Mobilize Energy Efficiency Financing, Push Skills Development, Efficiency Canada Urges MP’s
Canada must mobilize private financing for energy-efficient buildings, transform markets to automatically adopt efficiency, and ramp up development of the energy efficiency work force, Efficiency Canada Executive Director Corey Diamond told the Commons Natural Resources Committee in a presentation last week.
The recommendations were based on a study the newly-formed organization released in May, which concluded that energy efficiency provisions in the pan-Canadian climate framework (PCF) will deliver household cost savings, jobs, greenhouse gas reductions, and GDP growth—but a PCF+ scenario that featured “best in class” efficiency measures would do even better.
With the committee kicking off a study of economic opportunities for energy efficiency in Canada, Diamond told members that:
- Efficiency measures in the pan-Canadian plan save the average household C$114 per year, for annual savings of $1.4 billion and cumulative savings of $40 billion between 2017 and 2030. Business and industry save $92.6 billion. In the PCF+ scenario, average household savings go to $151, average annual savings to $1.8 billion. Cumulative savings total $53 billion for households and $140.7 billion for businesses.
- The PCF’s efficiency plan adds $355 billion to the country’s GDP over 14 years, with every dollar invested producing $7 in growth, and the plan creates 118,000 jobs distributed across every region of the country. The PCF+ scenario produces $595 billion in GDP, though only $4 per $1 invested, and creates 175,000 jobs.
- While the PCF eliminates 52 megatonnes of greenhouse gas emissions per year through energy efficiency, the PCF+ plan boosts that total to 79 Mt—nearly 40% of the country’s Paris Agreement target.
Energy efficiency also helps build a more competitive, resilient economy, Diamond said, at a time when Canada uses more energy to produce a unit of GDP than the United States, the UK, France, Mexico, or South Korea.
“If you spend less on energy, that cushions businesses against unexpected costs, and it frees up dollars to invest in more productive capital improvements and human resources,” he told MPs. “Efficiency improvements also produce what are known as co-benefits, which are non-energy benefits that can boost labour productivity and even sales. Better ventilated and designed buildings increase employee satisfaction and reduce sick days. Better lighting can increase worker safety and even make products look better. These economic benefits can be much greater than the energy saved.”
In the Q&A following the presentation, Diamond and Policy Director Brendan Haley suggested the Canada Infrastructure Bank as an example of an institutional home for financing energy efficiency and distributed renewable energy. (The full committee transcript will eventually be available here.)
“Bankers are used to asking for collateral when they go on loans,” Haley said. “There’s lots of money to be made from energy efficiency investments, but it’s mostly in cash flow. We know we can provide a stream of data, we know we can provide the evidence to bankers and financiers that efficiency investments really pay off, but we need the government to lead.”
That would mean “creating a branch in the Canada Infrastructure Bank, if that’s the mechanism to be used, that’s dedicated to energy efficiency and perhaps distributed renewables. Those face very similar barriers, and will need be recognized as an asset class in their own right. What they will do is some initial de-risking, essentially working with banks and credit unions and saying “We’ll take on some of the risk of these initial investments”.
A major barrier to energy efficiency, Haley added, is that “it’s a whole bunch of little projects, whereas people like to invest in one big thing. One thing the Canada Infrastructure Bank could do is aggregate all those small energy efficiency projects into one larger financial instrument. That becomes much more appealing for the private sector to finance.”
MP Marc Serré (L-Nickel Belt) asked about the potential to accelerate the growth of energy efficiency activity in Canada. “The shift is happening now, and it’s matching the shift that’s going to continue to happen with the regulation and/or the policy signal that’s going to come,” Diamond replied. “So one of the things we always talk about is the impact of these 118,000 jobs. A portion of those jobs is going to be in the small to medium-sized, mom-and-pop type businesses in communities across Canada,” and in the building trades that will deliver the hands-on energy efficiency improvements.