The feds deliver (limited) support for low-income energy efficiency

New federal funding aims to address climate change and affordability, but is it sufficient?

Brendan Haley

Director of Policy Research, Efficiency Canada

Abhi Kantamneni

Research Associate, Efficiency Canada

September 21, 2022

Blogs | Low-Income Energy Efficiency | News

  • New federal funding can help low-income Canadians switch from oil-heating to more efficient and low-carbon heat-pumps.
  • While it addresses several climate and affordability gaps in the federal energy efficiency strategy, it still leaves most low-income Canadians behind.
  • We need all low-income Canadians to have access to energy efficiency — renters and homeowners in all regions, using all types of fuel.

    In September, the Minister of Environment and Climate Change,  Steven Guilbeault, announced $250 M in federal funding to help low-income Canadians switch from oil to efficient heat pumps — a major breakthrough in federal energy efficiency policy.  

    Up to now, the federal government has not recognized that a specific and targeted approach is needed to deliver energy efficiency to low-income Canadians. The Low Carbon Economy Fund (LCEF) will invest approximately  $62.5 M a year for the next 4 years. For context, all provinces combined spent roughly $100 M on low-income efficiency last year. 

    A significant portion of this new funding will be directed towards Atlantic Canada. Last year, provinces in Atlantic Canada spent $23 M on low-income energy efficiency. This federal initiative will earmark an additional $30 M on average every year for Atlantic Canada.

    Households in Atlantic Canada spend more on oil for heating – both a percentage of total energy expenditure and as absolute values – relative to the rest of Canada. Energy poverty is also twice as prevalent in Atlantic Canada compared to the rest of the country1, with Atlantic households spending a greater amount of money as well as a greater percentage of their incomes on meeting their home energy needs2.

      Household energy expenditure by fuel type by province. Source: Canada Energy Regulator Market Snapshot

    Gaps Addressed: 

    This new funding announcement is in line with many of the federal low-income energy efficiency recommendations we made in our Efficiency For All report:
    1. No-cost, turnkey upgrades: Low-income Canadians cannot pay the up-front costs necessary for energy efficiency programs or afford to take on the debt required to access incentives, such as those available through the Greener Homes Program. In the announcement, MP Kody Blois noted this up-front cost issue as a barrier for low-income families in switching to heat-pumps.
    2. Fuel-switching: Existing programs are siloed by fuel-type, and switching to zero-carbon ready highly efficient heating systems (e.g., electric or hybrid heat pumps) is not a widespread standard feature in any program, particularly when such opportunities would reduce overall energy costs and lift more households out of energy poverty. This initiative will help low-income households switch from fossil fuels to low-carbon and higher-efficiency heat-pumps.
    3. Leverage delivery capacity of existing programs – There are existing low-income energy efficiency programs with delivery capabilities, yet they are constrained by provincial governance and policy objectives that incentivize achieving shallow measures over a large number of households, rather than reducing energy poverty or eliminating emissions. This federal funding  expands the scale and scope of existing provincial programs.

    Most low-income Canadians still left behind: 

    While this initiative addresses several climate and affordability gaps, it still leaves most low-income Canadians behind:

      1. Households heating with other fuels: A vast majority of low-income Canadians that heat their homes with natural gas and electricity are left out of federal energy efficiency investments that can save on energy costs and make lives more affordable. Now that the federal government recognizes a specific approach is needed to deliver energy efficiency to low-income households, why should it be restricted to those that heat with one type of fuel, targeted to one region of the country. Shouldn’t all low-income Canadians be able to access energy efficiency? 
      2. Whole-home retrofits: It is not clear from the announcement if the funding will include support for other home energy efficiency upgrades.  For instance, envelope upgrades deliver comfort, health and safety benefits and will make sure those heat pumps are properly sized and function properly. A federal government with a net-zero emission and poverty reduction objectives should also include insulation and air-sealing in addition to switching mechanical systems (heat pumps).
      3. Health and safety upgrades: Existing programs do not have a mandate to address remedial health and safety issues in homes such as mold removal or structural upgrades, even if such measures may enable future climate and affordability upgrades. It is not clear from the announcement if a portion of the funding can be used to provide health, safety and structural upgrades that make homes electrification ready.

    Overall, the level of funding in this announcement is small in comparison to the challenge of meeting Canada’s net-zero emission goal and lifting households out of energy poverty. 

    Public funding for low-income energy efficiency is critical because households themselves cannot share the upgrade costs and most existing programs can only support shallow envelope upgrades because of restrictive cost-benefit tests. 

    We still need “efficiency for all” 

    It’s great to see the federal government making low-income energy efficiency part of their climate and affordability agenda. Next we need all low-income Canadians to have access to energy efficiency — renters and homeowners in all regions, using all types of fuel. 

    The federal government is already investing approximately $2.6 billion into upgrades for middle to upper income Canadians through the Greener Homes program. An investment of at least that amount into low-income energy efficiency seems appropriate to help lower-income Canadians who can benefit the most from energy efficiency upgrades.

    There is strong support for low-income energy efficiency from people across the country. But to turn it into a policy priority, your MP needs to hear it from you. Take action today by emailing your MP. Ask them to ensure that the elimination of energy poverty is included in federal climate and affordability initiatives.

    Stay up to date on our low income energy efficiency work! Join our mailing list.

    [1] See: Riva, Mylene, et al. “Energy poverty in Canada: Prevalence, social and spatial distribution, and implications for research and policy.” Energy Research & Social Science 81 (2021): 102237.

    [2] See: Das, Runa R., Mari Martiskainen, and Grace Li. “Quantifying the prevalence of energy poverty across Canada: Estimating domestic energy burden using an expenditures approach.” The Canadian Geographer/Le Géographe canadien (2022).


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