Draft Energy Efficiency Market Transformation Strategy for Residential Natural Gas Fireplaces

Draft Energy Efficiency Market Transformation Strategy for Residential Natural Gas Fireplaces August 6, 2004 Andrew Pape-Salmon, Ministry of Energy and Mines Tel: 250-952-0819 Email: Andrew.PapeSalmon@gems8.gov.bc.ca 1 Summary This strategy seeks to significantly improve the energy efficiency of natural gas fireplaces installed in British Columbia, through a combination of utility and government incentives, cooperative efforts with industry to improve fireplace technologies, and regulation. The main elements of the recommended strategy are: 1. Seek federal funding to support a longer term incentive program for the installation of high efficiency gas fireplaces in BC. A higher qualifying level (e.g. 65%) should be considered, and consideration should be given to excluding models with standing pilots. 2. Evaluate a range of options for encouraging manufacturers and distributors to make higher efficiency products available in B.C., especially models without standing pilots. 3. Enhance information and labeling programs, by working with the federal government, industry, utilities and other stakeholders. 4. Encourage the federal government to set an Energy Star level for gas fireplaces within the next two years. 5. Introduce a minimum energy efficiency standard for gas fireplaces, to take effect in 2008, or another appropriate date. 2 Market Overview The demand and market for natural gas fireplaces has grown rapidly in North America and especially in British Columbia in the last 15 years. Natural gas fireplaces have become highly popular both for their contribution as a secondary heating source and because of their aesthetic value. While the industry does not publish annual sales data, observers suggest that annual natural gas fireplaces sales in British Columbia range from 30,000-50,000 units per year 1. There is now a high level of saturation of gas fireplaces in B.C., especially in homes constructed in the last 10 years. According to the most 1 Steve Connelly, Mark Hartman (Terasen Gas) Draft Page 1 of 16

recent (1997) Survey of Household Energy Use 2, conducted for Natural Resources Canada by Statistics Canada, approximately 305,000 BC homes (28%) had at least one gas fireplace in 1997. The 28% saturation rate in BC is the highest among the provinces, and is more than twice the national average (11.6%). Almost all (90%) of the gas fireplaces in BC were installed in the 10 years preceding the survey. A summary of the Survey data is contained in Appendix A. British Columbia is also home to a significant number of manufacturers of gas fireplaces. These companies have all expanded significantly in the past 10 years and many sell products in markets across Canada and the United States. Key B.C. manufacturers include: Pacific Energy, located in Duncan. (www.pacificenergy.bc.ca) Fireplace Products International Ltd., in Delta. Product lines include Regency, Excalibur, Hampton and Waterford. (www.regency-fire.com) Sherwood Industries Ltd., located in Saanichton. Maker of Enviro line of heating products and barbecues. (www.enviro-fire.com) Miles Industries, in Richmond. Maker of Valor Fireplaces. (http://www.valorfireplaces.com/) NB Technologies, which will be opening a plant in Maple Ridge to manufacture custom gas fireplaces. Archgard Industries Ltd., in Mission http://www.archgard.com/marketing.html Canadian Heating Products/Montigo, in Vancouver http://www.montigo.com/index.html Appendix A lists the major BC manufacturers and distributors. The main industry association representing gas fireplace manufacturers in BC is the Hearth, Patio and Barbecue Association of Canada (Western Chapter). http://www.whpba.ca/. The administrator for the HPBAC-WC is: Zigi Gadomski 1573 Charleton Court Port Coquitlam, BC V3B 6M8 604-941-4172 phone/fax zigi@shaw.ca 2 The next Survey of Household Energy Use (2003) will be available in mid-2005. Draft Page 2 of 16

3 Technology Overview There are four main types of natural gas fireplaces manufactured for the residential market in Canada: Zero-clearance gas fireplaces are designed to be installed where no masonry/brick fireplace currently exists. They can be installed against a wall or framed into the wall. The logs and burner are inside their own firebox, around which there is an inner and outer shell. Zero-clearance fireplaces are typically direct-vent units. Zero clearance fireplaces are typical in new construction. Free-standing stoves look and heat like wood stoves. They can be installed almost anywhere in a home and can use a variety of venting options. Gas inserts fit into existing fireplaces and use the home s existing chimney for venting. Gas log sets are an earlier technology and are primarily decorative open flame-type appliances consisting of a metal frame or base supporting simulated vented logs. Gas logs are usually mounted in an existing gas fireplace, and lack fixed glass doors or any controlled venting. Gas logs provide very little heating capability and can actually increase the demand on the central heating system because they use heated air from inside the house for combustion air, and then vent the exhaust to the atmosphere. There are also concerns about the health impacts of gas logs. A number of gas log sets were installed in BC homes over the last 20 years. There are three main types of venting systems for gas fireplaces. A direct vent fireplace is a sealed combustion unit that draws outside air in and exhausts its combustion products outside, eliminating the need for a standard chimney system. The maximum horizontal run (length) of a direct vent is about 20 feet. The glass panel in direct vent units is critical to keeping the combustion system sealed from the house and maintaining indoor air quality. Natural draft fireplaces typically use a B-vent or, in an existing chimney, an approved flexible aluminum liner, to vent combustion gases to the outside. Combustion air is drawn from inside the house. Some gas fireplaces use power venting, in which an electric fan assists the venting process. This allows units to be vented with horizontal and Draft Page 3 of 16

vertical flues from locations in a home where a conventional flue cannot be installed. 3.1 Key Factors Affecting Energy Efficiency Key design factors affecting the energy performance of natural gas fireplaces include: vent design, ducting and fan system; ignition system; unit construction; and controls. 3.1.1 Vent design, ducting, and fan system A direct or power vent fireplace is more efficient than and safer than a natural draft fireplace. Access to ducting is also significant factor. Some fireplaces can be connected to a certain amount of ductwork - much like a furnace - which can help distribute heat to more remote areas of the home while preventing overheating of the room where the fireplace is installed. Energy use is also affected by the efficiency of the circulating fan used to force convective heat into the room. 3.1.2 Ignition system In many gas fireplaces, a pilot light is used to ignite the main burner when the fireplace is turned on - but the pilot light itself can consume as much as half the gas used by the fireplace every year. The average gas fireplace pilot uses about 21 cu ft of gas per day. Many units allow the pilot to be turned off when the fireplace is not in use, and manufacturer literature often encourages consumers to turn off pilots especially during the non-heating season. However, research conducted by Natural Resources Canada in the 1990s showed that many consumers leave the pilot burning throughout the year. According to the 1997 Survey of Household Energy Use, 90% of the gas fireplaces in BC had a pilot light, and in half of those, the pilot light was never turned off (see Appendix A). The alternative to a continuous pilot light is an automatic starter. Some U.S. states in particular California and New York ban the sale of gas fireplaces with continuous pilots. This is an option that could be considered in Canada in Draft Page 4 of 16

the future. However, at the current time, relatively few units are offered for sale in Canada without continuous pilots. 3.1.3 Unit construction Key elements of construction affecting energy performance include the type of glass front, the inclusion of a secondary heat exchanger, and insulation of the outer casing. Ceramic glass does a much better job of transmitting infrared heat from the flame to the room than the alternative - tempered glass. Ceramic glass is also shatter resistant. A well-designed fireplace will have channels around and behind the combustion chamber, through which air circulates and picks up heat from the fireplace before re-entering the room. The best units go a step further by incorporating a secondary heat exchanger that extracts more heat from the combustion gases and transfers it to the house. An insulated outer casing (except for freestanding units) prevents heat loss through the walls of the home when a fireplace is located on an exterior wall. 3.1.4 Controls Good control capabilities are critical. Most gas fireplaces have a variable setting control, which allows the temperature to be adjusted by regulating the rate of gas consumption. Maximum energy efficiency and comfort control is provided by units with wide turndown ranges - some units can be turned down only to 70 percent of full load, but others can go as low as 20 percent. Some models also have an automatic thermostat control, which will adjust the firing rate to keep the room at the desired temperature. 3.2 Fireplace efficiencies Information on the efficiency of natural gas fireplaces is now being collected and reported as result of recent federal regulations. Since October 2003, manufacturers and distributors who import or ship gas fireplaces between provinces are required to test and certify their units to CSA P.4.1-02 "Testing Method for Measuring Annual Fireplace Efficiency," and to report the EnerGuide Draft Page 5 of 16

Fireplace Efficiency rating to NRCan 3. The Fireplace Efficiency rating is the only recognized measurement of vented gas fireplace energy efficiency in Canada. As of May 2004, more than 640 natural gas and propane models had been tested and the results posted to NRCan s website: http://www.oee.nrcan.gc.ca/equipment/english/gas_fireplaces.cfm?printview=n &Text=N The results of the tests vary widely. The highest reported efficiencies were 78.5% (propane) and 77% (natural gas). The lowest Fireplace Efficiencies reported were two models with efficiencies of 12.6%. In general efficiencies were much higher. Only 15% of the models reported efficiencies below 50%. P.4.1-02 Test Results (from NRCan website updated May 2004) Proportion of Total Models Tested Cumulative Percent Fireplace Efficiency Number of Models Less than 10% 0 0% 0% 10-15% 2 0% 0% 15-20% 0 0% 0% 20-25% 3 0% 1% 25-30% 20 3% 4% 30-35% 0 0% 4% 35-40% 7 1% 5% 40-45% 13 2% 7% 45-50% 52 8% 15% 50-55% 118 18% 33% 55-60% 172 27% 60% 60-65% 154 24% 84% 65-70% 77 12% 96% 70-75% 17 3% 98% 75-80% 10 2% 100% More than 80% 0 0% 100% The following chart shows the distribution of models. Some caution should be used in interpreting the results, for several reasons: 3 The fireplace testing requirement was introduced under the federal government s Energy Efficiency Act, which applies to appliances and equipment that are imported or shipped between provinces. For units manufactured for sale only in British Columbia, testing and reporting results is voluntary. Draft Page 6 of 16

- Not all models sold in Canada and British Columbia are listed, as all test results have not yet been reported. The results may also exclude some units manufactured for sale only in British Columbia that are not subject to the federal reporting requirement. - The results include both free-standing units and inserts, which have different ranges of efficiency - The results show only the number of units and are not weighted by volume of sales. At this point information on sales of individual models is not available, so the actual sales-weighted distribution of Fireplace Efficiencies may vary significantly in shape from the histogram below. P4 Test Results Number of Models 200 180 160 140 120 100 80 60 40 20 0 0 0 0 2 0 3 10 20 20 30 0 7 13 40 52 50 118 172 154 60 77 70 17 10 0 0 0 0 80 90 Fireplace Efficiency (FE) 4 Existing Energy Efficiency Initiatives The main current initiative is the P.4.1-02 testing requirement introduced by the federal government in 2003. This is a key first step, since reliable, comparable information on energy performance of different products and technologies provides the basis for a variety of initiatives, including incentives, labeling and regulation. Unlike many other products regulated under the federal Energy Efficiency Act, there is no requirement to place a label showing the EnerGuide Fireplace Efficiency Rating on the product. It would be impractical to require a label on a fireplace, both for aesthetic reasons and because units typically get quite hot. Draft Page 7 of 16

However, there is a voluntary labeling program managed (under an agreement with Natural Resources Canada) by the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI). This program encourages manufacturers to include the EnerGuide label in product literature. The EnerGuide label displays the rated fireplace efficiency of the units. Terasen Gas, BC Hydro and Natural Resources Canada are also funding a program in BC that offers incentives of $200-$300 to consumers to change out an existing log set and replace it with a new gas fireplace. The program runs from June 15, 2004 and September 15, 2004, and includes: A $200 rebate on the consumer s Terasen Gas bill for upgrading from a log set to a new, energy efficient gas fireplace with an EnerGuide Fireplace Efficiency rating of 55 per cent or higher. An additional $100 incentive (in the form of a manufacturer s discount) for purchasing a new energy efficient natural gas fireplace. The additional incentive applies to seven leading brands of fireplaces (Pacific Energy, Enviro, Regency, Vermont Castings, Valor, Napoleon and Jotul). The 55 percent cut-off is relatively low but the program specifically targets the replacement of log sets in existing masonry fireplaces. The most practical replacement option for these log sets is an insert with a B vent and these will generally not be as efficient as a direct vent. This raises an important program design issue the possible need for different approaches for different applications. It may not be practical to target the same level of efficiency for an insert used in a fireplace retrofit as for a direct vent unit. The current Terasen Gas/BC Hydro/NRCan program is a pilot. An evaluation of the program to be carried out after the end of the 2004-05 heating season will provide information that could be used to design future initiatives. 5 Market Transformation Strategy 5.1 Objectives The proposed objectives for the market transformation strategy are: - eliminate the least efficient gas fireplaces from the market by 2008 or another appropriate date; - encourage the replacement of inefficient existing gas fireplaces, especially gas log sets; - support the introduction and marketing of higher efficiency gas fireplaces; and - establish energy efficiency as a key decision factor for consumer choice. Draft Page 8 of 16

5.2 Policy Options The three main types of measures that could be used to improve the energy performance of natural gas fireplaces in BC are labeling, financial incentives, and regulation. (1) EnerGuide Labeling Labeling and other consumer information initiatives are critical to establishing energy efficiency as a key decision factor for consumer choice. This could build on the voluntary industry EnerGuide labeling program currently in place. The HRAI program could be monitored on an ongoing basis, and consideration given to other labeling and information strategies. (2) Energy Star Program The Energy Star program has been extremely effective in other product areas in shifting consumer preferences towards higher efficiency products. Energy Star is highly effective as an information/labeling program, the basis for incentive programs, and possibly the basis for regulation. The federal government could be encouraged to set an Energy Star level for gas fireplaces as soon as possible. This will require additional market, economic and financial analysis, but with almost a year of P.4.1-02 testing complete, much of the basic information required to set an Energy Star level is now available. It is possible that an Energy Star fireplace program could be put in place within two years. (3) Incentives Financial incentives can have a significant impact on the market. The current Terasen Gas/BC Hydro/NRCan program is a pilot, and could provide the basis for a longer term consumer initiative once the current program has been evaluated. The establishment of an Energy Star level will also support the introduction of new incentive programs. Financial incentives can also be provided more directly to manufacturers and distributors. Currently almost all gas fireplaces sold in BC include a standing pilot. Manufacturers could be provided with incentives to include electronic and other ignition technologies that do not require a standing pilot. There is likely also a need to gather additional information on the gas fireplace market, including information on incremental costs of higher efficiency units, in order to design more effectively targeted programs. Draft Page 9 of 16

(4) Regulated minimum standards A regulated minimum standard could be introduced to eliminate the leastefficient gas fireplaces on the market. Both the federal and provincial governments have implemented energy efficiency regulations that require a wide variety of appliances and equipment (including gas equipment such as furnaces and water heaters) to meet minimum energy performance standards. These standards protect consumers by ensuring that products include cost-effective energy efficiency design features. Regulated minimum standards are only one of the possible policy options. A strategy that combines incentives and information (to move consumer preferences to higher efficiency products) with a regulated minimum standard (to eliminate the least efficient products from the market and prevent backsliding when incentive programs end) has been highly effective in other areas (e.g. refrigerators) and could be used in this market as well. Regulated minimum standards need to be set at a level that are cost-effective for consumers and do not cause hardship for manufacturers. Given the limited information available on fireplace efficiencies and the incremental costs of efficient design options and technologies, it is too early to set a specific minimum energy efficiency level for gas fireplaces at this time. While some jurisdictions in the U.S. (California, New York) prohibit standing pilots, it is probably not feasible to take that approach in B.C. in the near future, as almost all models sold in B.C. currently have standing pilots. More market information and analysis are required, and the results of at least a full year of P.4.1-02 testing likely need to be reviewed prior to initiating a process to set a minimum standard. Adequate notice and lead time would need to be provided before the introduction of any regulated minimum standards. Typically there is also a period of at least a year between the time the regulation is passed and the date that the minimum standard takes effect. This suggests that a realistic time frame for a minimum standard for gas fireplaces in BC is 2008 or later. 5.3 Recommended Strategy The main elements of a recommended strategy are: Draft Page 10 of 16

1. Seek federal funding to support a longer term incentive program for the installation of high efficiency gas fireplaces in BC. A higher qualifying level (e.g. 65%) should be considered, possibly with two tiers (inserts and direct vents), and consideration should be given to excluding models with standing pilots (provided enough models are available without standing pilots). 2. Evaluate options for encouraging manufacturers and distributors to make higher efficiency products available in B.C., especially models that feature intermittent pilots. 3. Enhance information and labeling programs, by working with the federal government, industry, utilities and other stakeholders. Provide consumers with information on the potential savings associated with intermittent pilots and other design features. 4. Encourage the federal government to set an Energy Star level for gas fireplaces within the next two years. 5. Introduce a minimum energy efficiency standard for gas fireplaces, to take effect in 2008 or another appropriate date. The table below summarizes the recommended implementation plan: Timeframe Actions Partners, Key players 2004 1. Analysis of P4 test results: additional market research may be required to show costefficiency tradeoffs 2. Propose expansion of Natural Resources Canada/Terasen program, possibly with funding from the Opportunities Envelope and a raised FE level. 3. Confirm appropriate energy efficiency target based on test/market analysis 4. Consider expanding marketing aspects 5. Work with Natural Resources Canada and industry to encourage wider availability and marketing of higher efficiency fireplaces Natural Resources Canada, BC Ministry of Energy and Mines, Terasen, industry associations 2005-2006 1. Additional technical and economic analysis to provide basis for Energy Star and Natural Resources Canada, BC Ministry of Energy and Mines Draft Page 11 of 16

2008 or other appropriate date proposed regulatory levels 2. Work with Natural Resources Canada, industry, and utilities to promote Energy Star products through new DSM and other marketing programs 3. Define and announce regulatory minimum and timeframe for implementation 1. Effective date for minimum standard BC Ministry of Energy and Mines 5.4 Economic and Energy Impacts The implementation of market transformation strategy for natural gas fireplaces is expected to provide substantial energy, financial and emission reduction benefits to the province. While further data collection and analysis will be required, preliminary analysis suggests that the strategy outlined above could yield over 1000 terajoules of annual energy savings by 2015 (see Appendix C for initial analysis). Further analysis is required in particular on the economic and financial costs of improving efficiency. This information will likely be required to set a minimum FE level in regulation. 5.5 Next Steps The B.C. Ministry of Energy and Mines is seeking comments on this proposed strategy by September 13, 2004. Draft Page 12 of 16

Appendix A Statistics Canada 1997 Survey of Household Energy Use Distribution of Houses by Presence and Characteristics of Gas Fireplaces, by Region Source: 1997 Survey of Household Energy Use Canada Atlantic QC On Prairies BC All Houses (000) 8162 742 1714 3080 1534 1092 Houses with this type of fireplace Percentage 11.6 0 0 15.1 11.5 27.9 Number of Houses (000) 947 0 0 465 176 305 Among houses with a gas fireplace Number of fireplaces (%) One 83.6 91.5 92.5 66.3 Two or more 16.4 8.5 7.5 33.7 Age of the fireplace (%) Less than 4 years 41.8 50.2 35.6 32.6 From 4 to 6 years 33.2 26.3 41.3 39.1 From 7 to 10 years 14.8 15.6 6.7 18.4 11 years and over 10.1 7.8 16.5 10 Number of glass doors (%) None 30.5 26.1 32.1 36.2 One 56.1 67.6 48.2 43.1 Two 13.4 6.3 19.7 20.7 Frequency of use during the heating season (%) Never 7.3 4.3 6.6 12.5 Less than once per week 21 14.8 35.7 21.8 From one to three times per week 26.4 31.2 28.9 17.6 More than three times per week 45.3 49.7 28.8 48.2 The fireplace replaces a wood fireplace (%) 39.5 44.6 28.9 37.9 Is the gas fireplace equipped with a pilot light? (%) Yes, but is turned off during the summer 28 28.7 20.3 31.2 Yes, but is turned off at other times as well 14.2 11.9 19.2 15 Yes, and is never turned off 52.5 56.3 57.5 43.7 No, there is no pilot light 5.3 3.1 3 10.1 Gases are expelled (%) By the chimney 65.2 56.2 76.5 72.5 Through the wall 34.8 43.8 23.5 27.5 Draft Page 13 of 16

Appendix B British Columbia Natural Gas Fireplace Manufacturers and Distributors COMPANY NAME BRAND(S) MANUFACTURER/ LOCATION WEBSITE DISTRIBUTOR Archgard Industries Ltd. Archgard Manufacturer Mission www.archgard.com/index.htm Canadian Heating Products Montigo Manufacturer Vancouver www.montigo.com CFM - Majestic Majestic, Vermont Castings, Northern Flame Manufacturer Ontario www.cfmcorp.com Concorde Dist. Inc. Vermont Castings, Majestic, Envirofire Distributor Abbotsford www.concordedistributing.com Delco Fireplaces Napoleon, Kingsmen Distributor Langley, Nanaimo www.delcofireplaces.supersites.ca Ecco Heating Products Ltd Lennox, Superior Distributor, Installer Langley www.eccohtg.com FPI Fireplace Regency, Hampton, Excalibiur, Waterford, www.regency-fire.com Products Int' Ultraglow Manufacturer Delta Kingsman Fireplaces Kingsman Manufacturer Winnipeg www.kingsmanind.com Miles Industries Ltd. Valor Manufacturer North Van www.valorfireplaces.com Heat-N-Glo, Heatilator, Mr. Fireplace Aladdin, Chinook(Viking) Distributor Surrey www.mrfireplace.com Mullan Sales & Marketing Napoleon, Continental, (Wolfe Steele) Distributor Sidney Draft Page 14 of 16

Northwest Stoves Hearthstone, Jotul, Pacific Energy, Town & Country Distributor Langley www.northweststoves.ca Pacific Energy Fireplace Pacific Energy Manufacturer Duncan www.pacificenergy.bc.ca Sears Home Central Kenmore, Continental, Century Distributor Vancouver, Victoria www.sears.ca/e/hc/gasfire.htm Sherwood Industries Envirofire Manufacturer Saanicton www.enviro-fire.com Stove Builders International Osborne (woodstove), Drolet (gas) Manufacturer Quebec www.drolet.ca Temco Fireplace Products (CFM sub) Temco, Elegance Manufacturer Ontario www.temcofireplaces.com Valley Comfort Blaze King Manufacturer Penticton www.blazeking.com Draft Page 15 of 16

Appendix C Energy Savings from Fireplace Strategy Preliminary Analysis Year Annual impact on sales Cumulative sales Unit savings (GJ) Total Annual Savings (TJ) 2004 1500 1500 3.5 5 2005 1500 3000 3.5 11 2006 3000 6000 3.5 21 2007 3000 9000 3.5 32 2008 3000 12000 3.5 42 2009 50000 62000 3.5 217 2010 50000 112000 3.5 392 2011 50000 162000 3.5 567 2012 50000 212000 3.5 742 2013 50000 262000 3.5 917 2014 50000 312000 3.5 1,092 2015 50000 362000 3.5 1,267 2016 50000 412000 3.5 1,442 2017 50000 462000 3.5 1,617 2018 50000 512000 3.5 1,792 2019 50000 562000 3.5 1,967 2020 50000 612000 3.5 2,142 2021 50000 662000 3.5 2,317 2022 50000 712000 3.5 2,492 2023 50000 762000 3.5 2,667 2024 50000 812000 3.5 2,842 2025 50000 862000 3.5 3,017 2026 50000 912000 3.5 3,192 2027 50000 962000 3.5 3,367 2028 50000 1012000 3.5 3,542 2029 50000 1062000 3.5 3,717 2030 50000 1112000 3.5 3,892 Assumptions: 1. Fireplace sales are assumed to be 50,000/year. 2. Retrofit program take-up: 1500 in 2004 and 2005; 3000 in 2006-2008 3. Legislation at a minimum level of 65% FE is assumed to take effect in 2009, relative to a baseline efficiency of 50%. This is assumed to result in average savings of 3.5 GJ per household per year. Draft Page 16 of 16