The Carney government is just a few months away from running out of funds for a signature home retrofit loan program that could be a cornerstone of its effort to cut energy costs and climate pollution and transform the way Canadian businesses operate.
Efficiency Canada is urging the government to recapitalize the Greener Homes Loan Program in its fall budget and turn it into a permanent statutory program, warning that the $600-million top-up it received in the December, 2024 Fall Economic Statement will run out by mid-November in the absence of new funding.
The program offers 10-year, interest-free loans between $5,000 and $40,000 to help cover home retrofit costs like insulation, air sealing, new windows and doors, smart thermostats, efficient space and water heaters, solar panels and inverters, and climate resilience improvements.
“This loan program was part of the promise that has been made to Canadians across two different prime ministers now and on multiple occasions to ensure middle class Canadians have an opportunity to reduce their greenhouse gas emissions and energy costs,” the organization’s senior director of policy strategy, Brendan Haley, told The Energy Mix.
“The skilled trades sector is watching, homeowners are waiting, and contractors who’ve built their businesses around this program shouldn’t have to wonder if they’ll have work next year,” Efficiency Canada added in a LinkedIn post this week.
Running Out of Cash
The concern that the program will soon run out of funds traces back to a July 10 Access to Information request from government relations consultant Fernando Melo, text of which The Mix has seen, asking the Canada Mortgage and Housing Corporation (CMHC) the total value of loans the program had approved to date. “We have not had an update on the usage rate of this program in quite some time, and understanding the remaining duration is critical for the stability of energy retrofit companies and the general public,” Melo wrote.
A CMHC official responded that the program had committed to 115,751 loans under the wider, $2.78-billion program, including 6,052 that used up $155.3 million of the $600-million top-up, as of June 15. The agency estimated that new loans were being approved at a rate of 3,500 per month.
Based on those numbers, Efficiency Canada says the loan program risks running out of cash by about mid-November.
“It definitely shows that there’s an interest in the loan program, and I don’t think that interest should be unexpected,” Haley said, after federal loans and grants boosted the country’s annual energy retrofit rate from 0.5% to 1.7% of the residential building stock between 2020 and 2024.
In a pre-budget submission [pdf] that cites the Carney government’s own policy priorities as a call to action, Efficiency Canada urges Ottawa to:
• “Maintain and evolve” the Canada Greener Homes Loan program with long-term funding, beginning with a $4.3-billion infusion over four years;
• Prepare to develop a Canadian version of the ENERGY STAR program and to market it internationally if the Trump administration shuts down the widely-acclaimed U.S. version;
• Increase funding for low-income energy efficiency to $2 billion under the Canada Greener Homes Affordability Program;
• Use Canadian technologies and expertise to double the pace of energy efficiency improvements—and treat the work as a nation-building project.
The ‘Business Transformation’ Carney Craves
“It’s a great time in the government’s mandate to rethink a program like this,” Haley told The Mix. “The Liberal Party platform had a very firm commitment to fund home retrofits and lower energy bills. Mark Carney’s leadership platform, when he promised to get rid of the consumer carbon tax, included some quite clear promises to have both loans and grants for home energy retrofits. It’s quite consistent with the government’s stated mandate priorities around affordability and careers in the skilled trades. And it is a loan program, with the repayment booked as an asset in the government’s balance sheet, so it meets the criterion of not having a significant operational spending cost for the government.”
With the Carney government focused on business transformation, he added, a revamped energy retrofit initiative would enable contractors to boost productivity and introduce more innovative business models, while offering consumers a simpler retrofit process that delivers the funding they need, when they need it. That might mean an efficient, fast-turnaround funding mechanism to help homeowners out when a furnace or air conditioner breaks down, or a staged, co-financed plan to coordinate energy efficiency improvements with other home upgrades.
Either way, Haley said, “we can deliver more value for both the consumer and those skilled trade-oriented businesses, and that should really be of interest to the current government.”
No More Boom and Bust
But it wouldn’t be the first time a federal energy retrofit program ran out of funds ahead of schedule. In May 2021, Efficiency Canada Executive Director Corey Diamond was at the table with Trudeau-era cabinet ministers Seamus O’Regan and Carla Qualtrough when they announced a $10-million fund to train 2,000 new energy auditors across the country.
“Energy efficiency policies and investment are the right path,” Diamond said at the time. “It’s impossible for Canada to meet its international climate commitments without reducing the amount of energy waste across the country.” He added that activity would create hundreds of thousands of jobs, while helping out “the 22% of Canadians struggling to pay their energy bills every month.”
By February 2024, industry sources were warning of “massive fallout” as Natural Resources Canada prepared to wind down a wildly popular Greener Homes grant program that ran through its available funding so quickly that it was deemed too successful to continue. Less than a month later, advocates were urging the government to salvage the grant, with the home retrofit sector in chaos and consumers abandoning ship.
“I can’t recall another instance where the government ended a program because it was too successful and we had to ask them to renew it,” Environmental Defence Programs Director Keith Brooks told The Mix at the time.
“Oh, sure, the layoffs have started,” said Kai Millyard, EnerGuide service organization manager at Green Communities Canada. “A lot of people had bookings to enrol in the program, but almost all of them cancelled because the incentive matters. It works. It makes a difference in enabling people to go ahead and do retrofitting.”
That’s not an experience the Carney government should want to repeat, Haley said this week.
“A boom and bust cycle for a program like this is incredibly disruptive,” he said. “It can kill businesses. It can destroy the careers of the skilled trades the government says are one of its top priorities. It can reduce the productivity of our country because it creates incentives for Canadians to make unproductive decisions by chasing government support, rather than undertaking retrofits in a planned way that saves them the most energy at the lowest cost.”
The $600-million top-up saved the Greener Homes Loan Program from that kind of disruption in the run-up to this year’s federal election, he said. Now, “it’s important to remember the history here. When the grant program was abruptly cancelled, the loan program was presented as the main avenue for middle-income Canadians to continue to reduce their greenhouse gas emissions and costs. When the federal government took the carbon price off oil, the loan program was the key to their messaging about the supports they would offer Canadians. Then when Carney promised to get rid of the consumer carbon tax, it was again the grants and loans for home energy efficiency that were put up front as the new policy.”
The best way to make good on those provinces would be to fund energy retrofits as a “statutory program that is available when Canadians want it,” he said. “It needs to go beyond a project stage and be automatically funded as a servicethat is going to be consistently available for Canadians.”
Mitchell Beer is publisher of The Energy Mix, a non-profit community news site and e-digest on climate change, energy and the shift off carbon. This article first appeared on The Energy Mix. Read the original article here.