Natural Resources Committee on April 15th, 2010

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. Corey.

[Mark Corey]

In fact, we're very interested in geothermal. I should say that my other job, as the chair said, is the assistant deputy minister of the earth sciences sector, which includes the Geological Survey of Canada. One of the things that we're doing in the Geological Survey of Canada right now, of course, is we're looking at how we can better map the potential. Particularly in western Canada, for example, we would have the potential for the high-temperature electricity-generating type of geothermal. There are basically four types and it goes from the high temperature down to the lower, where you have heat pumps.

We actually do have a couple of specific projects that we're working on in geothermal. One of them is in Yellowknife and the other one is in Fort Liard.

These are Mary's programs.

[The Chair, Conservative, Leon Benoit]

Ms. Preville, go ahead.

[Mary Preville]

Thank you very much.

The two specific programs that Mr. Corey referred to are actually just getting under way under our clean energy fund program. They're two of the 19 projects that were announced in January.

In the city of Yellowknife they're doing a project that will use geothermal heat from the abandoned Con mine for use within the city itself.

The second project is the community-based geothermal demonstration in a remote first nations community. That project will demonstrate how a northern community can use geothermal resources to generate electricity and heat in a first nations community.

Those are projects that are just getting under way with a high potential.

[Devinder Shory, Conservative, Calgary Northeast, AB]

If I understand it correctly, there is no program, even on a trial basis, for individual homes for a geothermal heating system or electricity production?

[Carol Buckley]

I'll take that question if that's all right, Mr. Chair.

The ecoENERGY retrofit homes program has provided financial incentives to over 7,000 homeowners to support their implementation of a geothermal heat pump system in their homes, so that program has been supporting that technology at the residential sector level.

[Devinder Shory, Conservative, Calgary Northeast, AB]

I take it that this initiative has been a success for retrofit homes programs. Is that correct?

[Carol Buckley]

Yes, I would say it's been very successful. It's reached almost 300,000 homeowners to date and paid out over $340 million in grants. That includes 7,000 homeowners who have received quite substantial grants for heat pumps.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Then it brings the question that if it is so successful, why is it not introduced for new homes?

[Carol Buckley]

The decisions were made by ministers in 2006 on how to allocate this funding suite called ecoENERGY efficiency. The decisions made at the time were to put incentives into existing homes to improve their efficiency.

The decision was not made by ministers to provide incentives for new homes, for new energy efficient homes. Some of the thinking around that has to do with the fact that only under 2% of homes are built new every year. The stock of 10 million homes is in need of improvement if we are interested in reducing the energy use of our housing stock and in reducing the greenhouse gas emissions associated with our housing stock.

If you're looking at making an intervention in the economy, there are a lot more homes that need retrofit every year than there are homes that are built new every year. So the decision at the time was to put the incentive money towards improving the efficiency of the existing stock rather than towards improving the efficiency of the new stock.

If I might, Mr. Chair, just to add to that, we have excellent instruments in place for new buildings to improve their efficiency. We have the EnerGuide rating system for new homes, which is increasing the efficiency of new homes through programs such as R-2000 and Energy Star. The efficiency of the new home is higher than it was previously.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Shory.

We'll go to Monsieur Guimond before we suspend for just a couple of minutes as we add to the panel. I think we can go another five minutes on this, on the broader issue, before we get into the ecoENERGY retrofit program for homes, specifically.

Go ahead, Monsieur Guimond, for up to five minutes.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Mr. Chair.

Good morning, I am finding this discussion very interesting. I am going to move in another direction that concerns my region. I come from eastern Quebec, more specifically from Rimouski. It is a rural region, like many regions in Quebec and in Canada. Over the last few years, with the economic, agricultural and forestry crises and the increase in energy and gas prices among other things, many farmers, forestry workers and small cooperatives have formed groups in several villages in my riding in order to look at new opportunities in agriculture and forestry. This was done with the intention of producing green energy, biofuels, etc.

As the representative from the Department of Natural Resources, are you aware of the developments that have taken place over the last few years in my area and perhaps elsewhere?

[Mark Corey]

Mr. Chair, we have invested almost $100 million in the forestry sector in order to increase production of these energy sources. Our colleague, Jim Farrell, assistant deputy minister for the forestry sector, could describe that program in more detail. We do have such programs to support the sector.

[Carol Buckley]

Thank you. I will just add a little bit to support that question.

From Natural Resources Canada's perspective, we also have the ecoENERGY for biofuels program, which supports domestic production of biofuels, which may, in fact, serve producers who come from the forestry or farming sectors. Colleagues at Agriculture and Agri-Food Canada also have a biofuels capital incentive program, which is directed at stimulating farmer participation in the production of biofuels using farming products. That's called the ecoABC program.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

That seems very interesting, but could you give me more detail on these programs so that I can see to what degree we are talking about the same subject?

[Mark Corey]

I can give you some more details and come back with more information in this regard. I have some notes here, in English.

What budget 2010 announced was the next-generation renewable power initiative. It provides $100 million over four years to support advanced clean energy technologies in the forestry sector. This builds on other programs we've been working with the Canadian Forest Service to put in place. That's probably the most recent one aimed at combining the energy and forestry industries.

Mr. Chair, we can come back and provide more information on that program, as well. I just don't have the information on that with me today.

[The Chair, Conservative, Leon Benoit]

Thank you.

Go ahead, Monsieur Guimond.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I would like to have more information. I can see as I tour my riding that there are a lot of new initiatives in the forestry sector. It seems to me that there is a lack of vision and leadership that would allow us to identify the most promising approaches and provide good programs so that we can move forward.

Is it one of your concerns, at the Department of Natural Resources, to identify, establish priorities and assess these projects so that we can stop this piecemeal approach, have a clear vision of the future and embark on the right path?

[Mark Corey]

This is what we in our department call a horizontal project. It involves the forestry sector as well as other sectors, and energy experts. I could come back with more information on the strategies being considered. After I have consulted my colleague Jim Farrell, assistant deputy minister for the forestry sector, I will be able to tell you what we are currently doing for this sector.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Witnesses will be coming to tell us about these new developments over the next few meetings.

In conclusion, what I have found as have groups from this sector is that there is too much red tape. It is discouraging for the small groups that do not have the support that is needed to fill out these forms. If you could just keep them in mind, as far as future programs are concerned, in order to make their lives easier, it would be appreciated.

[The Chair, Conservative, Leon Benoit]

Thank you.

Merci, Monsieur Guimond.

We are finished with the first hour and the first panel today. We will just shuffle things a little and add to the panel, coming back in the next hour to deal specifically with the ecoENERGY retrofit homes program.

We will suspend for two to three minutes and come back to the second hour.

[The Chair, Conservative, Leon Benoit]

Let's reconvene the meeting.

For the second hour we have Ms. Buckley and Mr. Corey back. We also have new members on the panel. We have Mr. Charles Tanguay, who is communications officer for the Union des consommateurs, and with him is Marc-Olivier Moisan-Plante, economist.

Welcome, both of you, to the panel.

We'll start in this discussion on the ecoENERGY retrofit homes program with a presentation from the department, from Ms. Buckley. Then we'll go to you, Mr. Tanguay, for your presentation, and then to the usual question period.

Go ahead, please, Ms. Buckley.

[Carol Buckley]

Thank you very much, Mr. Chair.

I would like to thank you for the opportunity to provide you with more details about our program, ecoENERGY retrofit homes. It's a welcome opportunity to discuss this program, which, as I think you heard from the first hour, is one that we feel has been very successful.

I've provided a handout with which I hope you can follow along.

There are about ten million low-rise housing units in Canada, and that's our target market for this program. Fewer than 2% of homes in Canada are built new each year, so we have a very large stock of existing homes to worry about the efficiency of their energy use. Indeed, this program is targeting the renovation of those homes so as to reduce their energy usage in order to reduce greenhouse gases and provide cost savings for Canadians on their fuel budget.

Energy efficiency in the housing sector has increased by 22% over the last decade and a half. That's pretty much due to the fact that the appliances we use are 50% more efficient than they were a decade ago, building practices are building more airtight, more efficient homes, and the furnaces we put in our homes are significantly more efficient than they were a decade and a half ago.

But with all of that, energy use in the sector has still grown by 5% in absolute terms over the last decade and half. This is due to the fact that there has been about a 30% rise in the population, so there are more homes for more Canadians, and the homes we live in are on average 10% larger than they were a decade and a half ago. Maybe a more significant impact on all of our lives is that for the things we plug into the wall—the computer equipment, the audio equipment, many things that didn't even exist a decade and a half ago—the energy use associated with those electronics has grown by 105%. So while there have been efficiency gains in this sector, so too have there been absolute increases in energy use.

I'm moving on to slide 2 now.

Hence came the introduction of the program to offer up to $5,000 in grants to homeowners to put energy efficiency retrofit in place in their homes.

It's a three-step process. The consumer calls up a certified energy adviser who has been certified by Natural Resources Canada to do evaluations in people's homes. The evaluation takes place, and the homeowner receives a list of energy efficiency measures that they could put in place in their home.

The second step is for the consumer to decide which measures they want to put into place and to do the work. They have 18 months, or until March 31, 2011—that has always been a rule of the program—to put their investments into place.

The third step in the program is for them to call back the energy evaluator, who returns to their home and does an assessment of what work was put into place. This gives the Government of Canada a credible, evidence-based program whereby we know that we're providing incentives for which the work has actually been done.

It's at this point that the homeowner would apply for the grant.

I'm moving on to the next slide here.

The program has proved very popular. The government has continued to invest. We had an original budget of $160 million for four years. It was meant to reach up to 140,000 households and reduce emissions by about 0.4 megatonnes—that's 400,000 tonnes of greenhouse gas or their equivalent. However, given the very high level of demand that the program was experiencing, the government decided in budget 2009, as part of the economic action plan, to increase the budget by $300 million. The expectation was that this addition in funding would reach as many as 200,000 additional homes and allow them to retrofit and receive a grant and reduce emissions by a further 0.8 megatonnes of greenhouse gas emissions. At the same time, the government increased the grants so that homeowners would have an extra 25% of incentive for their measures, and this helped the uptake of the program and spread the money across Canada more quickly, having a stimulus effect on those who manufacture and install energy efficiency goods and practices.

Demand for the program continued to escalate, and the government has put two more increases in budget in place: a $205-million increase and an $85-million increase, which together will reach a further 180,000 homes and reduce emissions by another 0.5 megatonnes.

In total, Mr. Chair, the program has a $745-million budget over four years to reach as many as 520,000 households. That's a nearly fivefold increase in budget.

Moving to the next slide, we've been very successful in leveraging investments from partners in the provinces and territories and in the utilities. All the provinces and territories, with the exception of Nunavut, offer complementary programs, where they provide incentives, low interest loans, and in 10 cases they also help subsidize the cost of the energy evaluation for the homeowner.

In addition, a number of utilities, such as Terasen Gas, Enbridge Gas, and BC Hydro offer their own grants, further adding to the federal dollars, and many cities do the same thing.

In thinking of the end user and how easy it is for them to apply to the program, as we heard a comment from Monsieur Guimond here, we are thinking about the Canadian homeowner so that they only have one application to make and the federal government processes that application and provides the information to the partner programs.

On slide 5, you can see the impact of this program from coast to coast. We have provided you with the statistics in each province of Canada and each territory of Canada. The box in each case shows how many energy advisers are certified to work for the program in that region. It shows how many Canadians have taken advantage of the pre-retrofit evaluation---600,000 in total--and then it shows how many post-retrofit evaluations have taken place. That's the number of Canadians who have applied for a grant. And the final number is the average size of the grant: $1,300.

On slide 6, we indicate the types of measures that Canadians have invested in. There has been a preponderance of air sealing: replacement of heating systems, windows and doors, as well as insulation.

Then I will draw your attention to the support for emerging technologies. This question has come up a couple of times this morning. You can see we have support for the implementation of solar domestic hot water systems, over 1,100 of them, and 7,700 ground-source heat pumps have been installed with support from the program.

The last slide is a wrap-up of the statistics to demonstrate the impact that this program has had on the Canadian residential sector. There have been over 600,000 pre-retrofit evaluations, so that is 600,000 Canadian households who have detailed information, in hand, about their house and the improvements they can make to reduce their energy use. To date, $340 million in grants have been paid out, with an average saving in each household of 22% . That means the participating households can reduce their energy bill by almost one-quarter. That's a very significant reduction, particularly when energy prices tend to keep rising. Three tonnes of reduction in greenhouse gas per home...2,000 energy advisers across Canada.

We have over $300 million left in the program for dispensing in this year to the homeowners who are still remaining in the program. In total, the $745 million will be spent to reduce greenhouse gases and increase the efficiency of Canadian homes and allow Canadian homeowners to divert money from their fuel bills to other more important uses.

I would be happy to take your questions. Thank you very much for the opportunity.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Buckley.

We go now to Mr. Tanguay for a presentation and then we'll go to questions.

Go ahead, please.

[Charles Tanguay, Communications Officer, Union des consommateurs]

Thank you, Mr. Chair.

I want to thank members of this committee for inviting us today to present our views on energy efficiency.

My name is Charles Tanguay, and I am the communications officer for the Union des consommateurs, a federation of consumers' associations with its head office in Quebec. I am accompanied by Marc-Olivier Moisan-Plante, my colleague who is an economist. His specific area of interest is energy efficiency issues. He is currently conducting a study on ecoenergy labelling for homes. I think the topic will be of interest to you and we can tell you about it. The Union des consommateurs is a federation. It includes 10 local consumers' associations, the ACEFs, as well as the Association des consommateurs pour la qualité dans la construction, an association specifically dedicated to residential home renovation and construction.

Our interest in energy efficiency issues is not new. We participate in the work of the Régie de l'énergie du Québec, and our member associations deliver a special energy efficiency program called “Éconologis” which targets low-income households. The program is funded by the Quebec Agence de l'efficacité énergétique and by energy distributors and through visits to low-income family households, makes it possible to do small insulation work projects, to provide advice and to reduce energy bills in these homes.

We believe that everything about energy efficiency is good. It reduces energy costs for consumers and mitigates the increase in costs associated with ever-increasing energy demands. We know that producing additional quantities of electricity costs considerably more today than the average of existing facilities. So it is much more cost-effective, for energy suppliers and society in general, to use negawatts, in other words to reduce consumption rather than increasing production capacity. It is also a matter of reducing greenhouse gases. We hope that Canada will reduce greenhouse gas emissions. In addition, there are economic arguments in favour of energy efficiency. We have seen very strong job creation in the sector. Money invested in it creates considerably more jobs than in other sectors. It is the economy of the future; it is a way to make our economy more efficient and to do more with less energy. It is good for consumers, but also for society in general. We would like to see the government do everything it can, take more action in terms of energy efficiency.

Bear in mind that many of the benefits of energy efficiency are not accounted for, nor are they only economic. For example, in the area of housing, the comfort of occupants can clearly be improved. We can improve air quality in homes, and as a result, the health of occupants. An energy-efficient home is generally better built, and that means it will last longer, and will require less maintenance. Many of these advantages are not accounted for, but they exist. As regards low-income households, the energy costs they will not have to pay will enable them to buy more food and to send their children to school. It is important to calculate not only the economic advantages, but all of the advantages associated with energy efficiency programs.

In Quebec, the Régie de l'énergie approves the programs of various energy providers. The cost of the programs is integrated into the base rate; in other words, it is part of the rates paid for energy. That means that all energy consumers in Canada pay for the various energy efficiency programs.

So when a program is subsidized by the government, all Canadian taxpayers pay for it. It is therefore very important for benefits to be fairly distributed. Ideally, all citizens should be able to benefit from the program.

Yet we realize that there are specific problems in reaching out to low-income households, when it comes to energy efficiency programs. In an evaluation—I believe that ecoENERGY's predecessor was evaluated—we found that the segment representing the poorest 40% of the population had benefited from only 3% of these program's benefits. In other words, the poorer you are, the less you benefit from energy efficiency programs. But the poorest people are the ones who need these energy efficiency programs the most. In fact, in many cases, they live in lower quality homes, which are poorly insulated, and they do not have the means to buy high-efficiency appliances. So poverty is making the energy bill more difficult to bear.

In addition, there are a host of difficulties associated with being a tenant. In many cases, the owner does not pay the heating bill for tenants. So there is no economic incentive for the owner to improve the energy efficiency of the rental unit.

That leads me to an anecdote on work conducted on energy efficiency. But this time it deals with automobiles. We have provided you with a copy of a research report published just over a year ago on energy efficiency labelling of automobiles in Canada. In the report, we recommend that Natural Resources Canada undertake a review of the enerGuide label for automobiles. We examined labelling models used throughout the world for automobiles.

This is an aside, but you will see that there are links to housing.

Our labels for automobiles in Canada could be improved and could above all be more visible. The current problem is that half of the time, the fuel consumption label for vehicles is located inside the car's glove compartment or in the dealership's showroom. So it is not very visible.

While conducting this research, we also examined studies which analyzed consumer behaviour when deciding to purchase a vehicle. We know that consumers are very irrational. When buying a car, criteria are based on emotions; consumers are concerned with the look of the car, with the power of the engine. While there is more and more talk about the energy efficiency side, when it comes time to buying the car, consumers are not translating these concerns into action. So we looked at how to make consumers more concerned with the issue, so that energy efficiency is part of the main decision-making criteria.

In reality, the same problem can apply to homes. When someone looks for a home, they start by looking at a neighbourhood, then they fall in love with the house because it has a renovated kitchen or bathroom. These criteria are more emotional, and less rational, and they win out over criteria for energy efficiency.

I will conclude quickly.

Our research report on automobiles advocates the adoption of new labelling which is more visible, as well as incentive programs to purchase vehicles which emphasize energy efficiency.

We can see the same thing in housing. My colleague is wrapping up a research program on ecoENERGY labelling for homes. As part of his work, he has analyzed experiments that have been conducted throughout the world, in Denmark, in the United Kingdom, in Oregon. We are looking at the relevance of making labelling mandatory during a real estate transaction, or when renting an apartment or selling a home.

We are also doing an overview of incentive programs which reinforce labelling. We feel the Department of Natural Resources plays a very important role. Evaluations of the various programs clearly show economic benefits, but as I was saying, there are a host of other benefits that are not measured. Often, grants like ecoENERGY ones are the incentives consumers need to take concrete action in doing renovations. Moreover, they often invest more than the value of the grant. And that is very beneficial.

Programs involving visits by experts and standardized diagnostic procedures for energy efficiency take several years to be fine-tuned. We believe ecoENERGY developed important expertise in the diagnostic of buildings' energy efficiency and it would be important to conserve that expertise, especially if the government foresees ecoenergy labelling for homes, as recommended in our report. This must of course complement provincial programs. I believe that the Department of Natural Resources program has been matched by the provinces. When there are two incentives, the programs are more attractive. I also think that links with the CMHC can be explored to improve, for example, interest rate reductions and also to target low-income households.

It is important to be concerned with adapting programs specifically in homes where there is too little energy efficiency. If we do not do that, energy costs will be higher and will result in renovations. And if they are not well-monitored, they may not be well done and that will be detrimental not only for energy and energy savings, but also perhaps for the health of the occupants of Canadian buildings.

Our research report will be available early on in the summer and we will gladly share it with you. In the meantime, my colleague will be able to answer your questions. Thank you very much for inviting us to appear today.