nations that are investing in RNG projects. As shown in Figure 3, most of the global supply comes from Europe and North America, with Germany, the United States, and France leading in production.

Figure 3: RNG/Biomethane production facilities in Europe, Canada, and the United States.

The growth of RNG projects over the last four years has been tremendous and the next four years promise more of the same. This trend speaks to the important role that RNG will have in Canada’s future energy mix. For more details on RNG projects across Canada, please visit cga2026.acartdev.com.

Did you know that Canada’s natural gas system dates back to even before the country’s Confederation?

It is true — Canada’s first transmission pipeline was built in 1853. The 25 kilometre pipeline was made of cast iron and moved natural gas — at the time, it was the longest pipeline in the world!¹

Natural gas delivery has been around a long time in Canada, but its significant growth really occurred after the Second World War.

Distribution mains (the pipes under roads and between communities) were built with increased frequency over the middle decades of the 20^th century, with construction peaking in the 1980s.  More recently, we have seen new additions to the natural gas distribution system slow, as most large populated regions of the country are already connected to the gas network.  Given the thousands of kilometres of mains and services pipelines installed over decades, it is not surprising that natural gas utilities are spending close to $3 billion each year to renew and extend their systems.

Bare steel and cast iron pipelines were more steadily constructed between the 1950s to 1980s to transport manufactured gas. As unprotected steel and cast iron are prone to corrosion and small leakages, they have been phased-out over time. Modern distribution systems no longer include cast iron, and steel pipelines are protected by specialized coatings and corrosion-prevention systems. Polyethylene (PE) is considered a very suitable pipeline construction material and has been used on an increasing basis over the years, including in higher pressure systems. The majority (71%) of the pipeline distribution system, both mains, and services, in Canada are comprised of high and medium-density PE.  The Canadian Gas Association’s utility members no longer have cast iron pipelines and the switch to PE pipes has resulted in significant greenhouse gas (GHG) reductions. By way of example, from the 1990s to early 2012, Enbridge Gas replaced around 1,800 km of cast iron and coated steel pipelines, which led to a reduction of 145,000 tCO₂e of fugitive methane emissions, annually.²

Figure 1: Historical Mains and Services pipeline additions for the gas distribution system

Figure 2: Distribution of pipeline materials for Canada’s natural gas distribution system

The Natural Gas Innovation Fund (NGIF) was created by the Canadian Gas Association (CGA) to advance technology and innovation in the natural gas industry. Each project supported through NGIF must meet specific criteria, including a particular focus on environmental performance and reducing greenhouse gas (GHG) emissions.

Project-based GHG accounting is about quantifying how much a project will reduce emissions within a specific time period. Emissions reductions are calculated on a life-cycle model that takes into consideration emissions associated with the production, transportation, and end-use of products. The process below is used to estimate emissions reductions for NGIF projects and is consistent with the ISO 14064 standard. It can be divided into four parts:

1. Project Definition: The first step is to state the primary product(s) or service(s) provided by the technology (e.g., electricity generation, heating), as well as the functional unit. The functional unit is the emissions reduction intensity associated with the technology, for example, t-CO₂e / MWh electricity produced, t-CO₂e / GJ RNG produced, t-CO₂e / CHP unit installed.

2. Project and Baseline Models: Next is to define the baseline scenario, the GHG sources, sinks, and reservoirs (SSRs), and select the relevant SSRs for quantification. Biogenic SSRs are excluded. The baseline is defined as the scenario that is most likely to occur in the absence of the project.

SSRs are typically related to energy use, materials production, and activities (e.g., venting, fugitives, or biological process such as anaerobic digestion).  Examples include: stationary combustion, transportation, materials production, venting.

3. GHG Quantification: In the next step, key project input parameters and assumptions are stated, such as technology or project lifespan, fuel consumption, equipment efficiency, or service produced.

The input parameters are provided on an annual basis and for the capacity of the unit being commercialized. Parameters can be based on engineering calculations, modeling, reference factors, literature values, or data collected by the project proponent.

GHG calculations for each project SSR element and baseline SSR element are calculated using emission factors. The difference between the project and the baseline SSR emissions provides the overall GHG emission reduction potential of the project on an intensity basis.

4. Market Rollout: In the final step, GHG reductions associated with the commercialization and rollout of the technology are established. Based on the sales forecast provided, the overall GHG reduction potential of a project is calculated as:

Total Project GHG reduction = Product GHG Reduction Intensity x Sales Forecast

 

Source: Natural Gas innovation Fund
By: Saad Sarfraz, Manager Energy and Cleantech Analytics