Opening the Door

Executive Summary

Over the last two years, the energy transition has really been going places.

The U.S. Inflation Reduction Act and the EU’s Green Deal have fuelled household-level clean energy shifts at a pace never seen before. Here in Canada, the Greener Homes Grant helped Canadians from coast to coast to coast install heat pumps and retrofit their homes, while EV sales have risen rapidly thanks to growing model availability and purchase incentives.

Thousands of Canadians have made a shift away from fossil fuels, reaping many benefits. One such person is Vancouverite Stephen Fung, who says he saves $700 a month ferrying his three kids around in an EV instead of a gas car.

His situation isn’t unique. Almost every household in Canada can benefit from clean energy. Our latest analysis finds that a household in Toronto that switched out its gas cars for electric versions, ditched their natural gas appliances, installed a heat pump, and made a few energy efficiency upgrades would cut $550 off their monthly bill, even taking into account upfront costs. A similar house in Vancouver could save $777. And to make it even better, these families would reduce the carbon footprint of their cars and homes by more than 90%.

The picture is the same across most of the country. The equivalent household would save hundreds of dollars a month in almost every province.

One thing is clear: Canadians’ continued reliance on fossil fuels is costing them. In fact, a recent study found that energy prices are the most volatile component of inflation in the country, worsening recent inflation-driven affordability struggles.

But despite the savings benefits of clean technologies, the barrier to entry for many Canadians is higher than it was a year ago. For one, the federal government’s Greener Homes Grant (that offered up to $5,000 off the price of a heat pump and other energy savings measures) has been discontinued, although it is set to be replaced by a programme assisting low- to median- income households. Many of the most affordable and best-selling EVs in Canada have also either increased in price or disappeared. The 2024 Nissan Leaf is more expensive than the 2023 version, while the production of both the Chevrolet Bolt and the Kia Soul has been paused or discontinued, leaving a gap in the market.

Polling suggests that upfront cost remains the number one concern for prospective EV buyers, despite EV sticker prices dropping in recent years. It needn’t be the case.3 Europeans can choose from at least 12 different electric options with a purchase price of less than C$45,000, compared to just three in Canada.4 It’s perhaps no surprise that EVs represented 24% of all vehicle sales in Europe in 2023 compared to 12% in Canada. Put simply, automakers are not delivering lower- priced electric options to the North American market (a fact not likely helped by Canada’s new competition- limiting 100% tariff on Chinese EVs).

And yet, even with upfront costs included, EVs are by far the biggest money-saving option for many households. In fact, opting for an electric Volkswagen ID.4 instead of a gas-powered Honda CR-V would save a driver around $3,000 a year over the lifetime of the car. The problem is that not everyone can finance a car with a higher sticker price, even if they know they’ll pay significantly less along the way in gas and maintenance.

The lack of options points to the critical importance of government policy, to both help cut the upfront cost via purchase incentives and encourage automakers to make more affordable models. In fact, a recent report from the Parliamentary Budget Officer on the impacts of the federal government’s Electric Vehicle Availability Standard (which requires automakers to make an increasing portion of EVs available for sale) found that it will be key to incenting automakers to bring more affordable EVs to market. And yet, the future of the policy remains uncertain with the Official Opposition publicly stating they would repeal it, if elected.

When it comes to home upgrades, many provinces stepped up after the federal government dropped its program earlier this year, retaining or expanding support for heat pumps and energy retrofits. A median income household in B.C. would receive $12,000 toward a heat pump, for instance. But the result is a geographically unequal transition. Ontarians, for example, can access no government support to switch their gas furnaces for a heat pump.

We are at a critical time in the energy transition. We have the solutions to fight both climate change and growing energy bills, but it is vital that all Canadians can benefit. To that end, all levels of government must take action, offering rebates to cut upfront costs or supporting community infrastructure upgrades like public charging.