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When considering a new furnace many factors can determine your final choice.  Once you are decided on the fuel type (natural gas, electric, propane, oil, wood), size relative to the size of your house and efficiency must also be determined. 

Furnace Sizing

You probably do not need a furnace with the output of your current furnace. Most furnaces in Canadian houses can provide far more heat than the house requires. A properly sized conventional or mid-efficiency furnace will be running almost continuously during the coldest day of the winter. Having a furnace of a correct size will result in efficient operation during the whole heating season. A grossly oversized furnace will run only for a short period, never coming up to peak efficiency. Note, however, that sizing may not be an issue with high-efficiency, condensing gas furnaces. Due to the design of condensing appliances, they are efficient even when oversized.

Furnace Efficiency

There is a wide range of furnace efficiencies, although the conventional, standard-efficiency gas furnaces can no longer be sold in Canada. Electric furnaces work on electric resistance. There are high efficiency, condensing oil furnaces as well. New gas furnaces in Canada can either be mid-efficiency (78 – 82 per cent) or high efficiency condensing furnaces (89 – 96 per cent). The high efficiency furnaces use a plastic vent and are most often vented out the side wall. Most mid-efficiency furnaces still use a metal chimney approved for gas appliances (B-vent) or a stainless steel liner inside an existing chimney. Propane furnaces are usually modified natural gas equipment.

As natural gas prices increase, it becomes increasingly easier to recommend high efficiency appliances. (source: Canada Mortgage and Housing Corporation)

This article summary is courtesy of Brant Plumbing & Heating in Burlington, Ontario.  The entire article is available from CMHC