Energy efficiency is highly desirable for Canadian homeowners. In 2022, Clean Air Partnership surveyed 1005 Canadians who were considering renovations. The survey revealed that the vast majority of Canadians place considerable economic and personal value on energy efficiency. 77% of survey respondents said they would pay a premium for an energy efficient home, and 72% of respondents said they would pay for an energy audit to determine their home's efficiency. This is reflected in the fact that the Natural Resources Canada Greener Homes Grants, which were due to last until 2027, ended in early 2024 due to oversubscription.
Municipal energy efficiency retrofit programs are an essential cornerstone required if we are to meet our community energy efficiency and energy poverty reduction goals. Despite being enabled for over a decade, Ontario residential energy efficiency retrofit programs struggle in meeting the success in other jurisdictions. For example, in the USA and Nova Scotia, these programs thrive, serving >200,000 homes with $6.8bn in upgrades. Programs in these jurisdictions determine their own capitalization and repayment processes, allowing for 3rd party delivery, circumventing municipal hesitance to 'act as a bank' and deploy scarce staff resources.
In Ontario these programs are enabled through O.Reg 586/06 under the Municipal Act, which allows for the municipality to issue a loan to a homeowner for the completion of energy efficiency works on the home. These loans are recouped through the imposition of a local improvement charge (LIC) on the property. Should the property be sold, the LIC passes to the new homeowner. This ensures that the costs of installing energy efficiency measures are evenly distributed to a new homeowner should the house be sold as the new beneficiary of the measures.
In Ontario, the Municipal Act requires that LIC programs follow municipal tax collection processes, meaning 3rd parties cannot truly deliver energy efficiency programs, must follow the municipal property tax cycle and are unable to capitalize programs, disburse homeowner loans, and recoup homeowner loan payments.
Municipalities would need to request amendments to the O.Reg 586/06 under the Municipal Act to allow for greater 3rd party delivery of LIC financing programs. The request speaks directly to the current provincial government focus on reducing red tape to help Ontarians save money and operate businesses efficiently. For Ontario homeowners, reducing red tape would simplify access to retrofit programs to help them improve their properties. Programs would not be administered one municipality at a time, with larger province wide program offerings having greater visibility and market presence. For Ontario homeowners, improving their buildings would mean net positive cash flows from the utility savings and long payback periods on the retrofit loans, reducing exposure to fuel cost increases. For rural homeowners currently using fuel oil and propane, the pay back would be immediate and essential at a time of increasing fuel costs and carbon taxes.
For business, this change would allow for greater third-party delivery of energy efficiency retrofit programs. This would provide direct benefit to those businesses involved in administering them and create indirect economic benefits for the trades required to retrofit homes and install efficiency measures, including contractors, HVAC trades, electricians, insulators, and many others. For lenders, because retrofit loans are secured by a priority lien, lenders can better serve clients and provide a new avenue for moving capital into the marketplace.
For municipalities, changing the Municipal Act requirement that LIC repayments must follow the municipal tax process will reduce red tape requiring direct municipal involvement in delivery of these programs, reducing burden on municipal staff to deliver them. This will also allow smaller rural municipalities with limited staff resources to deliver these programs, creating rural economic development opportunities, and it will streamline the process for larger municipalities. This will create jobs, increase property values, and help municipalities retain workers and businesses.