Natural Resources Committee on May 7th, 2007

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

I get the feeling that there is an urgent need to act, but that the federal government has done very little. There are a dozen Equilibrium homes on display across Canada. That is nowhere near enough to convince Canadians to go to see them. For example, if all the energy-efficient showhomes are in Verdun, Hudson or other metropolitan areas, that is of no use to somebody in the Gaspé region. They are not accessible to everybody.

I would like to make another comment. Mr. Stewart, would you not agree that the Canadian government has not done enough to promote the construction of energy-efficient houses, given that they can contribute to reducing greenhouse gases? There is an urgent need to build more of this sort of housing.

[Douglas Stewart]

You have to start somewhere. I think 12 homes is a big step forward, considering that before there were virtually none. We're hoping to publicize the lessons learned from these 12 homes across the country. We're hoping that people will begin to demand these houses and that builders in other parts of the country will also start to build them.

[The Chair, Conservative, Lee Richardson]

Just for clarity, all the projects were not one home. The one in Alberta is 25 houses, isn't it?

[Simon Knight, Climate Change Central]

There are four in Alberta that are being built as part of the EQuilibrium project--one in Edmonton, two in Red Deer, and one in Calgary.

I'd like to point out, though, that when we originally approached CMHC with the proposal for net-zero energy homes, it was actually to talk about a three-phased approach. We originally did a small number of homes to prove the viability of the homes to the government and to future funders. We talked about a larger deployment of 150 homes on a neighbourhood scale and then a larger 1,500 home deployment where we're talking about entire communities. We wanted to build up the confidence in the builders, in the people who will be financing these sorts of homes, and in the public who would be buying them, that these are viable and very attractive homes to move into. We wanted a phased approach, so we actually looked at using the funding in a judicious manner.

[The Chair, Conservative, Lee Richardson]

Thank you.

Ms. Bell.

[Catherine Bell, NDP, Vancouver Island North, BC]

Thank you. It's a very interesting topic.

I have an initial question for Mr. Stewart.

On the EQuilibrium homes, you said a total of 72 teams responded and you picked the 12 teams. I notice that none of them is in British Columbia, if I'm reading this form correctly. They're all across Canada, but not in British Columbia. I'm just wondering, did no one apply, or was there a problem?

[Douglas Stewart]

Yes, in fact, we did have applicants from British Columbia. I should point out that we, as part of the judging process, convened a committee of experts of various professions from across the country. All the applicants were put through a very rigorous judging process, and the ones that were the best were chosen. Unfortunately, one from British Columbia did not get chosen.

It is our intention, after we get the 12 homes built, to make a special effort to try to cover those regions of the country that have not been covered by a demonstration.

[Catherine Bell, NDP, Vancouver Island North, BC]

Yes, and there are other provinces missing as well—

[Douglas Stewart]

Yes.

[Catherine Bell, NDP, Vancouver Island North, BC]

—but I'm from B.C., so I had to ask. Thank you.

We know from some of the information you've given us that, of course, energy efficient homes are going to save money on several things, but it seems pretty slow progress. There are not many being built. I know there's construction happening in probably everybody's community around this table, and I'm wondering how much of that is being built energy efficiently.

I know R-2000 is great, but there are so many more things you can do with solar panels and the situation of your home, with geothermal and wind energy, with all those things, but by and large, it's more expensive. Solar panels aren't cheap. It's an additional cost when you're building your home or renovating, and most average Canadians really can't afford it.

The small incentives don't seem like much. Is there any other initiative or incentive you could suggest that would get more people involved in building and renovating to make their homes more energy efficient?

[Gordon Shields]

As suggested, some incentives could include what we see in Ontario right now. Again, this is going back to a provincial jurisdiction, but they have the standard offer program, which is a feed-in tariff, and you have individual homeowners who are able to place or install photovoltaic panels in their rooftop, tap into the grid, and feed into the grid the excess energy they produce. That's an excellent program where people are rewarded with 42¢ a kilowatt hour. If we could see a similar program on a national scale or individually in each province, that would be an enormous contributor to helping support that technology.

That said, sometimes it's hard to look at the house as a whole, but that's the way we have to see the home now, in the future: the whole house. It's a system where, if done properly at the beginning, all the technologies are working together at the lowest cost possible and you lower the need for incentives for that home.

So if you could find a way to lower the premium, which is roughly $3,000 to $5,000 for an energy efficient home, an R-2000 home, right now, and lower the premium of an installation of a PV, for example, or geoexchange, with an incentive like the standard offer program or you could roll it into a green mortgage amortized over 25 years.... Those are ideas, right there, but that's somewhat dependent on the provincial jurisdictions.

The federal government can play a role in that, but I'd say more largely it's provincial on those kinds of incentives—the standard offer program, for example.

[Andrew Cole]

Potentially there are a couple of other ways to look at financing. Many businesses can depreciate capital assets in a certain way. It's never been considered that the house is an asset to a net production to the grid. Again, this idea of a new paradigm is that we've never considered to accelerate the depreciation on the extra capital cost to build in solar panels, to build in a wind turbine, to build in micro hydro, to upgrade the insulation, but ostensibly that could be an avenue to provide a mechanism for people to get a better return on investment. Make it a business proposition.

[Catherine Bell, NDP, Vancouver Island North, BC]

I have one quick question. In your grid, the conventional versus net-zero home, this is over just one month?

[Gordon Shields]

That was an illustration. That's a U.S. home.

[Catherine Bell, NDP, Vancouver Island North, BC]

At one point it actually is higher, and I just wondered what happened there—it's January 24.

[Gordon Shields]

Again, this is averaged out over the year where the home will be drawing or producing a net amount of energy over the year, and that's the whole thing. There are times the house will have to draw more energy than it would produce, and that's the beauty of net-zero energy. You can pull from the grid when you need to or you can send back to the grid when you have to or can. That's essentially where you have periods in the house when people have the plasma TV on, hair dryers, radios, and everything else, and then you'll see a peak.

[Catherine Bell, NDP, Vancouver Island North, BC]

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Trost.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

Whenever I hear this, that it really doesn't cost that much, it's educational, etc., I always think, how far away are we from when the market will take it on its own? I know you said it, but to put it into the most succinct points, what is the gap between what needs to be done, if this is the way we want to go, and when the market will catch on for its own energy efficient houses and demand will be there?

When I look at my own situation, I probably pay $100 over a three-month period for electricity. I've got a 1,000-square-foot condo. It doesn't seem like a whole lot for me. If it could be reduced by a certain amount, I might do certain things.

What I'm asking is, what sorts of numbers are we looking at before people will begin to take this on the market on its own, without having any GST differentials or anything like that? Financially, when does this begin to become an incentive where it's obvious for people to do it on their own?

I'll ask both of you for.

[Douglas Stewart]

I think we shouldn't underestimate the value of good information. I think if consumers knew what they could get and what they could save, there would be more demand for energy efficient housing.

Right now, the average consumer in Canada spends about $1,800 a year on residential energy. That wouldn't include automobile or travel energy. An R-2000 home probably consumes 60% of what a normal house would consume. Let's say that an R-2000 home was saving $800 a year. It probably would pay for itself in seven years or so. With energy prices rising, that payback period will be even faster.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

That's a 14% return on your investment without any real tax on it. Most people don't get that on the market, at least not on a regular basis. Again, from your research, why don't people take it up? You keep saying education, but it still doesn't click to me.

[Gordon Shields]

In part it is a market issue, where granite countertops are more important than an energy efficient house. When a builder builds the house, he generally doesn't promote that.

I live in Barrhaven, in Ottawa—and some of us know that Barrhaven is growing into what some say is a sprawling community—and we have builders putting up homes faster than you can shake a stick at. Now, I didn't hear one word about energy efficiency, but they told me about my granite countertops and they told me about the two-lane driveway. They told me everything else but. So I'm not even given the option of whether I want an upgrade to make my home energy efficient unless I ask the questions, I guess.

Unless the builders are prepared to help market these houses actively and they see a business case model to do that, it's hard for them to do it. If you have two builders effectively building up a community and one of them has maybe decided to do two or three of these homes, unless the other one sees his market decline as a result, why would he pursue it?

It's in part trying to incent the builders and to educate the consumers on where we want to go as a nation with a policy. That's part of the challenge, and it does mean transforming the marketplace; it means intervention into the marketplace on the part of government.

Markets will ultimately solve things at the end of the day, but this needs support at the front end. The United States, Asian, and European models are all out there to demonstrate that's probably the preferred path.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I have a question again about the GST proposal; it was 2.5% for the GST holiday, if I remember correctly. Now, what would that 2.5% GST reduction be on? Would it be the entire energy efficient house? Could you explain in a bit more detail what you're specifically proposing?

[Gordon Shields]

Just to be clear, I'll say 2.5% is what already comes off the house. We're suggesting that you scale it up to 3.5%, 4%, or what have you.

More importantly, say you were to look at a net-zero electrical home and the cost of what it is today to install that, at roughly between $8 and $10 a watt, plus what it takes to get a home that is R-2000 standard. That's a minimum platform to make it a smart decision to install on-site generation, because you have to have an energy efficient house, a proper building envelope, before you do this. If you make those two choices, you're looking at about a $15,000 premium on the home.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

And what size home would that be?