Government of Canada Announces Launch of Strengthened Heat Pump Program With Newfoundland and Labrador to Lower Energy Bills and Pollution

OTTAWA, ON, Dec. 22, 2023 /CNW/ – Making the switch from a costly oil furnace to an efficient heat pump helps Canadians save thousands of dollars each year on their energy bills. Given that the cost of home heating oil is the highest and most volatile compared with its alternatives and continues to increase, largely due to geopolitical events, switching to a heat pump also protects households from fossil fuel price spikes outside of Canada’s control — leading to even more savings. Whether it’s driving down energy bills or harmful pollution, the benefits of switching to a heat pump are clear, and the Government of Canada has been bringing these benefits to Canadians through the Oil to Heat Pump Affordability program.

To make the shift to heat pumps even more affordable for even more Canadians, the Government of Canada announced the launch today of the strengthened Oil to Heat Pump Affordability program in Newfoundland and Labrador. Under the program, low-to-median-income households in Newfoundland and Labrador can now apply here to receive up to $22, 000 in funding to cover the full, average cost of switching to a heat pump — including up to $15,000 from the Government of Canada’s OHPA program and another up to $7,000 from the Government of Newfoundland and Labrador and other federal funds.

In addition to these strengthened heat pump grants, successful applicants will also receive an upfront, one-time payment of $250 from the federal government. The federal government will soon be sending $250 payment cheques to the thousands of households in Newfoundland and Labrador, Nova Scotia and Prince Edward Island that signed up to receive a heat pump supported by the original OHPA program since it first launched in the spring of 2023.

The strengthened OHPA grants of up to $15,000 are available to households in jurisdictions that have stepped up or intend to, with provincial/territorial funding to further help lower-income, oil-heated households make the switch to a heat pump where the federal government has a co-delivery arrangement in place that includes provincial and territorial contributions. The federal government currently has co-delivery arrangements in place with Newfoundland and Labrador, Nova Scotia and Prince Edward Island. Additional details will be announced on the strengthened Oil to Heat Pump Affordability program with the Governments of Nova Scotia and Prince Edward Island for households in these provinces in the coming weeks.

There are oil-heated households in all provinces and territories in Canada. These households have been and will continue to be able to apply for up to $10,000 in federal OHPA funding via the national portal managed by NRCan. The Government of Canada is currently working with five of these provinces and territories to deliver new, strengthened OHPA co-delivery agreements to make heat pumps even more affordable for even more Canadians across the country. The Government of Canada is keen and remains ready to develop and finalize strengthened OHPA co-delivery agreements with all provinces and territories that wish to bring these benefits to their residents.

Quotes:

“As home heating oil prices continue to create affordability challenges for Canadians across the country, the federal government knows that Canadians want a cheaper and cleaner way to heat their homes. That’s why we are strengthening the Oil to Heat Pump Affordability program and ensuring that funding to transition from heating oil to an efficient heat pump is given to the households that need it most, as soon as possible.”

The Honourable Jonathan Wilkinson

Minister of Energy and Natural Resources

“Electricity is cheaper, cleaner and more reliable than home heating oil. So, we’ll pay for you to make the switch. Lower- and median-income households in Newfoundland and Labrador can now get up to $22,000 to install an electric heat pump.”

The Honourable Seamus O’Regan

Minister of Labour and Minister responsible for Seniors

“Heat pumps help folks out with kitchen-table issues. They’re good for your pocketbook, and they’re good for the environment. They work in our winters, and they double as air conditioners in the summer. People needed more help to make the switch. So, our government has stepped up to cover costs for those who need it.”

The Honourable Gudie Hutchings

Minister of Rural Economic Development of Canada and Minister responsible for ACOA

“Heat pumps help to reduce reliance on fuel oil, therefore enhancing energy affordability for homeowners. Our provincial Oil to Electric Incentive Program, supported by the federal Oil to Heat Pump Affordability program, will help in the transition to a lower-carbon economy, promote sustainability and reduce overall living costs for our residents.”

The Honourable Bernard Davis

Minister of Environment and Climate Change, Newfoundland and Labrador

Quick Facts:

Heat pumps are two-to-three times more efficient than oil furnaces. The fact that heat pumps simply move heat, rather than generate it, is a large part of why they are more efficient and less costly than alternatives.
The cost of oil home heating in Canada, like in other countries, is significantly influenced by global commodity markets and the global price of oil and gas. This cost has increased over the years, largely due to geopolitical events. Oil-heated households in Canada face the highest and most volatile heating bills on a relative basis, which are becoming increasingly difficult to manage in the context of high global inflation rates.
The average Canadian home that uses heating oil spends $2,000 to $5,500 per year, depending on the province or territory — making it the most expensive heating option. The average Canadian home that uses natural gas spends around $1,000/year on home heating — nearly three times less than the cost per year for an average Canadian oil-heated home. Homeowners who switch from an oil furnace to a cold-climate heat pump could save up to an average of $2,500 per year on their home energy bills.
Specifically, oil furnaces and boilers in Canada’s homes generate around three million tonnes of CO₂ every year — the equivalent of pollution from approximately 920,000 cars. Oil combustion in heating systems also generates nitrogen oxide, sulphur dioxide and fine particles that can be harmful to the environment and human health.
As heat pump technology improves, the market expands, and heat pumps continue to generate significant energy bill savings over their lifetime, the upfront and average cost of purchasing and installing a heat pump system in Canada is still about $18,400 and remains a barrier to adoption.
- For this reason, the Government of Canada launched the OHPA program in spring 2023 to provide low-to-median-income households that heat with oil up to $10,000 off their purchase and installation of a heat pump.
- In the fall of 2023, the Government of Canada committed to increasing this rebate to up to $15,000 and to providing a $250 Canada Heat Pump payment cheque in provinces and territories where P/T partners step up and provide $5,000.
There are approximately 610,000 oil-only-heated households across Canada, 580,000 of which are in the provinces, and of that provincial total, more than half of oil-heated households fall below median incomes. 64 percent of homes in the territories are also heated with oil. While 1–12 percent of homes in provinces outside of Atlantic Canada heat with oil, nearly 30 percent of households in Atlantic Canada currently do so. Of those households in Atlantic Canada, nearly two-thirds fall at or below the median income level.
The OHPA program is accessible to low-to-median-income Canadian households. On average, a family of four that makes at or below $121,000 per year in Canada is likely to be considered at or below the median income level, in a given province or territory.
The OHPA program is one of many programs that the federal government has stood up to help households cut energy bills and pollution. Oil-heated households that are above the median income level may apply for a grant of up to $5,000 through NRCan’s Greener Homes Grant Program or a loan of up to $40,000 through CMHC’s Greener Homes Loan Program. Households of all income levels that heat their homes through other means and want to make the switch to a heat pump may also apply for financial support through the Canada Greener Homes Grant and/or CMHC’s Canada Greener Homes Loan.
Prior to the formal launch of the original OHPA program in March 2023, the Government of Canada offered to every province and territory the opportunity to co-deliver the up to $10,000 federal grants under the original OHPA program, alongside existing/new provincial/ territorial/utility heat pump funding programs.

The Governments of Nova Scotia, Prince Edward Island and Newfoundland and Labrador, which were also providing provincial funding to help lower-income households make the switch to heat pumps, entered into co-delivery arrangements with the federal government shortly thereafter. Today’s announcement was made possible due to these pre-existing co-delivery arrangements.