Home Retrofit Grants Won’t Deliver the Energy Savings the Climate Crisis Demands, Analysts Warn

Impatience is building among policy analysts behind the push for mass, deep energy retrofits as a cornerstone of Canada’s post-pandemic green recovery, after this week’s Fall Economic Statement from Finance Minister and Deputy Prime Minister Chrystia Freeland came up with just a fraction of the funding and none of the design and structure that a comprehensive program would require.

Low-carbon energy modeller Ralph Torrie, who began leading the charge on mass, deep retrofits at a late February workshop in Ottawa co-hosted Energy Mix Productions, said the C$2.6 billion allocated for a seven-year program raises questions about how seriously the Trudeau government is prepared to confront the climate crisis. In mid-September, the Task Force for a Resilient Recovery called for a $26.9-billion program over five years.

“It’s a change from asking what can we afford to asking what’s it going to take,” Torrie told The Mix Tuesday, noting that the government did just that when it spent $7.5 billion on personal protective equipment in response to the pandemic.

“It’s like calling the fire department when your house is on fire and they say, ‘you’ve got a real emergency there. We’re working on a plan to address it. Meanwhile, we’ll send you a coupon for a free fire extinguisher’,” Torrie said of the new program. “What you want to hear is, ‘we’re on our way.”

The more limited commitment to date to climate action and a green recovery shows that “we’re just not there yet.”

Analytica Advisors Founder and President Céline Bak, who along with Torrie helped Corporate Knights organize a series of seven Build Back Better webinars earlier this year, said Canada’s green recovery investment as a share of GDP is just half of what European Union countries are setting aside for decarbonization, digitalization, and re-industrialization. The fiscal update provides less than 20% of the funds required for building retrofits and electric vehicle incentives consistent with the government’s commitment to hit net-zero emissions by 2050, Bak told The Mix.

“Building agricultural natural capital was funded at a level of 2% of the opportunity to leverage the contribution that farming and rural communities can make to Canada’s climate action plans,” she wrote in an email. Bak also criticized the government for announcing no new dollars for fossil industry schemes to find non-energy uses for tar sands/oil sands bitumen.

“The federal government has established new categories of investment to build back better, but it will fall to a future budget to fund these categories adequately,” she said.

In this analysis for Corporate Knights, Sussex Strategy Group Senior Counsel Shawn McCarthy says the Fall Economic Statement shortchanges climate action.

Torrie said he could see the challenges the government faced in trying to juggle climate and green recovery programming in the midst of a global health emergency. “Reading through the report, you can’t have anything but sympathy for the magnitude of what they’ve been up against this past year, and how difficult it must be for them to think about anything else right now except the [COVID-19] crisis,” he said.

But the contrast between both the funding and the level of programming for the pandemic and the government’s climate response shows that, “the rhetoric notwithstanding, the government is not yet really treating climate change as an emergency,” he said.

“I get that maybe the amount of spending has to be small right now, until we get through this [pandemic] wave. But it’s not the amount of spending that is my main concern. It’s that what they’re doing doesn’t look like the first steps one would take on an emergency response.” Rather than putting in place the logistical, business, and financing infrastructure for a “truly mass approach to retrofits,” with a path to make the program accessible to households facing energy poverty, “we’re handing out coupons and the homeowners will be on their own,” he said. “You can be pretty confident that poor people are not going to be getting these grants.”

That’s in spite of one of the lessons learned from COVID-19 that the government acknowledges in the fiscal update.

“The pandemic has taught us what happens if you haven’t thought out a strategy or a plan,” Torrie said. “You end up with no choice but doing whatever you have to do to deal with the crisis that you didn’t anticipate or prevent. There are a lot of lessons there for the climate crisis, because if we don’t get much, much more serious about flattening this curve, we’ll be looking back from a world of hurt and wishing we’d gotten serious sooner.”

Efficiency Canada Policy Director Brendan Haley, who posted a detailed Twitter thread on the fiscal update Monday evening, saw some prospect that Ottawa can push through to a mass, deep retrofit program by combining the $5,000 grant with the maximum $40,000 zero-interest loans the Trudeau government promised in its 2019 election campaign platform.

“The combination of loans and grants is a good policy mix,” Haley told The Mix Tuesday morning. “And then there’s also the coordination with provincial programs that could stack those incentives and hopefully help market a loan program. So the coordination with the jurisdictions that are running the majority of the energy efficiency programs right now is quite key.”

But Haley echoed Torrie’s concern that the design of the program, and the strategic thought behind it, will be even more important than the dollars.

“Policy-makers still often think about the solution to energy efficiency being a financial problem, where there are small policy interventions like a loan and a grant and then we’re done,” Haley explained. Whereas really, where the innovation needs to come in is in creating new business models that make retrofitting much more streamlined, much faster, much deeper, then coupling that with a mix of financing and logistics. It means understanding what changes when we do energy efficiency at large scale, and therefore can develop economies of scale.”

While $5,000 grant per family is “politically enticing,” he added, it “isn’t an agenda to target the large-scale, society-wide, at-scale benefits of energy efficiency.”

At the same time, Haley held out hope that “this was only a fiscal statement,” when big program announcements are usually reserved for a full budget. So for now, “at least there’s something, and the energy efficiency sector can start planning.” With the actual 2021 federal budget just a few months away, he added, “it’s really incumbent on the energy efficiency and climate change communities to say this is a useful addition to the policy mix, but also send the message that a climate action plan needs much larger-scale retrofits.”