Re: Consultation on the…

Re: Consultation on the Natural Gas Policy Statement

Please find below Environmental Defence's comments on Ontario’s new Natural Gas Policy Statement. Attached are more detailed comments which include important footnotes and sources.

The most cost-effective gas policy for Ontario would be to follow the lead of its largest neighbours – New York State and Quebec. New York State is phasing out gas in most new construction starting in 2026. Quebec is prohibiting all fossil fuel heating in most new and existing buildings as of 2040. These are large jurisdictions (~30 million people combined) with extensive resources to determine the optimal gas sector policies. They represent different points on the political spectrum – the right-leaning Coalition Avenir Québec and left-leaning Democrats. But the experts and politicians in these jurisdictions both know the same thing – the most cost-effective way to decarbonize buildings is by electrifying them, and the sooner we stop wasting money on gas infrastructure, the better we will be able to keep energy prices down.

However, if the Ontario Government chooses to ignore the best approach for consumers which is to phase out gas in new construction and prohibit fossil fuel heating by 2040, it should at least consider the following recommendations. They are based on the government's own Electrification and Energy Transition Panel (“EETP”) report and its recent policy set out in Ontario’s Affordable Energy Future: The Pressing Case for More Power. The focus is on affordability both today and in the future.

Key Recommendations:

Continued high gas infrastructure spending is risky and could undermine long-term affordability, endanger gas system viability, compromise the ability of the gas system to help decarbonize hard-to-electrify industrial sectors, and reduce customer choice.
Electric heat pumps are the cheapest way to heat homes, both now and even more so when compared to expensive renewable gases in a decarbonized future.
Electrification is the cheapest way to decarbonize buildings and also the best option for economic growth and jobs, as it replaces imported gas with made-in-Ontario electricity.
Energy bills should be lowered by implementing all energy efficiency programming that is cost-effective and by minimizing the costs to build all-electric developments.

Discussion Questions
1. What role should natural gas play in supporting energy affordability and customer choice in residential and small commercial applications (e.g., space and water heating)?

Gas should play a declining role in the residential and small commercial sector. Key points include:

Affordability Today: Electric cold climate heat pumps are now much cheaper than gas for home heating, with significantly lower annual costs due to higher efficiency and avoidance of monthly gas charges.
Affordability Tomorrow: In a decarbonized future, heat pumps using clean electricity are roughly five times cheaper than furnaces using renewable gas.
Cheapest Decarbonization Pathway: Electrification has been proven as the most cost-effective approach to decarbonize buildings in Ontario.
Jobs and Economic Growth: Electrifying buildings supports local economic growth by replacing out-of-province gas expenditures with investments in Ontario’s electricity system.
Healthy Homes: Electric equipment improves indoor air quality by eliminating toxic gases emitted by gas appliances.
Convenience: Modern electric equipment, such as induction stoves and heat pumps, provides better performance and energy efficiency.
Choice and Gas System Viability: Limiting gas infrastructure investments today preserves future customer choice and maintains gas system viability.
Carbon Emissions: Eliminating methane gas, a major greenhouse gas contributor, is essential for achieving net-zero targets.

2. What role should natural gas play in supporting economic development in Ontario’s industrial and agricultural sectors, including those processes that may be difficult to electrify?

Renewable Natural Gas (RNG) and green hydrogen should be prioritized for the hardest-to-electrify sectors such as cement production and heavy transportation. This requires a significant reduction in current gas infrastructure spending to ensure affordability.
3. What role should the government play in supporting and expediting the rational expansion of the natural gas system to make home heating more affordable and support economic growth in communities that are seeking natural gas service?

The government should promote heat pump adoption rather than subsidizing natural gas expansion. Efforts should include combating deceptive marketing that claims gas is the cheapest heating option and promoting the economic advantages of electrification.
4. For natural gas expansion projects receiving government support, should the approvals processes be streamlined to support affordable home heating for Ontarians? In what ways?

While filing processes can be improved, further streamlining could lead to unnecessary capital spending. The focus should shift to transitioning from heating oil or propane to heat pumps, which is more cost-effective.
5. What role should natural gas play in supporting power system security and resiliency?

Fossil fuel-based electricity generation should be phased out, with battery energy storage systems providing a more cost-effective and reliable alternative.
6. What role should natural gas play in offsetting higher GHG-emitting fuel sources?

Fossil-based methane gas is no longer viable as a “transition fuel” due to its high emissions throughout the supply chain. Investment in gas infrastructure to offset oil or propane use is inefficient and costly compared to electrification.
7. What are the challenges and opportunities for enhanced energy efficiency, adoption of clean fuels (e.g., RNG, Hydrogen), and emission reduction methods (e.g., carbon capture and storage) to lower emissions in the natural gas system?

Energy Efficiency: All cost-effective energy efficiency programs should be implemented to lower energy bills.
RNG and Hydrogen: These fuels are too costly and limited in availability to play a significant role in building decarbonization.
Carbon Capture and Storage: This technology is prohibitively expensive and does not address the significant portion of emissions from heating buildings.

8. What principles should the government provide to the OEB to help inform the Board’s ongoing development of natural gas connection policies?

Encourage the adoption of the most affordable heating options, such as heat pumps.
Minimize risks from overinvestment in gas infrastructure.
Align regulatory frameworks with plausible energy transition outcomes to protect customers.

Conclusion

While fossil methane gas consumption cannot be eliminated immediately, infrastructure decisions made today will affect energy costs for decades. Ontario’s Natural Gas Policy Statement should prioritize electrification and energy efficiency to ensure affordability and sustainability.