Proposed updates to Canada’s energy efficiency regulation designate additional energy-using products and impose more rigorous standards on some products that are already mandated to comply. The majority of these contemplated changes align with energy performance requirements enshrined in the United States code of federal regulations (CFR) and involve a shift from currently prescribed CSA testing standards to those dictated in the U.S. CFR.
A draft amendment with an accompanying summary of the government’s intentions and rationale was posted online in the June 20 Canada Gazette and is open for public feedback until Aug. 29, 2026. The package of proposed changes is dubbed Amendment 19, reflecting that it is the 19th in an ongoing series of updates. This round focuses on various electrical and mechanical equipment and appliances, following a 2024 amendment that addressed water efficiency.
Manufacturers and distributors/retailers obligated to meet energy efficiency thresholds and/or comply with rules for importing and selling products into the Canadian market have the most direct stake in the proposals. Meanwhile, purchasers and end-users of regulated equipment and appliances will absorb both flow-through capital costs of compliance and the lifecycle operational costs of energy consumption.
Analysts with Natural Resources Canada (NRCan) calculate the entirety of Amendment 19 could deliver 48 petajoules (PJ) or 13.2 terawatt-hours (TW-h) in annual energy savings and 2.7 megatonnes (MT) of annual reduction in greenhouse gas (GHG) measured as carbon dioxide equivalent (CO2e) by 2050. That would equate to $26.7 billion in cumulative net benefits over the same period, of which nearly $10 billion worth is projected to accrue in the commercial sector. The removal of outdated standards and other tweaks to better align with requirements in other jurisdictions are also touted as measures that will make the regulations more workable for businesses and trading partners, with spinoff benefits for consumers.
“Amendment 19 was established through an evidence-based analysis of market data and a cost-benefit analysis, while balancing various public interest considerations. Canada is following the lead of other jurisdictions when analyzing where to leverage minimum energy performance standards to support energy security, climate action, affordability for Canadian households, businesses and industrial sectors, and trade,” the regulatory analysis states.
Although many of the proposed requirements now reference the U.S. CFR, Canadian rule-makers are pegging them to a particular point in time. To date, Canada has generally followed the U.S. lead as it has ratcheted up the stringency of energy efficiency standards for appliances and equipment — reflecting an effort to harmonize standards for manufacturers selling into both markets, which is encouraged in the Canada, United States, Mexico Agreement (CUSMA) on trade. The updated amendment stays true to that objective, but would block any reverse trajectory.
“For standards of other jurisdictions incorporated by reference, Amendment 19 would clarify the protection against potential backsliding of the jurisdiction that could cause the regulations to no longer work as intended,” the regulatory analysis advises. “Energy efficiency standards incorporated by reference would continue to apply at their current level if another jurisdiction subsequently reduced its requirements.”
Many of the products captured in the proposed amendment would also have to comply with updated energy rating and labelling requirements that are harmonized with the U.S. Federal Trade Commission (FTC) Energy Labeling Rule and associated EnergyGuide labels. However, NRCan’s EnerGuide system would continue to be the consumer-facing brand in the Canadian market.
Impacts for commercial/institutional products and end-users
If the amendment is enacted as proposed, replacement gas-fired storage water heaters in commercial and institutional buildings would have to meet the same energy-efficiency standards as first-time installations. (Currently, the regulation sets the minimum thermal efficiency threshold at 80 per cent for replacement units versus 90 per cent for originals.) It’s one of several categories of commercial energy-using products tapped to meet more rigorous energy efficiency standards, harmonized with the U.S. CFR, as of Jan. 1, 2028.
Manufacturers, importers and distributers/retailers of commercial gas furnaces, commercial electric water heaters, commercial gas-fired instantaneous water heaters and battery chargers would face the same compliance date. There would be a more imminent June 1, 2027 introduction of updated standards for electric motors, while new requirements for commercial clothes washers would take effect slightly later on March 1, 2028.
All products proposed to be newly added to the regulation — air cleaners, computer room air conditioners, gas clothes dryers, pool heaters and pool pump motors — have commercial/institutional applications. New energy efficiency requirements would be harmonized with the U.S. CFR and go into effect in the Canadian market between Jan. 1 and May 30, 2028, depending on the product.
Four additional products, grouped within two product categories, are also slated to be newly included in Canada’s energy efficiency regulation even though they are not currently regulated in the U.S. Those are:
- water-to-water ground-source heat pumps;
- direct exchange ground-source heat pumps;
- energy recovery ventilators; and
- heat recovery ventilators.
In these cases, CSA or HRAI (Heating, Refrigeration and Air Conditioning Institute of Canada) testing standards are cited. The regulatory analysis acknowledges that this introduces additional discrepancies between the Canada and U.S. markets, and will require dealers importing such equipment into Canada to meet the prescribed standards. Yet, it suggests this won’t necessarily present a new regulatory burden for Canadian businesses since energy performance verification is already required under the ENERGY STAR labelling program.
Turning to the end-user perspective, NRCan projects benefits in energy/water savings and GHG emissions reductions across the entire package of proposed changes that should outweigh the incremental extra costs of purchasing, installing and maintaining the designated products by a ratio of greater than three-to-one. The costs-benefits breakdown varies for specific products with commercial/institutional applications. At the low end, the return on imposing energy efficiency standards for computer room air conditioners is pegged at slightly less than two-to-one, whereas paybacks on more efficient gas-fired instantaneous water heaters and electric motors are respectively estimated at 14-to-one and 11-to-one.
Notably, analysts actually foresee negative upfront costs for purchasers/end-users of air cleaners that comply with the proposed new energy efficiency standard. Canada-wide the annualized incremental extra cost for the technology is calculated at about $20 million based on 2024 dollar value, but that would come with an associated $57.7 million reduction in filter replacement costs even before benefits related to energy efficiency are considered.
The regulatory analysis also points to a potential cost qualifier arising from industry innovation. “It is important to consider that incremental costs to consumers may not materialize to the extent modelled, as manufactures often find novel ways to reduce costs when meeting energy efficiency standards,” it states.
