Natural Resources Committee on Oct. 23rd, 2018

[Brendan Haley]

I think the history of Ontario policy is complex. The one thing I would note is that energy efficiency can play a really valuable role in the electricity system as an alternative to power plants and transmission lines.

In Ontario right now, even with some of the nuclear refurbishments coming on, there are going to be capacity deficits in the near future, so Ontario might have to build natural gas plants and operate them just for a couple of years. It would be way cheaper to save that energy instead. When we added up some of the conservation programs in Ontario in the previous year, it only cost two cents to save a kilowatt hour through their existing programs, whereas a natural gas plant or a nuclear refurbishment is eight cents and higher.

I think efficiency plays a valuable role in the electricity system. A real problem with the Ontario electricity system is it's currently quite unbalanced. As I think you know quite well, there are periods of the day when wind energy is curtailed. You can't shut off the nuclear plants, the wind is still blowing and we can't use that energy.

Thinking on the demand side could benefit us quite a bit, because we can change the time in which we're demanding energy. It's not with the time of use rate; it's with much more technologically sophisticated measures, such as heating your hot water when the wind is blowing. I think there are opportunities to do some of that stuff, to ensure that some renewables have been built whether you thought that was a good idea or not, but we can increase the value of those renewables that are already built—

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I don't disagree on renewables; I disagree with how it was done. Unfortunately, I've hit my halfway point. I have a lot more questions. I have to turn it over to Mr. Falk.

[The Chair, Liberal, James Maloney]

You blew through your halfway point.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Schmale, for giving me the balance of your time.

Thank you to all our witnesses. I appreciated your testimony.

Mr. Diamond, I have been doing a bit of math. Of course, we're all very concerned about energy efficiency and being good stewards of all the resources we've been entrusted with, but I do have some questions about your math.

I have an accountant who has drilled cost-benefit analysis into my head, so when I'm looking at your math, I'm looking at $355 billion of GDP growth. That's a cost to implement energy savings for a net savings of $1.4 billion a year.

[Corey Diamond]

Yes. It's $1.4 billion a year on the household, and then an additional $3.2 billion a year on the commercial/industrial savings. We split the household and the commercial/industrial. If you add those together, that would be $4.6 billion. That's correct.

[Ted Falk, Conservative, Provencher, MB]

That would mean we're still spending about $10 billion a year to get a benefit.

[Brendan Haley]

But the figures are net, so essentially we have counted costs, and the costs we counted were the costs of doing the efficiency programs or doing the upgrades. The second cost, which is a cost of GDP, is that utilities don't get to save as much energy, so there is less economic activity in particular sectors. Those are the costs. However, the final GDP figure is a net figure that—

[Ted Falk, Conservative, Provencher, MB]

That would make my scenario even worse. You're also predicting to add 118,000 jobs annually to the Canadian economy, and if you do that over the 14-year period of your study at a net cost of $355 billion, it's costing you. It's a direct cost. If that's what it costs to achieve an energy efficiency, it's a direct cost.

My math tells me it requires over $200,000 per job to create a job.

[Brendan Haley]

I think we've got that in there.

[Corey Diamond]

I know that we shared the detailed study with the clerk's office. I know it was getting translated; I'm not sure if it got translated in time, but there is an opportunity to review the study.

On page 17 of the study, we outline what the annual program spending is for each of the fuel types, and that's the input that goes into creating the net benefit of the GDP growth. If you look at it, it's $1.3 billion in actual cost to implement the types of programs. These are the things that we talk about as far as generating energy efficiency programs to provide incentives is concerned, to get to the market transformation, potentially codes and standards and things. That input is then compared again to what the output in economic activity is and the GDP and job growth that is created. The net was the number that we state.

[The Chair, Liberal, James Maloney]

Okay. I'm going to have to stop you there.

Mr. Cannings, we'll go over to you.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you all for being here. I wish we had a lot more time.

I'm going to start with Mr. Lee and say that whenever I talk to Canadian home builders in my riding, for years they've been telling me to bring back the ecoENERGY retrofit program. They said that they really noticed it when it happened and they noticed it when it ended. We talked about cost benefit; it was a program that—I don't have the numbers in front of me—cost something like $800 million or $900 million over its lifetime, and it generated four billion dollars or five billion dollars in spending. The government really leveraged a lot of private homeowners' spending. It did a lot of good in terms of energy efficiency.

You talk here about bringing in a home renovation tax credit, whereas ecoENERGY, I think, was just a grant you got at the end. I'm just wondering if you could compare those and perhaps just say whether you would like to see the ecoENERGY Retrofit program brought back. I hear, as I say, a lot of your members calling for that.

[Kevin Lee]

Absolutely. The retrofit program was an excellent program; it had fantastic savings. It was in just about one out of every thirteen houses in Canada and it saved about 20%, on average, per home. Those are huge numbers. It was, as you say, a grant program. We were very supportive of it and still are.

Our recommendation for moving forward would be that a program almost exactly the same be done, but that it be done in a permanent renovation tax credit, rather than a grant program that can come and go and is actually very difficult to manage fiscally within a department, such as Natural Resources Canada. When it's coming through the tax system and is a more permanent indicator, you have the opportunity to have much longer-standing programming and to continue to allow homeowners to plan for these types of things. Moving to deep levels of energy retrofit takes time, and homeowners can't always do it in one year. A tax credit would enable you to do it over multiple years, and it also would have the strength of Revenue Canada in enforcement, which is also important.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'll move on following up on that.

This report, I understand, is the effects of what would happen if we implemented all the recommendations from the pan-Canadian framework. My overall question is, how's that going? I just talked about the ecoENERGY Retrofit program. It was kicked over to the provinces. Ontario picked it up, and now they've gotten rid of it. It's not being done.

I keep calling for the federal government to take it up again, because there seems to be a patchwork of things that aren't happening as well as possible. It's more of a political question, but what's the possibility of all these things coming true in the way the framework is set up right now?

[Corey Diamond]

It's certainly true that the provinces have a lot of the power—pardon the pun on this—to deliver these types of programs, and sometimes there is a some boom-and-bust experience for a lot of the service providers because it's based on some policy.

There are things the federal government can do and there are two of them that have been successful. One is the minimum energy performance standard, which is setting the highest standards for appliances such as windows and hot water tanks and heat pumps so that wherever they are sold in Canada, they are the best in class. That's number one. Number two is on industrial energy efficiency. No matter which province an industry is in, you can fund programs for that, and those have been quite successful.

One of the things that we're advocating for is a policy that helps to smooth out that boom and bust when provincial politics could hinder these types of programs. The way we're asking for it is not essentially just to transfer money to do energy efficiency, but to transfer money around programs that transform markets and eventually get us to the building codes and things that are strong. Mr. Lee was talking about a timely manner in installing these codes. We're advocating for a similar type of initiative whereby funds could be provided to various actors and provinces that can demonstrate that the work they're doing is getting us to the place where we have energy efficiency baked into the codes. That's what we're asking.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

You mentioned appliances. I met with some of the appliance people last year, I think it was. The way I understood it, in Canada our appliances are less efficient than they are in the United States because of our regulations.

Is that true? Why?

[Corey Diamond]

Yes, it would depend on different appliances.

In this case, there was a two-year process of the federal government working with representatives from window, heat pump and hot water tank trades to develop the market transformation map. Everyone signed off on that. I think that's the work that has to be done to get it up to the standard of best in class, in the U.S. or elsewhere.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Does that include things like refrigerators?

[Corey Diamond]

I'm not sure, but I think working with the manufacturers, retailers and various stakeholders for each appliance type is the work of the Office of Energy Efficiency.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay. We have one minute.

I'll move back to Mr. Lee, or perhaps both of you could answer this in a very short time.

I sat in on the environment committee meeting when we were talking about building codes, and a witness, a local builder here who did energy-efficient homes, said that he had to purchase the windows he used from Europe. Please comment.

[Kevin Lee]

Yes, we have to stop with this Passive House standard and “European technology is better” and all of that. They're tested to different standards. They're not tested to Canadian standards. These companies that are coming in and saying their windows are more efficient—and they're coming through the Passive House program at times—are not tested to Canadian standards.

If these windows are so great, test them to Canadian standards and let's see. Let's just start right there. Canadians make really good window technology, as well as a lot of other housing technologies. We need to invest in Canadian technologies and help our Canadian companies prosper. We really need to stop looking elsewhere.

Canada is also a world leader in energy efficiency. The Energy Star, the R-2000 program and now our NetZero program are the best of the best, and they're made for our climate. Let's focus on building Canadian technology and supporting Canadian companies.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

That would be my point. If we're not doing it right, we should be, but you're saying we are.

[Kevin Lee]

We do it very, very well, and we need to continue to do better. We can learn from other countries here and there, but Canadian technology, especially in the energy-efficient housing space, is excellent. We just need to keep getting better.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

[The Chair, Liberal, James Maloney]

Thanks, Mr. Cannings.

Mr. Whalen, you're going to take us home.