Liberals’ new greener-homes grant aims to boost energy efficiency – and attract climate-friendly voters

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The federal Liberals are launching what is likely to be one of their more crowd-pleasing climate-related programs, despite criticism from experts about how effective it will be.

Six months after it was first promised in the fall economic statement, Prime Minister Justin Trudeau announced on Thursday that his government is ready to start giving Canadians up to $5,000 for energy-efficiency retrofits to their homes.

Projected to cost $2.6-billion over seven years, the Canada Greener Homes Grant is to help cover investments such as electric heat pumps, new windows and doors, and better insulation. It’s also been slightly broadened from the way it was initially presented, to cover measures such as flood-proofing that help make homes more resilient to effects of climate-change.

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The government will additionally reimburse households up to $600 for the cost of energy audits, which are required both before and after the renovations are made in order to qualify for the grants. Eligibility is retroactive to last December for anyone who has had audits and work done since then and kept the receipts.

In an interview, Natural Resources Minister Seamus O’Regan said the government projects the program will help cut greenhouse gas emissions by up to 1.5 megatonnes by 2027. While significant, that would be less than 1 per cent of the reductions needed for Canada to reach its latest target for shrinking its national carbon footprint by the end of this decade.

But the Liberals clearly see upside beyond just the direct emissions reductions. Mr. O’Regan cited several potential benefits that explain why they’re drawn to the retrofit grants program – a smaller version of which existed under Stephen Harper’s government a decade ago – as a way to achieve both environmental and economic benefits while reducing Canadians’ cost of living.

Those multiple purposes also relate to why it is viewed with some wariness even by many advocates for making major investments in decarbonizing the country’s buildings, who worry that this particular way of doing so is more a case of good politics than good climate policy.

One of the less contentious ancillary objectives is postpandemic job creation, and not just from increased demand for the services of contractors. To be able to complete all the necessary audits, the government is recruiting and training 2,000 new energy advisers.

“It allows us the opportunity in a modest but very meaningful way to hire people who have been particularly hard-hit by the economic downturn,” Mr. O’Regan said. He noted that will include “increasing substantially” the share of women in that field, who currently make up only about 18 per cent of the sector.

The impact that Mr. O’Regan seemed most eager to talk about, though – even more than either emissions reductions or job creation – is the potential to reduce households’ energy bills.

The government’s modelling, he said, suggests that even without the subsidy, about 1.2 million Canadian households would get their money back on new heat-pump purchases within five years owing to the savings on heating costs. Similar math could likely be applied to some other renovations, which might reduce the amount of heating or electricity usage through efficiency improvements that reduce leakage. And they could add value to Canadians’ homes (albeit in an already overheated real estate market) as well, Mr. O’Regan added.

Describing the grants as “a nudge for people who have been thinking about it, maybe procrastinated on it,” Mr. O’Regan suggested they would accelerate expenditures that make sense for many Canadians to make regardless.

That’s where much of the debate about the program’s value lies. Critics such as the University of Ottawa’s Nicholas Rivers, who studied the version that existed under Mr. Harper, have assessed a “free rider” problem – which is to say that such an initiative is inefficient because it subsidizes investments that would likely happen before too long anyway.

One obvious way around that would be some manner of means testing that limited the grants to families and individuals who are unlikely to be able to afford the upgrades on their own.

Another would be to hand out a smaller number of larger grants, targeting more major renovations that some houses and apartment buildings need to achieve energy efficiency, and that are likelier to be cost-prohibitive upfront. (In last month’s budget, the government instead committed to interest-free loans of up to $40,000 for those sorts of projects.)

The most negative reading of the Liberals’ decision to instead offer the grants more widely and thinly involves electoral considerations. Casting the program more narrowly would mean fewer voters would be able to take advantage of it, or at least know they will have the opportunity to do so if Mr. Trudeau wins another term in a federal campaign that could come as early as this fall.

A more charitable interpretation, perhaps not mutually exclusive to that one, is that the government sees merit in proving to as many Canadians as possible that helping the environment can also help their own bottom line.

With the climate fight often framed as one involving sacrifice – including by opponents of carbon pricing that will drive up heating costs for those still reliant on fossil fuels – the Liberals have pounced on an opportunity to actively reward people for helping reduce emissions. That could conceivably make it easier to get buy-in for other sustainability measures as well.

Whether that makes this program the best possible use of billions of dollars, compared with other ways the government could have used that money to meet emissions targets and promote clean-economy competitiveness, will remain a subject of debate in climate-policy circles.

But the Liberals don’t seem to have any qualms, with Mr. O’Regan implying that if anything, the program could be expanded if uptake is strong enough.

“To be honest with you, I think it’s something that we can build on,” he said. “This is not an incentive that’s going to go away, any more than combatting climate change is going to go away any time soon.”

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