‘Massive fallout’ feared as Ottawa winds down Greener Homes grant program

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Now, the program as it now stands is shutting down—not because it failed, but because it exceeded expectations. Officials underestimated the public appetite for energy upgrades like windows and doors, air sealing, insulation, solar panel installations—and above all, heat pumps, which accounted for nearly half of the paid-out grants to date. The release says the grant program will help 250,000 households buy the devices over the next few years.

But the cost of heat pumps drove the size of the average grant up to $4,200, “significantly higher than initially expected,” NRCan writes. Meanwhile, the department spotted a flaw in the original program design that made it difficult or impossible to fund energy efficiency work in the homes that need it most, requiring homeowners to pay thousands of dollars up front before applying for reimbursement for their retrofits.

In recent weeks, word on the street was that delivery agents for the Greener Homes Grant were being instructed to honour any requests they’d already received for home energy audits, but stop accepting new applications. Program partner Enbridge Gas has already closed its application portal in Ontario, and applications in other provinces will be shut down in two weeks.

“The enormous popularity of the first phase of the Canada Greener Homes Grant illustrates Canadians’ desire for their homes to be affordable, comfortable, and sustainable,” Natural Resources Minister Jonathan Wilkinson said in a release. “We are readying the next phase of the Canada Greener Homes Initiative to offer more accessible supports to families across the country who need it most while continuing to take action on climate change.”

‘The Machinery of Government’

But that didn’t explain the gap between programs, or the anxiety it produced for energy auditors who’d signed up for training or started small businesses to throw in with Greener Homes—especially when Wilkinson signalled months ago that Ottawa knew the program was burning through its budget faster than expected.

“Yes, we’ve actually started to exhaust the funds earlier than what we had anticipated, and that’s largely a function of the popularity of the program,” he told CBC last fall. But “we have a certain budgetary envelope. We have to exhaust or utilize that envelope before we can ask the minister of finance for additional money.”

“It’s a fair question,” the spokesperson for Wilkinson told The Mix Monday evening, when asked why the new program wasn’t ready to roll by the time those funds ran out. “The machinery of government takes time,” but “we’re really focused on duplicating the success of the first phase while making it better,” she said.

NRCan got lots of feedback on the need to make Greener Homes more easily available to low- and moderate-income households, the spokesperson added. “If you want to do something right, it’s better to take a couple of weeks and make sure it’s a program that is really meeting the needs of Canadians, rather than rushing something out half-baked,” she said. But “it’s certainly our intention to get the next phase of the project off the ground, money in peoples’ pockets, and jobs on peoples’ calendars right away…that’s certainly in our minds.”

Boom, Bust, and Disruption

Brendan Haley, policy director at Efficiency Canada, said the announcement will produce “what many people were warning about, which is abrupt disruptions and this boom/bust dynamic which causes a lot of uncertainty and can cause a lot of havoc within the industry.” Whether or not the grants as they stood were exactly the right vehicle to get energy retrofits done, “we should not expect any pause in the effort. Affordability problems exist, climate change still exists, so why should we not have consistent support for retrofits in this country?”

In 2021, Efficiency Canada’s national retrofit mission report “outlined the need for a long-term approach that moves away from one-off programs,” Haley recalled. The approach “allows for experimentation and mid-course corrections in the nature of the programs, and the types of supports could perhaps change over time. But with a consistent mission, and the public sector being there to play a consistent role until we hit net-zero emissions.”

While the emerging plan to focus on low- and moderate-income households is a “very good deal,” it still isn’t clear what form the program will take or how it will function, he added. “There needs to be a big enough budget that they will not have the somewhat unexpected problem of having to close the program early again. A low- to moderate-income program needs to be free. It needs to have no administrative barriers. The retrofit measures need to really focus on affordability, which means insulation and air sealing, not just heat pumps. So a very well-designed low-income program could avoid some of the problems that we saw with the Greener Homes Grant.”

Haley said any federal department responsible for finances or budgets should have its own reasons to like a program that deals with energy costs and climate pollution in tandem.

“Affordability is the primary concern of Canadians now, and energy retrofits, in particular, can be anti-inflationary if they’re done well,” he explained. “You’re helping people consume less expensive energy. Then on the supply chains, you’re working with a sector which is largely construction and trades, where we want more people to enter and we need to find a way to make that sector more streamlined and productive. There’s also an opportunity for consistent public support to train up new people through the energy retrofit sector, who then become experts in the field and add to our ability to do the things we want to do in this country.”

But “you don’t achieve any of those things by creating a boom/bust dynamic in that market.”

Anxiety vs. Opportunity

Days before this week’s announcement, CBC reported that a newly-burgeoning energy audit industry was worried about mass layoffs in the months ahead if the Greener Homes grants were cut off. “There’s going to be a massive fallout,” said Stephen Farrell, owner of Calgary-based VerdaTech Energy Management and Consulting, whose company now conducts about 600 audits per month in Alberta and B.C.

“We’ve just increased the number of energy advisers across Canada dramatically. Millions and millions and millions of dollars was spent training new energy advisors,” he told CBC. “I would suggest we can lose about 70 per cent of them. They’ll go out of the industry.”

The spokesperson for Wilkinson pointed out that dire assessment was published before NRCan announced that a second program phase was under development. The backlog of applicants already in the system will generate audit and retrofit business for years, and auditors will also be in demand for two other federal programs—the Canada Greener Homes Loan Program and the Oil-to-Heat-Pump Affordability Program—and for separate programs run by provincial, territorial, and local governments.

“There are still hundreds of thousands of audits that will still need to be done across the country,” she said, and the program has also raised the public profile of energy retrofits as a way to cut home heating and cooling bills as well as reduce climate pollution.

“A lot of those folks are hiring energy auditors to figure out where they can find those financial savings,” she said. “There’s a whole industry now that has spring up that is not 100 per cent reliant on these programs,” and “even without the government programs, that demand is not going anywhere.”