The social cost of new construction residential space heating in British Columbia

Two potential policy approaches and subsequently four policy options are analysed for their potential to reduce the social cost of electric space heating in British Columbia. A fuel neutral, as opposed to a fuel switching policy approach is recommended based on marginal economic costs, greenhouse gas emissions intensities, consumer costs, and the political/policy context. No market failure and, as such, no justification for policy intervention in fuel choice is found. A standardized heat pump installation program, subsidies for high efficiency heating equipment, a mandatory Energuide for Houses rating, and regulating heating equipment efficiency are policy options assessed by their effectiveness, economic/financial cost, equity, administrative ease, and political feasibility. I construct a demand model to forecast the potential electricity savings, analyse private payback periods, and conduct qualitative assessment. A market-based policy, the Energuide for Houses standard is the policy option that best addresses issues of equity and political feasibility.