It's important that energy efficiency finance has an institutional home. A lot of the barriers in getting finance into energy efficiency could be overcome by thinking of it a bit differently. Bankers are used to asking for collateral when they advance loans. There's lots of money to be made from energy efficiency investments, but it's mostly in cash flow. We know we can provide a stream of data and we know we can provide evidence to bankers and financiers that efficiency investments really pay off, but we need the government to lead. We're talking about creating a branch in the Canada Infrastructure Bank—if that's the mechanism to be used—that's dedicated to energy efficiency and perhaps distributed renewables. Those face very similar barriers and will need to be recognized as an asset class in their own right. They will do some initial de-risking, working with banks and credit unions to say, “We'll take on some of the risk of these initial investments.”
We've seen throughout the States or in Europe that when banks do this, initially the private sector leverage rate is a bit lower, but after a while the banks and the private sector say, “You know, you've proved it to us. We don't need to do this anymore.” At that point the number of private sector dollars that can be leveraged for every single public dollar really rises.
A big barrier to energy efficiency is that it's a whole bunch of little projects, whereas people like to invest in one big thing. The Canada Infrastructure Bank could aggregate all those small energy efficiency projects into one larger financial instrument. That becomes much more appealing for the private sector to finance.
The other big area is standardization, which is essentially trying to draw up standard contracts and trying to make energy efficiency investments more familiar to investors as an asset class. There's a lot of work that can be done on standardization. Those are the specific things we could see happening with regard to trying to attract private sector finance in particular.