Canadian Gas Association’s Response to Green Building Strategy

September 16, 2022

September 16, 2022

The Canadian Gas Association (CGA) welcomes the opportunity to provide comment on the federal Green Buildings Strategy. This file is of foundational importance to the industry, its customers, and the many employees of the industry across Canada. CGA is the voice of Canada’s natural gas delivery industry. Its members are distribution and transmission companies, equipment manufacturers and suppliers and other service providers.

In Appendix 1 we provide answers to the questions included in the discussion paper. In the below cover note we offer context and offer four recommendations for consideration and action. Building on our submission, several CGA members will be providing provincial specific submissions that will showcase the regional perspectives to reducing emissions in the buildings sector.

By way of background, CGA members deliver 38% of all the energy in Canada. Natural gas energy is the largest source of energy to the residential and commercial building stock in Canada with over 20 million Canadians using natural gas and/or renewable gases every day. Today, natural gas meets nearly 100% more of Canada’s end use energy needs than that of electricity. Further, natural gas has been the fastest growing source of energy use in Canada over the last decade. The market has sent a clear signal and that is that it values the use of natural gas and gaseous energy for its affordability, reliability, resiliency, and versatility. On top of this, the natural gas industry has in place existing storage facilities capable of holding up to 60 days of peak winter use. This incredible storage base allows the industry to effectively manage supply and demand. At a time when much is being discussed about battery storage, it is important to recognize the natural gas storage capabilities that exist in Canada and the benefits of that storage for consumers, including those living and working in buildings across the country.

By way of context, the current global energy dynamic demands a brief highlight here. As the government knows, recent events in Europe have prompted a renewed focus on energy security, reliability, and affordability. The global energy market is undergoing a shift that has not been witnessed since the oil embargo from 1973-74’s. We are seeing new partnerships and alliances between nations. Most notably, natural gas is front and center in this new dynamic as Europe aims to dissolve its reliance on Russian natural gas supply. All of this is relevant to Canada’s thinking on its green building strategy. If our goal as a nation is to support the world with new liquefied natural gas and hydrogen supply, we must demonstrate leadership domestically on our gaseous energy opportunity. This includes hydrogen, ammonia, natural gas, and renewable natural gas. At current, the green buildings strategy is focused almost entirely on electricity. It presents no commentary or vision for gaseous energy. The result of this is less confidence in Canada as a reliable partner for our global allies who are looking to us for gaseous energy. If we cannot articulate a vision domestically, what signal is that sending to the world? Again, we offer this as a backdrop for our submission below.

CGA understands the complexities and challenges of reducing emissions from buildings across Canada. Natural gas distributors have been working for decades to improve the energy efficiency of buildings via equipment incentives, education and awareness, and by introducing new technologies to market. In fact, according to data from the NRCan end us database, the use of natural gas in the commercial and residential sector has remained largely flat over the last fifteen years despite over a million new homes and buildings joining the gas system and a larger average square footage of new homes[1]. This points to the success of government regulation and industry leadership.

Specific to net zero, CGA released a net zero pathways report that models three pathways to net zero buildings in Canada by leveraging the gas energy infrastructure system[2]. It is clear from the discussion paper that the opportunities presented by the CGA member infrastructure were not integrated into the initial round of Green Building Strategy (GBS) analysis. For example, we did not see any reference to hydrogen or hydrogen blending, renewable natural gas, natural gas heat pumps, or the benefits of reliability, resiliency, or the gas energy storage available in Canada today. This is a missed opportunity and one that serves to be corrected.

Recommendation #1: NRCan should work with the industry to review its research report and better understand the natural gas infrastructure system. This process can and should inform the final draft of the GBS whereby the gas infrastructure system is leveraged as a tool to support net zero for buildings.

The gas energy system in Canada and the pathways in our net zero research are all supported, to varying degrees, by initiatives from within NRCan including the Hydrogen Strategy for Canada, the Clean Fuels Fund, and the Market Transformation Roadmap for Space Heating. Inconsistency in policy direction and programs confuses the market and stymies investments required to realize the level of energy transformation the government is seeking in its strategy discussion paper.

Though the discussion paper rightly identifies the role of hybrid heating, it should be noted that the opportunity for gas-electricity system integration is about more than just gas-electric hybrid heating. Take hydrogen for example. In Canada, gas utilities are leaders in low emission hydrogen research and demonstration projects. For example, Markham, Ontario is home to the first hydrogen blending project in North America. Enbridge Gas in collaboration with the IESO have a successful pilot project that uses clean electricity to create hydrogen, storing off peak energy from the electric grid as hydrogen, and injecting it into the local natural gas grid. More projects like this are being planned in numerous locations across Canada as are 100% hydrogen fueled communities. The GBS must recognize the innovations that are occurring in the gaseous energy industry. For more detailed information on the role of hydrogen in the gas system, CGA is set to release a flagship report examining the suitability of the gas system, and end use equipment, looking at a >5% H2 blend rate. That report will be made available to NRCan by the third week of September.

Recommendation #2: That NRCan meet with the gas delivery industry in November 2022, for a half day workshop on the role of the gas system, and the various innovations occurring in renewable fuels and technologies.

Several CGA members have commissioned research on electrification vs. a diversified pathway using pipes and wires. The consensus from this research is that electrification is more costly than a diversified pathway. The GBS, if it continues to focus on electrification, will surely have an impact on affordability and reliability of energy for Canadians. Costs and modelling need to be transparent with input from industry.

Recommendation #3: We are requesting transparency and details on the cost of achieving the proposed GBS. CGA recommends that the modelling and estimated costs for Canadians be included prior to the publication of the GBS.

CGA emphasizes the need for collaboration between different levels of government. In Canada, natural gas is regulated provincially by economic regulatory bodies under provincial legislation. These regulators are responsible for reviewing new natural gas connections and costs for consumers. The language in the discussion paper suggests the government will limit/ban natural gas connections. Over the last decade over a million new consumers have joined the natural gas system in Canada. These include homes, businesses, industry, power generators and transportation companies. A suggestion that in the future consumer choice would be limited to electricity poses a fundamental challenge to the existing legislative framework in Canada and the ability of consumers to determine how they choose to heat their home or fuel their business. Further, Canadians use natural gas in buildings for a variety of reasons, not just heating. For example, Canadians use natural gas to fuel their stoves, dryers, BBQ’s, fireplaces, patio/outdoor heaters, back-up power generation, etc. The use of natural gas/renewable gases needs to be examined holistically.

Recommendation #4: We are requesting further details on how the government of Canada would approach limiting/banning future natural gas connections in Canada, including the intersection of such a decision with existing provincial legislation and regulations.

We thank you for this opportunity to comment on the Green Building Strategy discussion paper. Should you have any questions or require any additional information about our comments, please contact me directly.

 

Sincerely,

Paul Cheliak
Vice President, Strategy and Delivery
Canadian Gas Association

Appendix 1.
Detailed Responses to Questions

Question 1 – Does this discussion paper target the right strategic themes and areas requiring change, and communicate the level of action required?

  • Gaseous energy and the infrastructure in place to deliver it appears to be absent from the discussion paper. The benefits that the gaseous energy systems can provide towards net zero goals for the built environment is tremendous not only for customers of these systems but also for the electricity grid and the necessary power generation that would need to be built.
  • Impacts to the gas and electric grids is not considered in the paper. A deep analysis of the electric grids ability to replace natural gas across Canada needs to be performed. The task and cost are monumental and is not being considered in this strategy. https://www.cga.ca/wp-content/uploads/2019/10/Implications-of-Policy-Driven-Electrification-in-Canada-Final-Report-October-2019.pdf
  • Affordability, Resiliency, and Reliability of energy should be themes within the strategy. Choosing a technology winner that is more expensive and less reliable is not a pragmatic approach for the strategy nor is it what Canadians expect. The strategy needs to focus on the end result which allows multiple pathways to meet net zero – a prescriptive path that chooses a single technology will not gain the results desired.

Theme 1 Leading by Example

  • The federal government shows great leadership in using low carbon gases – in fact, Department of National Defence is the largest purchaser of RNG in Canada
    • In 2020 DND purchased 103,000 GJs of RNG – abating 5000 t CO2e annually
  • Buy Clean Strategy needs to include Canadian RNG and low carbon hydrogen. These are both growing in Canada and are supported by NRCan through funding and are included in the approach used in the Hydrogen Strategy for Canada.
  • Federal Funding Conditions, which include resiliency, should include gaseous energy solutions to provide backup power during electrical outages. Gas infrastructure is resilient and provides this service to many essential buildings in Canada. The residential sector would also benefit from having this service and this should be included in the strategy.
  • Cost analysis should be performed on all retrofits of all government buildings to demonstrate the actions taken provide the taxpayer with certainty that their tax dollars are being spent efficiently.

Theme 2 Mandating Change

  • Develop Regulatory Standards and an Incentive Framework for Transitioning off Fossil Fuels for Heating Systems: The federal government should provide more information on this proposed approach and consider the gas technologies available today to support the governments objectives. For example:
    • Hybrid heating needs to play a role if affordability is a consideration in this strategy. CanmetENERGY has tested hybrid heating systems and find that they provide a means to reduce GHGs and energy costs for Canadians. https://www.nrcan.gc.ca/simply-science/the-future-home-heating-hybrid-home-heating-systems-offer-energy-savings-and-reduce-g/22236. Hybrid heating is only possible with a robust and optimally used natural gas system due to the cost-of-service model that utilities operate under. To maintain an optimal energy system, ongoing support for the utilization of the gas delivery system is required to ensure adequate long-term investment that will maximize its potential to deliver carbon neutral energy.
    • Renewable gases will play a significant role in affordably reducing end use emissions in buildings across Canada. The infrastructure already exists to distribute this energy reliably and safely – representing billions of dollars in capital spent by natural gas customers in Canada. There are policy discrepancies between this discussion paper and those that encourage renewable gas production such as the CFR, Clean Fuel Fund, Net Zero Accelerator.
    • Natural Gas Heat Pumps will be commercially available in 2023. Being recognized in the Market Transformation Roadmap for Space Heating https://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/files/emmc/pdf/2018/en/18-00072-nrcan-road-map-eng.pdf these will play an important role in increasing end use energy efficiency and affordability for Canadians. This technology should be a part of the Greener Homes Grant starting in 2023, as well as part of any new funding opportunities that are presented in the future to help businesses and homeowners increase their buildings energy efficiency and affordability.

Question 2 – This discussion paper identifies current and potential actions that the federal government is taking under each theme. What actions can your organization contribute to support achieving the changes needed within each theme?

  • The natural gas industry has many affordable and reliable pathways to net zero including RNG, hydrogen, hybrid heating, gas heat pumps, and more that are not reflected in the discussion paper. More on these solutions, and the value of the natural gas delivery industry in Canada can be found here https://www.cga.ca/resources/publications/playbook/
  • Since 2013, Canada’s gas utilities have invested more than $1.5 billion in DSM and energy efficiency programs, resulting in avoided emissions of more than 3 million tonnes annually of CO2
  • The exclusion of natural gas infrastructure from the discussion paper poses a challenge for the emerging RNG and hydrogen industries in Canada and the overall reliability and resiliency of the energy system in Canada.
  • CGA and its members will continue to work in collaboration with NRCan on the implementation of the Hydrogen Strategy for Canada. Within the strategy NRCan states ‘>50% of energy supplied today by natural gas is supplied by hydrogen through blending in existing pipelines and new dedicated hydrogen pipelines, blending of hydrogen in the natural gas networks’ The Green Building Strategy discussion paper does not, at current, include hydrogen. As such there is policy inconsistency within two overarching NRCan policy documents. Canadian natural gas companies are investing in hydrogen facilities and hydrogen blending projects. In fact, Canada is home to the first hydrogen blending project in North America https://www.enbridgegas.com/sustainability/hydrogen
  • CGA is co-chair of the Natural Gas Working Group as part of the implementation of the Hydrogen Strategy for Canada. NRCan is also co-chair of this group.
  • CGA is co-chair of the Infrastructure Working Group as part of the implementation of the Hydrogen Strategy for Canada. NRCan is also co-chair of this group.
  • CGA sits on the CSA Hydrogen Advisory Group
  • CGA is a founder of RNGinet – an information sharing network for RNG in North America
  • CGA, with NRCan, hosted a workshop on RNG in 2018. See attached for summary.
  • Inclusion of renewable gases in federal funding opportunities will foster and grow the thriving RNG sector in Canada creating jobs, fueling the economy, and providing affordable net zero energy for Canadians.
  • Development of low carbon neighbourhood utilizing natural gas infrastructure to distribute low carbon gas to a neighbourhood. 100% H2. H2/RNG/Natural gas blended community. CGA would be keen to work with CanmetENERGY on such an endeavour.
  • Build Upon the Local Energy Efficiency Partnership Initiative (LEEP):

Question 3 – Are there other actions that you believe need to be taken, best practices we should consider, or potential risks to pursuing the Strategy?

  • Affordability needs to play a central role in any actions taken from the strategy. Costs to perform deep retrofits are prohibitive for many Canadians. New rules and regulations will further affect the affordability of home ownership for Canadians. Affordability should be its own theme with a focus on the end use customers.
  • Funding needs to be directed to RNG and hydrogen for blending in natural gas networks. Both solutions provide reliable and cost-effective abatement for customers.
    • As a reference, the average cost of renewable gas is approximately $23/GJ. This is equal to $0.09/kWh
    • Electricity rates in Ontario Off Peak- $0.08/kWh, Mid Peak – $0.11c/kWh, Peak $0.17c/kWh
    • RNG is nearly equivalent to the cost of current Off Peak electricity rates.
  • Electrifying home heating has significant risks that are not accounted for or considered in the discussion paper. Full electrification of home heating is not in-line with the themes of affordability or reliability of energy that Canadians expect. The below questions need to be considered and made transparent for Canadians:
    • How much electricity generation (not nameplate capacity) is needed to replace natural gas in each province?
    • What type of generation will be built to provide this and at what cost?
    • Peak energy and reliability of supply should be key considerations. How will peak demands be met affordably and reliably providing Canadians the power they need when they need it most?
    • Energy storage for intermittent renewable generation should be part of any cost calculations on generation build out. How has this been accounted for?
    • How will the electricity be transmitted to local grids and at what cost and timeline will it take to build out?
    • How will the electricity be distributed and at what cost and timeline will it take to build out?
    • How will power outages be dealt with if we are relying solely on electricity to heat and power our homes?
    • Site versus source emissions need to be accounted for in the strategy. What analysis has been performed on electric grid marginal emission factors and how has it been determined that these are lower than other energy sources? (RNG, hydrogen, natural gas and gas blends, hybrid heating).

Question 4 – What milestones should be used to track progress toward a net-zero emissions, climate-resilient buildings sector?

  • Following the existing 5-year net zero legislation timeframes would provide alignment in processes.

Question 5 – What structures and processes should be put in place to support continued collaboration to 2050?

  • The Government should hold direct consultations with gas utilities, economic regulators, and provincial/territorial governments across Canada throughout the full development lifecycle of the Green Buildings Strategy. More specifically, this should include both consultations prior to the release of the strategy, focusing on the policy development and after the release of the strategy, which would focus on implementation and execution.
  • Canada’s natural gas industry can make significant contributions to achieving the government’s net-zero targets. Our member utilities are developing numerous technologies and programs to support green buildings including significant investment in energy efficiency programs, hybrid heating, and renewable gases including RNG and hydrogen.

Question 6 – What modeling has your organization done that could inform modelling out all the actions that will be identified under this strategy to ensure they are ambitious enough to meet our net-zero buildings sector commitment?

Question 7 – How can we best consider Indigenous priorities that have been raised through existing federal processes and initiatives regarding the built environment on reserves and in other remote and northern communities (e.g. the work to close critical infrastructure gaps by 2030, conduct infrastructure needs assessments, develop and implement Indigenous distinctions-based housing strategies, and co-develop the Urban, Rural and Northern Indigenous Housing Strategy)?

  • As the paper has indicated, Indigenous communities face additional challenges due to higher rates of energy poverty and income disparity. As such, economic growth and affordability must be key priorities when addressing Indigenous and remote communities. Natural gas and the gas system offers an affordable and reliable option for such communities and must be part of any future building strategy.
  • Several of CGA’s members have allocated dedicated budgets to upgrading housing within Indigenous communities under their DSM programs with services ranging from winterization, retrofits, and rebates.
  • Though not related to specifically housing, the LNG sector provides an example of the benefits generated from strong partnerships between the natural gas industry and indigenous communities. Several LNG facilities in Canada have developed significant Indigenous ownership partnerships.
  • Finally, NRCan should consider using the UNDRIP action plan as a framework in their work to best reflect Indigenous peoples.

[1] https://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/menus/trends/comprehensive_tables/list.cfm

[2] We provide a link to the report in our Q&A section of the Appendix.

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