Oil and Propane Conservation
| In May, 2010, the ECO released its first Annual Report on the progress of activities in Ontario to reduce or make more efficient use of electricity, natural gas, propane, oil and transportation fuels. Click here for more information on this report, including videos and communications materials. | |||||
Propane and oil serve similar end uses. In the residential sector, they are used primarily for space and water heating
(including pool heating). In the industrial and agricultural sectors, they are used primarily for process heating. For both oil
and propane, the commercial/institutional sector is the largest consumer of these fuels. Propane or heating oil is often the
heating fuel of choice in rural or remote areas that are not connected to the natural gas distribution system. In recent years,
there has been a shift away from heating oil to propane as the price of oil has increased.
In electricity and natural gas conservation, the regulatory framework gives fuel suppliers (i.e., distributors) a vital role in delivering conservation programs. For propane and heating oil, this has not been the case for several reasons. First, the cost associated with distributing propane and oil is not regulated by the province. It is, therefore, more difficult to encourage fuel suppliers to provide conservation. Without such incentives, fuel suppliers are unlikely to promote conservation, as it can cut into their profits by reducing consumption. Second, the fuel delivery market is more fragmented for oil and propane, with many small suppliers. Finally, the propane industry in particular has been pre-occupied with safety regulation since the 2008 Sunrise Propane explosion.
The government is supporting conservation of oil and propane to some degree. The Ministry of Energy and Infrastructure delivers programs that conserve oil and propane use in the residential and commercial/institutional sectors. However, the design of these programs is largely driven by an approach that simply matches federal programs.
The Green Energy Act (GEA) enables the setting of minimum efficiency standards for oil and propane-using appliances, such
as furnaces, boilers, and water heaters. However, as noted in Section 5.5 of our report, no updates to standards have been
passed since 2006.
The federal government has encouraged industrial conservation through the Canadian Industry Program for Energy Conservation (CIPEC), a joint Natural Resources Canada-industry program. CIPEC is designed to improve energy efficiency across business sectors through benchmarking and efficiency improvements. Heating and equipment contractors have also taken some steps to address energy conservation through programs that can reduce consumption of propane and oil. Industry associations, such as mining and cement companies, also encourage conservation among their members.
Despite the initiatives described above, overall there has been less attention paid to energy efficiency for oil and propane heating compared to the natural gas and electricity sectors. The lack of an organization examining conservation on a province-wide scale, such as the Ontario Power Authority or the two large gas utilities, may mean that opportunities are being missed.
To enhance conservation of oil and propane, the ECO believes that the Ontario government should determine where the greatest opportunities for conservation of these fuels reside – perhaps the commercial and institutional sectors – and determine if special approaches are needed for unique captive customers like rural markets. These are tactics that should be addressed in the energy conservation strategy (recommended by the ECO in Section 4.3 of this report). The strategy should examine, at a minimum, the following elements related to the conservation of oil and propane.
- Identification of the preferred agent(s) to encourage conservation (for example, suppliers, associations, contractors or other delivery agents).
- The incentive structure that may be needed to overcome the erosion of supplier profits due to reduced fuel consumption.
- The mechanism to implement incentives, if feasible, for non-regulated fuels like oil and propane. If feasible, a policy statement of how the public interest is supported (i.e., how the benefits of conserving oil and propane are socialized and a public benefit is realized).
- How program results will be tracked and energy savings measured.
- Whether special incentives are desirable to address the dependence of rural and remote communities on oil and propane.
Citing This Article:
Environmental Commissioner of Ontario. 2010. Annual Energy Conservation Progress Report, 2009 (Volume One): Rethinking Energy Conservation in Ontario. Toronto, ON : Environmental Commissioner of Ontario. pp. 32-33
