With each year, our built environment faces increased pressure from climate change and an ever-greater frequency of floods, extreme heat and smoke pollution.
These trends will continue squeezing lower-income households the hardest because they are more likely to live in riskier areas and are less able to afford resilience-enhancing retrofits.
The 2024 federal budget contains a new greener homes affordability program and complementary measures with potential to support retrofits for lower-income households. It is a welcome step, but the promised funding falls short of what’s needed, write Abigail Jackson, research associate at the Institute for Research on Public Policy, and Brendan Haley, policy research director at Efficiency Canada, in a post for IRPP’s Policy Options.
The two authors say the government should embrace a four-point approach to make energy efficiency work for low-income Canadians: working with local partners rather than imposing a one-size-fits-all plan; ensuring seamless integration with provincial, territorial, and local programs; empowering renters; and creating predictability for the retrofit market.
Breaking Down the Budget
The new greener homes affordability program is a significant step for low-income energy efficiency, Jackson and Haley say. It is well-aligned with recommendations put forward by the Affordability Action Council, a non-partisan collaboration of diverse policy experts and community leaders from across the country.
The program will fund direct installations of energy retrofits for low- to median-income households, with C$800 million allocated over five years, starting in 2025.
Targeted support is critical for lower-income households because they face some of the greatest barriers to accessing retrofits. Between 30 and 60% of very low-income households experience energy poverty, depending on the definition used. Yet, until now, Canada hasn’t had a national energefficiency program to help them.
The new greener homes affordability program will include renters—a welcome development given that 62% of low-income families are renters and rental households at all income levels are growing more than twice as fast as householders who own their homes.
The program will also be co-delivered with provincial and territorial partners, which means the federal government can leverage and amplify work already being done on the ground.
Other budget items could complement the new program, including $73.5 million to improve energy efficiency tools that will enable better tracking of energy data and retrofit savings projections, as well as $30 million to develop a national approach to labelling homes with their energy usage levels so that more households can consider energy costs in their housing decisions.
A new tenant protection fund also received $15 million, adding substance to the promise of a Canadian Renters’ Bill of Rights.
The new fund will provide advocacy services and information for renters, which could be used to ensure tenants who participate in the energy retrofit program benefit from lower bills and better housing, while being protected against higher rents and eviction.
An Insufficient Investment in Our Future
But despite these positive strides, the funding allocated to retrofit-related measures in the budget not only falls short of the investment needed but actually represents a cut, paling in comparison to the $2.6 billion originally invested in the Canada Greener Homes initiative.
The Affordability Action Council recommended the government aim to retrofit around 100,000 low-income homes per year, representing just one-fifth of the total building target proposed in the Green Buildings Strategy discussion paper.
Yet the $800 million in funding over five years ($160 million per year) allocated to the new program is woefully incapable of achieving even that modest objective.
If each retrofit costs about $11,000 (the Canadian equivalent of what the U.S. Weatherization Assistance Program allocates per unit), that’s enough funding for only about 14,545 homes a year. That doesn’t even account for the spending that will go into up-front program design and delivery.
Even if the funding is matched by provincial and territorial partners, the number of homes that could be retrofitted will fall far short of what the Affordability Action Council recommended.
Although the level of funding is inadequate for the scale of the problem, there is still an opportunity to make this program effective and durable over the long run.
As the federal government considers how to design and deliver the new low-to-median income retrofit program, here are four principles based on Affordability Action Council recommendations.
1. Develop and Enhance Local Energy Efficiency Programs
The new program should allow local partners to design and deliver their services in ways that work best for them. Rather than enforcing a one-size-fits-all model, there should b different options for local partners seeking to develop new programs or scale up existing ones.
The new program should account for the up-front costs associated with program design and should deliver support for local partners accordingly. It could also complement local programs by connecting them with referral partners and education partners where appropriate.
The federal government should allow expanded eligibility for existing low-income programs to median income levels to serve more people, but avoid requiring expansions that would force local programs to retool in ways that don’t fit local contexts.
2. Streamline Application and Administrative Processes
Federal, provincial, territorial, and local incentives should be seamlessly integrated. The federal government should focus on integrating its systems with existing low-income energy efficiency initiatives. As well, federal funds should enable (but not require) programs to expand the number of applicants reached.
To reduce administrative burdens and better target vulnerable households, the new program should also allow for cross-eligibility with other social assistance services. Other barriers can be further reduced by providing applicants with support services and user-friendly application forms translated into local languages.
3. Empower Renters and Provide Them with Adequate Support
Tenant rights must be embedded in the program design, including the right to maintain residence and tenure during and after a retrofit. Landlords who participatein the program should be required to sign agreements to maintain or improve affordability, similar to those used in the U.S. Weatherization Assistance Program.
There should be a clear referral pathway between the new Rental Protection Fund and the Greener Homes Affordability Program.
4. Create a Predictable Retrofit Market
The federal government should work with local delivery partners to streamline project aggregation and bulk ordering for retrofits, creating predictable project streams for suppliers while lowering costs.
To establish long-term predictability for the retrofit market, the program should be permanent, like its U.S. counterpart, with long-term and stable funding. The government must avoid prematurely ending the program, which could throw the retrofit market into turmoil.
To make the most of the federal budget’s funding for low-income energy efficiency and set up the Greener Homes Affordability Program for long-term success, it will be important for the government to deliver a well-designed program.
No one should be in poverty because of their energy bill, and everyone should have easy and affordable access to energy efficiency as we build a net-zero emissions economy. The new national energy efficiency program for low-income Canadians should be a basic pillar of a climate strategy that enhances affordability.
This post was originally published by Policy Options under a Creative Commons/No Derivatives Licence.
