A survey of building retrofits under the Canada Greener Homes program says funding limits are holding homeowners back from more extensive energy efficiency improvements, just as national polling shows an overwhelming majority of Canadians looking for relief on their home heating bills.
Green Communities Canada is recommending that Natural Resources Canada (NRCan) make deep retrofits that reduce building energy consumption by at least 50% the explicit goal of the C$2.6-billion, seven-year program. The report, issued earlier this month, urges Ottawa to “revise program messaging to emphasize deep retrofits, and a complete retrofit plan (envelope, mechanicals, renewables) rather than piecemeal measures,” if it intends to hit a 2050 net-zero target.
The report warns that a fast uptick in home retrofits over the first three years of the program still falls short of what will be needed to meet the country’s decarbonization goals: “At this rate,” it says, “it will take more than a century to retrofit the more than 11 million houses in Canada that require upgrades.”
Green Communities published its analysis just as home energy efficiency experts warned that the unexpectedly popular federal program might run out of funds ahead of schedule, prompting high anxiety across the home retrofit industry and among potential program participants.
More Retrofits, Less Energy Efficiency
Using data from the federal EnerGuide program, the report shows the number of retrofits carried out under Canada Greener Homes rising from 31,161 in 2020 to 45,910 in 2021 to 111,864 in 2022, for a total of 188,000 over the three-year span. But only 8,920 of those projects were deep retrofits, and the average savings across the full program only increased from 17 to 21% for energy, and from 22 to 26% for greenhouse gas (GHG) emissions. Emission reductions in the deep retrofits hit 64% in 2022, but those projects only accounted for 6.1% of the total for the year.
That performance showed what’s possible for the rest of the existing building stock, Green Communities writes.
“Deep retrofits have the potential to eventually eliminate emissions, as space and water heating systems are replaced by heat pumps, and provinces phase out generating electricity from fossil fuel,” the report says. The more ambitious basket of retrofit measures “can provide the depth of energy and GHG savings needed to decarbonize Canada’s housing stock, improve the quality of housing, and minimize electrical demand growth.”
But while the program made major strides with heat pump and solar panel installations, it lost significant ground on building envelope improvements to boost energy efficiency. Between 2020 and 2022, reductions in heat loss fell by 23% across all the retrofits, and by an overwhelming 74% in the deep retrofits.
“This suppression of building envelope improvements is an unintended and problematic consequence of the Canada Greener Homes program design,” the report says. With electricity demand for all purposes set to grow dramatically in the years ahead, “the benefit of reducing space heating needs before fuel switching is clear: if heating requirements are halved, only half the generating capacity will need to be built.”
In an email, an NRCan spokesperson said the Canada Greener Homes program had received more than 454,000 grant applications, directly or through provincial delivery partners, as of October 30. She cited heat pump installations and window and door replacements as the most common retrofit choices under the program, with solar installations less popular but increasing, particularly when homeowners take advantage of a Greener Homes loan program that maxes out at $40,000.
$5,000 is Not Enough
Kai Millyard, who led the data analysis as Green Communities Canada’s EnerGuide service organization manager, traced the declining emphasis on building retrofits to a program that offers a maximum grant of only C$5,000, an amount that hasn’t increased since it was first introduced 20 years ago. Inflation has eroded the value of that amount to about $3,250, the report says; if the program had kept up with rising costs, it would now offer up to $7,900.
“There are four items on the rebate list for which you can use the full $5,000 with just the one measure,” Millyard said. So “people are having to pick and choose which things to do, because they can’t do it all.” After receiving an energy advisor’s recommendations, homeowners “pick one or two, as opposed to thinking that they have to do all the building envelope work first, then think about a heat pump after that, then at some point we can do the solar.”
That order of appearance matters a great deal, he explained, both to reduce total demand on a fast-growing electricity system and to get the best performance out of the devices that are eventually installed.
“Heat pumps are going to work much, much better when they’re small and they’re in an efficient building shell,” he said. “It’s really not great to install them in old, inefficient houses, if only because you have to buy a heat pump that is bigger and more expensive,” rather than moving first to reduce the building’s heating load by half.
“It’s a little frustrating,” Millyard said. “We’re big supporters of heat pumps, and we’re glad to see them getting a lot of attention. But everyone is looking for a silver bullet, when in fact there are a lot of other things we have to do.”
Canada Greener Homes also falls short for low-income households and First Nations communities, where energy costs “take up a disproportionate fraction of household income,” the report adds. Green Communities says the solution there is a program that offers a 100% incentive, leaving none of the cost to be covered by building occupants.
Programs That Work
The report compares and contrasts Greener Homes with programs in Ireland and Germany that offer larger grants and make them conditional on energy efficiency performance. Ireland’s One Stop Shop sets a maximum of $50,000 for a range of energy-saving upgrades, and has so far paid out an average of $34,000 for single-family homes. Germany’s program is more complex: it includes 20-year, low-interest loans of up to about C$210,000, compared to the $40,000 for major retrofits under Greener Homes, with up to 25% of the total in Germany forgivable depending on how much energy the project saves.
“The much larger grant maximum provides a significant incentive for homeowners to install the full range of upgrades needed to complete an energy efficient renovation,” Green Communities writes. And “the incentive is performance-based—it rewards large energy savings, not the installation of individual upgrades. This supports the development of a whole project that will maximize savings, which the piecemeal approach in Canada does not.”
With governments under continuing pressure to make housing more affordable, and 70% of respondents in one recent poll favouring price relief on all forms of home heating, Millyard said energy efficiency measures are a proven winner.
“It’s actually popular,” he said. “People respond to this program like crazy. When it was launched in May, 2020, the number of people who signed up to participate was enormous, far more than we expected or the system could handle.”
As well, “there’s enormous economic stimulation from a program like this. When the economy is in rough shape, residential renovation is a good place to put stimulation money because that investment stays in the Canadian economy.”
Funding at Risk
Canada Greener Homes has been so popular, in fact, that NRCan officials are warning that the program could soon wind down if it exhausts the available funds, Windfall Ecology Centre Executive Director Brent Kopperson told CBC earlier this month. The same thing happened with the popular ecoEnergy home retrofit program in 2012.
“We are in a climate emergency and we can’t be putting our feet on the brakes. We need to really be accelerating the program,” Kopperson said. “So to end this program prematurely without an immediate replacement would cause significant havoc in the sector.”
Energy and Natural Resources Minister Jonathan Wilkinson confirmed that high demand has Canada Greener Homes spending its budget faster than expected, CBC writes, but suggested the program could be extended.
“Yes, we’ve actually started to exhaust the funds earlier than what we had anticipated, and that’s largely a function of the popularity of the program,” he said. But “we have a certain budgetary envelope. We have to exhaust or utilize that envelope before we can ask the minister of finance for additional money.”
Efficiency Canada research manager Abhilash Kantamneni told CBC that could be a problem for people who answered the government’s call for 2,000 new energy auditors to help homeowners plan their energy retrofits.
“All these people who entered into this sector with the hopes of a better career and livelihoods, I worry that this kind of start-and-stop funding cycle could put their livelihoods at risk,” he said.
“What the government should be doing is to signal an intention for long-term policy commitment and policy certainty,” to achieve its climate goals “in a way that leaves no one behind.”
“The fear, uncertainty, and doubt that has spread like wildfire through the Canadian HVAC industry this week must be extinguished immediately,” ClimateCare Canada Executive Director Victor Hyman added in a LinkedIn post. “Channel partners have invested tens of millions of dollars in inventory and training to support this program with the promise that it would last seven years, or 700,000 homes, or $2.6 billion.”
Now, NRCan “must clarify the path forward” so that everyone in the building retrofit market “can regain confidence and make the best decisions to help move the decarbonization of the residential building sector forward,” he added. Until then, “we feel like Charlie Brown trying to kick Lucy’s football. This is not how allies expect to be treated.”
