Buildings are one of the largest remaining sources of stationary fossil fuel combustion in the Canadian economy. Homes, schools, hospitals, offices, and other structures still rely heavily on natural gas and heating oil for space and water heating. The sector’s path to net zero runs through two levers: replacing combustion with electricity, mainly via heat pumps, and reducing demand in the first place through better building envelopes and stricter codes for new construction.
Heat pumps are becoming increasingly cost-competitive for heating, with economics varying across provinces and building types. Yet adoption remains low, accounting for just 3.5% of heating in residential dwellings. Cheap natural gas, high upfront costs, and the slow turnover of building stock and equipment (commercial heating systems can run 15 to 25 years) mean today’s choices lock in emissions for decades.
Low natural gas prices discourage investment in efficiency upgrades and fuel switching.
Heat pumps and net-zero construction cost more upfront even where they pay back over time.
Deep retrofit rates remain below what net zero requires, and heating systems, with 15 - 25 year lifespans, lock in high-carbon equipment.
Where tenants pay utility bills, owners have little financial reason to invest in efficiency or fuel switching.
Construction is dominated by small firms and contractors, fragmentation makes adoption of new standards harder.
There is a growing skilled trades shortage especially for green construction workers.
Raising building standards without worsening affordability, particularly for lower-income and rental households.
Avoiding stranded gas assets whose costs fall on remaining ratepayers as the network shrinks.
As operational emissions fall, emissions from materials become a larger share of lifecycle emissions.
Reducing landfill use and material-related emissions from construction and demolition.
Share of building energy consumption supplied by electricity.
Share of the building stock using heat pumps for heating and cooling.
Pace of energy retrofits across the existing building stock.
Growth in construction, retrofit, and domestic manufacturing of net-zero building equipment.
Heat pumps and efficiency upgrades cut long-term energy costs for most households.
Emerging domestic value chains in low-carbon building materials and green real estate.
Scores are grounded in the sources cited throughout each sector assessment, then reviewed by experts and industry stakeholders to confirm how each pathway elements criteria are ranked.
economic viability score
Economic Viability description
