Thanks, everyone, for the invitation. I am the policy director for Efficiency Canada. We're a research and advocacy organization focused on creating an energy-efficient economy. We are based at Carleton University.
I would like to start by inviting you to think about energy efficiency as infrastructure that we need to move to a net-zero emission economy.
We usually think about energy efficiency on a building-by-building basis, and we leave the financing and the project management of retrofits to a building owner.
In a net-zero economy, we're really concerned with the large-scale, aggregate impacts of improving energy efficiency. That includes GHG emission reductions from buildings directly, as well as freeing up some of our existing clean electricity resources that can be used for further reductions in areas like transportation and industry.
To reach the scale of energy retrofits, we need to create a functioning market for deep energy savings. That's where customers can access stable bills, comfort and indoor air quality benefits that can come with energy efficiency, in the same way that they can now pay for a cellphone plan or lease a car.
The convenience on the customer end exists in those areas in part because you have private investors ready to back particular business models and buy portfolios of smaller loans.
Today, private investors are not directing their capital towards substantial energy upgrades because we have not created the necessary market structures. Investors see high transaction costs for each retrofit project and they do not have the data to accurately assess investment risk.
The Canada Infrastructure Bank can take on what I call a “market-creating” mission, with a goal to direct capital into building retrofits as a new area for productive investments. Strategies that it could follow include taking the lead on investments and then producing data to demonstrate the potential to the private sector, aggregating individual retrofit projects into larger portfolios that can then attract investors, and promoting standardized energy-savings measurement and evaluation protocols that can reduce transaction costs and perhaps enable trade.
The CIB growth plan announced at the end of 2020 includes building retrofits for the first time, with a focus on large-scale, non-residential buildings. I think that is the market most prepared to demonstrate the investment opportunity.
However, to reach our climate goals, we also need to make energy-efficiency services available in the places people live. In the government’s currently announced or proposed policies and other areas we look at, financing for homeowners is either planned to be attached to the individuals themselves, or perhaps to the homes themselves. Yet in other jurisdictions, they're exploring the aggregation of residential retrofits to achieve economies of scale as well as different business models where homeowners can essentially sign a contract that guarantees home comfort and a stable bill, with a third party handling the financing. To really see residential retrofits take off, I think we need to develop these new market structures and business models.
This will require more than just redirecting financial markets. It will require on-the-ground market development and new innovations in areas such as manufacturing and logistics. If we can develop more market-ready residential retrofit solutions, the Canada Infrastructure Bank should be ready to provide that long-term, patient capital.
Thus, the suggestion I would make to you today is that the Government of Canada could initiate a residential building retrofit strategy that encourages new business models and new economies of scale to create the conditions for Canada Infrastructure Bank investment.
I think that complementary policy would fill a gap and help maximize the impact of the Canada Infrastructure Bank, going forward.
Thanks.