I'm the senior director of an energy efficiency policy think tank that's based out of Carleton University, where I'm also an adjunct professor.
I want to present to you today three policies to make home retrofits available to everyone at the speed and scale required.
To introduce my first solution, I want to say home retrofits are a lot more than just a challenge of delivering a lower-interest loan. The problem is often that we put too much responsibility and too much risk on customers, who must often navigate quite a complex market, often with predatory lenders or bad advice.
We also don't give customers the solutions they need at the right time. A critical moment is, let's say, if your furnace breaks down. You're not going to replace that furnace with a heat pump unless the financing is available on that same day and the customer trusts that it's the right solution for them. Previous zero-interest loans couldn't be accessed during those emergencies. The customer also really didn't have much recourse if the equipment wasn't installed properly or if the work was not effective.
To make retrofits work, we need delivery platforms that specialize in financing the most effective solutions at the right time, delivered by someone that the customer can trust and that can stand behind their work. Some examples of these platforms could be utility on-bill financing or financial technology companies partnering with contractors that can provide financing at the point of sale.
My first recommendation is that the federal government provide low-cost capital to a variety of different delivery platforms. I would call it a national home energy performance fund. It would learn from examples like Australia's home energy upgrades fund, green banks and other public banks.
A key benefit of this approach is more bang for the federal buck, because the platforms can blend low-cost public capital with capital from other investors, also using platforms that can solve these non-financial barriers around trust, convenience and performance. This means that you don't necessarily need a large interest rate subsidy, which would avoid competing with private capital and enable public capital to be recycled into more retrofits.
Again, this isn't about just low-cost finance that could just subsidize banks temporarily. Instead, it's about transforming markets to work for customers and high-value contractors. A national fund can meet that goal by setting requirements for the use of its capital. It can refuse financing to HVAC contractors that give bad advice, such as that a heat pump doesn't work. We've heard that. It can also offer better terms to business models that prioritize customer fairness, accountability for performance and building science-based advice that can support high-road business models that can give them a competitive advantage over predatory lenders or laggards.
These platforms will work well, I think, for middle- and upper-income households. However, when it comes to low-income households, they don't need to take on more debt. They need lower bills right now. That's why the greener homes affordability program supports no-cost, direct-install retrofits.
My second recommendation, given that the government has committed to retrofitting one million homes, is that we should dedicate 20% of that budget to expanding retrofit programs for low-income and indigenous communities.
My third recommendation is to change the retrofit process to increase its speed, scale and performance. Right now, how we retrofit is quite bespoke. We could, instead, retrofit entire communities, retrofit groups of buildings, develop economies of scale and deploy what we're calling modernized methods of construction. There are two programs that are supposed to be working on this. These are the greener neighbourhoods pilot project and the deep retrofit accelerator initiative. Both of them are more short-term pilot projects that are running out of money. I would suggest giving them much clearer, mission-oriented objectives to improve retrofit productivity, adopt modern methods of construction and support Canadian businesses and technologies.
That's a three-point plan, if you will, to make home retrofits work for everyone at the pace and scale required.
Thanks for your consideration.