The recent federal budget identifies the climate crisis as a challenge as large as the COVID-19 pandemic. This is a critical national opportunity for policy-makers across levels of government to develop integrated strategies to fund a resilient economic recovery that creates good, green jobs and more sustainable growth for all Canadians.
Our collective future depends on the efforts we take now to reduce greenhouse gases (GHGs) in our homes, workplaces and the wider economy. The scientific urgency is clear: the Intergovernmental Panel on Climate Change announced in 2018 that unless developed countries like Canada take ambitious efforts to halve their greenhouse gas emissions over the next nine years, it will be all but impossible to reduce global GHG emissions to net zero by 2050 — the scientific target that parties to the Paris Accord agree is necessary for averting a two-degree rise above global average temperatures, and consequently global climate chaos. Failing to act will mean a warmer, wilder future with widespread societal inequities assuring incredible harm to vulnerable populations at home and abroad, for generations to come. The time to act is now.
A key opportunity for Canada to pursue climate action is through policies that support low-carbon building retrofits at the local scale. Not only does building retrofitting reduce GHG emissions, it also creates quality job opportunities at a key moment for our national and local post-pandemic economic recovery efforts.
As the on-the-ground service providers for Canadians, municipalities have a large role to play in helping homeowners and businesses reduce emissions, but they will need support from Canadian and provincial governments to deliver on their potential.
An inclusive approach to emissions reductions
Home energy use constitutes about a tenth of Canada’s carbon footprint. Simple measures such as improving building insulation, replacing leaky windows and doors and installing low-carbon, efficient sources of heating and cooling can allow homeowners, businesses and communities to take immediate action to reduce climate-changing GHGs. Improving our energy efficiency through low-carbon building retrofits can reduce our reliance on the costly, polluting fossil fuels we use to heat our homes.
Retrofitting actions also have benefits across supply chains, creating new jobs upstream in building supplies and manufacturing, through innovation in low-carbon heating and cooling solutions that can drive productivity in communities suffering high levels of unemployment and poverty.
Efficiency Canada estimates that for Canada to get on a path to net zero by 2050, building retrofits will need to occur at a rate of three to five per cent a year until 2050. Canadian retrofit activity is currently estimated to be well under one per cent a year. There is clearly room to grow, and the pandemic recovery presents a once-in-a-lifetime window of opportunity to do that.
The federal budget promised one million free energy audits and up to 700,000 grants valued at up to $5,000 for green home retrofits, as well as $4.4 billion over five years to provide interest-free loans of up to $40,000 through the CMHC for home energy retrofits. To get the most out of this spending, policy-makers should pursue strategic governance collaborations to support inclusive approaches to financing for retrofits. For example, providing easily accessible, one-window financing services for Canadian retrofit providers, homeowners and businesses to access a stacked envelope of inter-governmental retrofit financing (e.g. retrofit rebates, incentives, grants, loans) may help to overcome the capacity barriers that have been obstructing retrofit program uptake.
The budget also proposes a dedicated stream of deep retrofit funding to “support low-income homeowners and rental properties serving low-income renters, including cooperatives and not-for-profit owned housing.” This is significant: According to the Canadian Urban Sustainability Practitioners network, approximately 20 per cent of Canadian households, or one in five Canadians, experiences energy poverty — meaning they struggle to affordably heat and cool their homes and power their lights and appliances. Energy poverty occurs in both rural and urban communities. If Canadian building owners pass the costs of retrofitting on to their tenants in the form of higher utility bills, it may reduce emissions, but it won’t help those facing energy poverty.
Canada needs more strategic, inter-governmental collaborations and integrated, transitional policy measures that recognize the potential for adverse consequences of green transition strategies on individuals and communities — such as increased costs for low-income homeowners and particularly renters. Careful policy designs should include tailored financing measures, such as subsidies, to support inclusivity in climate actions at the household and community scale, while minimizing the economic impacts of green transitions for homeowners and renters.
Municipalities have a role to play
Equitable pathways are needed to achieve a just, inclusive sustainable economy at the local scale. As the on-the-ground service providers for Canadians, municipalities have a large role to play in helping homeowners and businesses reduce emissions, but they will need support from Canadian and provincial governments to deliver on their potential.
For example, municipalities can design innovative retrofit financing programs to leverage federal support for retrofits for a wide range of citizens through broad-based, inclusive participation strategies that ensure the benefits of the green recovery are distributed equitably. Higher levels of government can support municipalities with inclusive policy support for retrofit planning and green financing, while offering local and regional leadership that builds nuanced, collaborative community approaches and regional capacities for climate action planning. This can help serve the contextual retrofitting needs of municipalities, while spurring local economic developments that leverage green retrofit finance to provide stimulus for pandemic economic recovery and green jobs for the workers who carry out the retrofits.
One proven municipal mechanism for approaching integrated GHG and poverty-reduction efforts at the local level is the use of municipal Local Improvement Charges (LIC), also known as Property Assessed Clean Energy (PACE) financing, to provide low- or no-interest loans to property owners to retrofit homes and reduce emissions. These loans are affixed to property taxes, providing upfront capital financing for emission reductions for homes and businesses through a guaranteed funding stream to finance a wide range of climate actions, including efficiency upgrades and low-carbon retrofits.
Acting on the climate emergency federally, provincially and locally requires integrated, multi-stakeholder approaches to implement innovative, inclusive and local policies and programs to reduce emissions and build resilience.
PACE/ LIC policy strategies can also use an inclusivity lens to develop and implement sustainable GHG emissions reductions strategies for a wide variety of participants, including low-income residents, renters and equity-seeking populations. Halifax and municipalities throughout Nova Scotia have been leaders in this area since 2010, with municipal and regional programs that provide inclusive financing for low-income homeowners and renters looking to do retrofits that reduce energy costs and emissions at the same time.
Halifax’s Solar City is Canada’s first well-established PACE program. The program evolved quickly and organically due to provincial, municipal and community appetite for saving costs on home hot-water heating through oil fuel substitution. Solar City uses locally manufactured solar thermal panels as a low-carbon alternative for home water heating, leveraging local manufacturing capacity for retrofits. Homeowners and building operators are provided upfront capital financing to engage in building retrofits, with the low-interest loan pay back affixed to the property tax (not the individual owner) for amortization over time. The loan cost is often exceeded by the energy savings accrued, thus adding value to the property due to low-carbon, cost-saving retrofits.
The Solar City program has contributed to a reduction of GHGs through the adoption of renewable energy. It also exemplifies how to provide reliable financing to support green economic development, while developing retrofit trades jobs in the community and creating accessible financing incentives that allow homeowners to save on energy costs.
Targeted federal government funding and policy incentives for retrofitting and emissions reductions can further leverage PACE/LIC programs like Solar City, by aiming to support widespread reductions of Canadian households’ and communities’ reliance on fossil fuels. Developing one-window, third-party administrators that can help homeowners and businesses access the stacked envelope of inter-governmental green retrofit funding solutions will free municipalities from the obligations of program delivery, while helping building owners access more financing opportunities for retrofitting and creating good-paying jobs for contractors.
According to an American PACE administrator in California, where the concept originated: “You need to make PACE programs easily accessible and simple with an education component to ensure constituents understand the risks and benefits of program participation, and that they are also aware of energy savings and broader equity and climate justice benefits.”
Climate change is challenging governments to advance novel, integrated solutions for green retrofit financing and action to reduce energy usage and costs. Acting on the climate emergency federally, provincially and locally requires integrated, multi-stakeholder approaches to implement innovative, inclusive and local policies and programs to reduce emissions and build resilience.
Moving forward, municipal climate action policy, planning and programs can leverage federal retrofit loan monies and ambitiously aim to develop co-beneficial home and workplace retrofit programs and financing solutions for a wide range of citizens. They can do this through broad-based, inclusive participation strategies that ensure equitable distribution of climate justice co-benefits in the low-carbon energy transition and COVID-19 green economic recovery.
Canadian municipalities need greater support for policy innovation and building collaborative community capacities for climate action planning from higher government leadership. They also need to use equity lenses to develop green financing policies and programs that serve a diversity of homeowner needs and opportunities for pursuing energy projects and other potential sustainability interventions to prepare for climate change at the property or neighbourhood levels.
Brennan Vogel teaches Geography and Social Justice and Peace Studies as a contract Assistant Professor at King’s University College, and is founder and director of CLEAR (Co-Laboratory for Energy and Adaptation Research).
