Eco-Friendly Heating: Canada’s Push for Heat Pump Adoption

Ottawa, Ontario, December 22, 2023 — To alleviate the financial burden on Canadians grappling with soaring home heating oil prices, the Government of Canada has unveiled an enhanced initiative to make the transition to energy-efficient heat pumps even more accessible. The strengthened Oil to Heat Pump Affordability (OHPA) program, announced today, specifically targets low-to-median-income households in Newfoundland and Labrador, offering substantial grants of up to $22,000 to cover the entire cost of switching from oil furnaces to heat pumps.

The decision to bolster the OHPA program comes at a critical juncture when the cost of home heating oil is not only exorbitant but subject to geopolitical fluctuations beyond Canada’s control. By encouraging the adoption of heat pumps, the government promises substantial savings for households and strives to curtail harmful pollution caused by traditional oil heating systems.

Heat pumps, known for their efficiency, operate two to three times more effectively than oil furnaces. Their energy-efficient nature stems from the fact that they move heat rather than generate it, resulting in reduced energy consumption and lower utility bills. With the average Canadian home spending between $2,000 to $5,500 annually on oil heating, the economic appeal of more efficient heating sources becomes evident. Homeowners who make the switch could save an average of $2,500 yearly, a significant relief for families navigating high inflation rates.

Moreover, oil furnaces contribute significantly to carbon emissions, generating around three million tonnes of CO2 annually — equivalent to the pollution from nearly one million cars. The environmental impact goes beyond carbon emissions, as oil combustion releases harmful substances such as nitrogen oxide, sulphur dioxide, and fine particles detrimental to the environment and human health.

The OHPA program, initially launched in spring 2023, provided low-to-median-income households with up to $10,000 in funding for the purchase and installation of heat pumps. Building on this success, the government has now increased the grant to a maximum of $15,000 and sweetened the deal with a one-time $250 payment for successful applicants in Newfoundland and Labrador, Nova Scotia, and Prince Edward Island.

The initiative targets approximately 610,000 oil-only-heated households across Canada, with over half falling below median incomes. In Atlantic Canada, where nearly 30 percent of households rely on oil heating, the benefits are particularly pronounced, with two-thirds falling within or below the median income level.

The OHPA program is not confined to a specific income bracket; instead, it aims to assist low-to-median-income Canadian households. A family of four earning up to $121,000 annually is considered at or below the median income level in any given province or territory. This inclusivity ensures that a broad spectrum of households can benefit from the program.

The government has also extended support to oil-heated households above the median income level through the National Resources Canada’s Greener Homes Grant Program, offering grants of up to $5,000, or the Canada Mortgage and Housing Corporation’s Greener Homes Loan Program, providing loans of up to $40,000.

Today’s announcement reflects the government’s aim to create a sustainable and affordable solution for Canadians burdened by escalating energy costs. As the strengthened OHPA program unfolds in Newfoundland and Labrador, the federal government remains poised to forge similar co-delivery agreements with other provinces and territories willing to embark on this transformative journey toward cleaner and more cost-effective heating solutions.