Canada’s building heating sector is in a moment of transition. Momentum is growing to unlock the benefits of clean, electrified buildings across Canada, but we are far from where we need to be. Delivering this scale of change efficiently, affordably, and at the pace required for our electrified future calls for coordination that goes beyond individual action. A successful transition to carbon-neutral buildings requires a comprehensive market transformation driven by:
- Effective governance,
- Clear demand,
- Reliable supply chains,
- Supportive infrastructure, and
- Accessible capital.
These five pillars are at the core of our National Building Decarbonization Action Plan1 and offer a blueprint for accelerating the shift to electrified and clean heating.
This blog post focuses on governance levers, notably building codes and standards, that can create long-term certainty, level the playing field, and offer a managed transition, beyond simply mandating change.
In September 2024, we released the second edition of our Jurisdictional Scan, offering a comprehensive snapshot of the evolving landscape of policies that aim to accelerate the shift to zero-emissions heating. This post highlights new adoptions, delays, and reversals since then, as well as emerging enablers and opportunities.
Significant Policy Updates
British Columbia has positioned itself as a national leader in heating buildings with clean energy, with a mix of voluntary and mandatory measures. Since May 2023, the Zero Carbon Step Code (ZCSC) was added to the provincial building code, giving municipalities the authority to limit operational GHG emissions in new construction. While the province intends to require that all new buildings must meet EL-4 by 2030, which requires zero carbon emissions from operations, more than 30 municipalities have already adopted the ZCSC. Provincially, since March 10, 2025, all new buildings must meet at least EL-1 of the ZCSC, which requires builders to measure and report buildings’ operational GHG emissions. The City of Victoria joined Vancouver in requiring owners of large buildings to report their energy use and carbon emissions to the city.
In Québec, the Communauté métropolitaine de Montréal (CMM) passed a bylaw banning the installation of space and water heating powered by fossil fuel in all new buildings in its 79 municipalities, starting in October 2024 for small buildings and extending to all buildings in April 2025. Additionally, Montréal’s emissions performance disclosure bylaw (Projet de Loi 41) will now assign annual carbon performance scores to over 7,000, buildings starting in 2026. This will be a new step in the advancement of the City’s road map towards zero-emission buildings by 2040 and lays the foundation for future performance standards. Alignment with provincial regulation is also ongoing.
However, progress hasn’t come without challenges. Toronto’s Building Emissions Performance Standard (BEPS) bylaw, originally expected to seek approval from Council in 2025, has been deferred pending further review. Meanwhile, outdated zoning bylaws in places like Toronto and Mississauga still hinder heat pump adoption, pointing to a need for regulatory modernization.
Even when enacted, policies promoting decarbonization can come under fire with changes in political leadership that threaten climate policies and decarbonization efforts. For example, July 2024 saw the Vancouver City Council reversed its ban on gas heating in new homes, before reinstating the original ban four months later after much industry and public support. Meanwhile, in Ontario, the introduction of the Protect Ontario by Building Faster and Smarter Act (Bill 17), aimed at accelerating housing development, has raised concerns about its potential to limit municipal authority to set mandatory green standards. In parallel, the Residential Construction Council of Ontario (RESCON) launched a legal challenge against the City of Toronto for its Toronto Green Standard (TGS) in November 2024, claiming it oversteps municipal planning authority and conflicts with the Ontario Building Code.
Enabling Change Beyond Policies
Governance, codes, and standards help provide the certainty and direction needed to encourage key stakeholders to action. But as emphasized in our National Building Decarbonization Action Plan, full decarbonization will require broader market transformation. Here are some examples of several promising initiatives that can support this market transformation further:
- Canadian Standards Association (CSA) is finalizing the development of the CSA Z5040 Standard, a national framework to support municipalities implementing GHG emissions, energy, and water efficiency reporting for existing buildings, planned to be published early 2026. Standardizing reporting will help streamline implementation, build consistency across jurisdictions, and serve as a starting point for the development of other policies and programs, such as BEPS.
- Local governments are investigating thermal energy networks (TENs) as a means to decarbonize certain areas. Ensuring that enabling policies align with goals to reduce emissions will be key to unlocking their potential. More details are available in our co-authored TENs report.
- In March 2025, the B.C. Utilities Commission approved BC Hydro’s updates to the Distribution Extension Policy to better support electrification, and the new policy took effect on July 5, 2025. The updated policy lowers the cost of connections for many customers, speeds up connection timelines, and offers greater cost certainty for developers.
What’s Next: A Look Ahead
Recent developments across jurisdictions demonstrate both the growing ambition and the persistent fragility of building decarbonization policies. Local governments are advancing pioneering initiatives and standards, but without consistent support and alignment across levels of government, these efforts remain vulnerable to uneven implementation and political shifts.
In 2026, we will continue to support Canada’s building sector in this global transformation, guided by our National Building Decarbonization Action Plan and broader strategy to make buildings the enabling engine of Canada’s electrified economy.
[1] National Building Decarbonization Action Plan (working title) is being finalized and will be publicly released early 2026.
