This article was published by the Pembina Institute on Nov. 15, 2023.
By Betsy Agar
Canada’s governments are addressing two intersecting crises: climate and housing. The solution to both is constructing new housing with highly efficient energy systems that use less heating energy and updating existing housing to waste less energy. The stakes for ensuring climate resilient and affordable homes for all Canadians have never been higher. Truly affordable housing extends beyond just lower monthly mortgage payments or reasonable rent. It encompasses a fundamental aspect that often goes unnoticed: energy efficiency.
Governments across Canada are making bold commitments to foster construction of new housing to help defuse a housing supply and affordability crisis. In addition to increasing housing supply and density in cities and communities, housing must also be built with the right materials and design to keep residents safe from the effects of increasingly severe climate events including extreme heat and cold – and poor air quality from forest fire smoke and pollution.
New housing for a new reality
Along with soaring housing costs, heating and cooling expenses also continue to escalate across the country, pushing the cost of living further out of reach for many Canadians. It’s estimated that approximately 20 per cent of Canadian households experience energy poverty due to the disproportionate cost of heating their homes compared to their incomes. But the reality is most of us are living in drafty, poorly sealed, aging housing, making our heating bills more costly than they need to be, while sending heating fuel emissions up our chimneys.
Constructing new homes and buildings that emit less carbon and meet higher standards for energy efficiency is not just a necessity but a catalyst for positive change. This transformative approach will unlock a multitude of health and non-energy benefits for both individuals and communities across Canada.
A new study by the Task Force for Housing and Climate also estimates that strong policy leadership on energy efficient housing at federal, provincial and municipal levels of government could prevent up to 100 megatonnes of greenhouse gas (GHG) emissions in 2030. That’s the equivalent of 34 per cent of Canada’s 2030 GHG reduction targets.
Local governments have the power to make change
Canadian municipalities have a key role to play in helping to reduce these GHG emissions from the building sector. They are uniquely positioned given their authority over land use planning, setting stringent codes and standards above and beyond provincial requirements, and responsibility to work with utilities and the province to provide reliable energy for its constituents.
Provincial and municipal governments must step forward by respectively developing and then adopting building codes that limit GHG emissions and energy use. By heating and cooling these new well-sealed and ventilated buildings with high performance electric heat pumps, rather than inefficient furnaces and boilers, we can increase efficiency and reduce the cost of keeping our homes warm in the winter and cool in the summer.
The gains from more energy efficient practices for the building sector can be substantial. Fossil fuels burned for space and water heating in homes and buildings contribute to a staggering 25 per cent to 60 per cent of the carbon emissions local governments are responsible for reducing. By implementing stronger policies, municipal and provincial governments can help keep housing costs manageable, while making significant strides towards creating healthier, safer and more resilient communities.
And let’s not overlook the long-term financial implications of these decisions for building owners. Building right the first time—by prioritizing energy efficiency—helps owners avoid the expense of upgrades in the future. Retrofitting buildings that are not initially designed to be zero-emission will require substantial costs that owners will bear down the road.
Using federal funding to drive action
The federal government also has the power to leverage the funding they control to drive action for cities and provinces that don’t move quickly enough on climate. This is something they are already doing when it comes to accelerating the pace of affordable housing with some success. Tying access to the Housing Accelerator Fund (HAF) to increasing housing density is pushing many municipalities to incorporate climate action in ways they may not have considered before.
The agreement made with London, Ontario will see the city get $74 million in funding for a plan that will approve higher-density developments without the need for rezoning. As a result of this funding opportunity, other cities are embracing increased density, including Calgary, Alberta. After years of dragging their feet, city council is exploring ending exclusionary zoning to qualify for its own HAF funding.
To encourage cities to future-proof their homes and buildings, we recommend that the federal government ties its funding, whether from the HAF or other federal housing programs, to conditions for enhanced energy efficiency in buildings.
No matter where you live, heat pumps are part of the solution
There are a lot of myths about heat pumps. The biggest one being that they cannot be used to heat buildings in extreme cold. The reality is that coupled with good insulation, air sealing and ventilation, cold-climate air source heat pumps are at a minimum 1.5 times more efficient than traditional gas furnaces and cost less to operate. Switching to heat pumps in energy efficient homes creates energy savings in even the coldest cities in Canada including Edmonton, Calgary, Regina and Winnipeg; ranging from 50 per cent to 60 per cent compared to gas furnaces.
According to a CanmetENERGY study commissioned by NRCan, using one of these heat pumps saves money no matter what type of existing heating a home uses. Homes using electric resistance heating systems can expect to save $700 to $1,900 each year on utility costs by switching to heat pumps. For oil furnaces the savings are between $1,000 and $3,500 annually.
Even for homes currently using natural gas furnaces, switching to a heat pump and as a result disconnecting from natural gas and paying the fixed monthly charges for just one utility bill, rather than two, would save most households $50 to $150 annually in most parts of Canada, including Alberta.
Coupled with better insulation, ventilation and air sealing, heat pumps become an essential component in reducing both energy demand and energy bills. That being said, to ensure long term affordability, provinces should also be working to design electricity rate structures to protect those most vulnerable from price volatility. Price fluctuations should not unfairly punish low-income households who cannot lock into low fixed rates and suffer most when prices are high.
The connection between affordability and energy efficiency is increasingly obvious as Canada tackles simultaneous housing and climate crises. New housing must not only be affordably built but also affordably heated, while protecting residents from climate extremes. Similarly, retrofitting existing housing for energy efficiency is vital in reducing living costs and ensuring healthy, safe living conditions.
This is why it will be so important that programs for subsidies and other forms of supports for updating and constructing new buildings are focused on homes that are or will be occupied by low-income Canadians.
By implementing appropriate regulations and policies and incentivizing energy efficiency, we can ensure that affordable housing truly becomes affordable for all while contributing to a sustainable and clean energy future.