How to make energy retrofits easy and affordable for everyone

The federal government recently announced the winding down of Greener Homes grants alongside hints of a new plan to give more support to low- and moderate-income Canadians.

We will not achieve net-zero emission homes with uncertain, boom-bust grant programs. Yet, perhaps a well-funded low- to moderate-income initiative can spark a different approach to retrofits, consistently supporting a mission for affordability and climate action.

The biggest problem with the abrupt halt of the grants is disruption and uncertainty. The federal government launched the Canada Greener Homes Program in 2021, calling for homeowners to help reach net-zero emissions by 2050 and for people to build careers as energy auditors, electricians, insulation specialists, heat pump installers, etc. Canadians answered this call. Homeowners paid upfront retrofit costs, provincial governments and utilities reoriented their programs and workers made career shifts.

The grant program ran out of budget, but climate change and unaffordability have not abated and we are a long way from net-zero emission homes. So why is there less support for energy retrofits today?

To be clear, it still makes sense for homeowners to improve insulation, plug air leaks, switch to heat pumps, etc. Homeowners can continue to take advantage of the federal government’s $40,000 interest-free loan. Consistent support for energy retrofits does not always have to look the same. Good energy efficiency strategies should encourage learning, mid-course corrections and experimentation. The Greener Homes grants were having an impact but weren’t achieving the deep energy savings needed for net-zero emissions.

One-off programs need to be replaced with consistent public investments focused on achieving net-zero emissions and affordability goals. That should give flexibility to local program administrators and building science experts to innovate and tailor solutions to make real affordability, health and comfort improvements in Canadian homes.

Programs and policies that could expand retrofits include mandatory energy labelling, new business models like “energy as a service” that replace any upfront costs with regular payments for real energy savings performance, supporting expert advice on retrofit project design and implementation and increasing the interest-free loans to enable deeper retrofits. However, disruptions to the existing program only make these possible improvements more difficult.

Making energy efficiency work for low-income Canadians

The federal government says the next phase of energy retrofits will be targeted at households with low to moderate incomes. The Greener Homes grants and loans were not accessible to Canadians unable to pay upfront costs or take on debt. An oil to heat pump program removes upfront cost barriers, but it is not accessible to the large majority of low-income Canadians who heat with electricity or natural gas or whose energy costs are best reduced with insulation and air sealing.

Unaffordable energy bills impact health and larger affordability challenges. Twenty per cent of low-income households report skipping basic needs, such as food or prescription drugs, to pay energy bills, and 18 per cent report keeping their dwelling at unsafe temperatures. Reducing energy bills helps people afford food and prescription drugs, and retrofits can prevent cold-related illnesses and deaths from extreme heat.

It is now possible to learn from some of the shortcomings of the Greener Homes grant to make a low-income affordability program successful.

First, the program should be available to everyone across Canada in need. That means helping those with unaffordable electricity and natural gas bills, as well as those who heat with fuel oil. An effective program should prioritize the upgrades that improve affordability immediately, which means insulation and air sealing in most homes. Energy efficiency should be available to tenants impacted by high bills, rents or inadequate housing conditions. A tenant program can help lock in below-market rentals by requiring landlords to sign affordability covenants in return for upgrades.

Second, a federal low-income initiative must be well integrated with existing programs and trusted community organizations. Federal dollars can lead to an expansion of existing utility programs, which must pass cost-benefit tests because federal match funding can buy down costs. Effective low-income programs also recruit and train people from traditionally disadvantaged communities to the trades, growing capacity across the whole retrofit sector.

Third, a low-income program should avoid booms and busts. The next federal budget should provide a large enough investment to avoid unexpected halts and reorient existing programs towards affordability and climate objectives. At least $2.5 billion is required to ramp up towards retrofitting three to five per cent of low-income homes a year — a target presented in a Canada Green Building Strategy discussion paper.

Finally, a federal program to support those with the biggest affordability challenges should receive cross-partisan support. Polling shows energy efficiency for low-income Canadians is supported by people who vote for all parties. Low-income retrofits are part of the NDP-Liberal supply-and-confidence agreement. In the U.S., the Weatherization Assistance Program has been supported by Republicans and Democrats for decades. Surely, we can reach a consensus in Canada that no one should be in poverty because of their energy bills and that energy efficiency is a lasting solution.

To achieve an affordable net-zero emission economy, high-quality and consistent energy efficiency solutions must be available for everyone. The federal government should fund and co-ordinate a long-term mission instead of offering short-term, inflexible programs. It can start by adequately funding and designing an effective solution for Canadians facing energy poverty.

Brendan Haley, PhD, is director of policy research with Efficiency Canada, a Carleton University-based think tank dedicated to creating an energy-efficient economy.