Clean Energy Canada | The Greener Homes Grant sent the right signal at the right time—it’s vital it gets a reboot
February 29, 2024

When the federal government rolled out its Greener Homes Grant in the final month of 2020, it was expected to last at least four years. And yet, just a month into this year, the grant was abruptly shut down amid “skyrocketing” applications.

In the last few months alone, hundreds of thousands of Canadians have mobilized to make their homes more efficient. The number of households applying to the grant—which offers up to $5,000 off the upfront cost of various energy upgrades—increased by 55 per cent between November 2023 and January 2024. Heat pumps were the main attraction, with more than half of the applicants ditching gas-hungry furnaces and costly air conditioning to embrace the simple efficiency of the heat pump.

But what’s next for Canadians who didn’t make the deadline?

The program has been an undisputed success. Canadians shaved money off their bills while the federal government took the sting out of the purchase cost. A family in a detached home could save more than $400 a year by installing a heat pump, while energy efficiency upgrades, like new double-pane windows, could similarly save hundreds of dollars annually.

Across the country, the grant supported 75,000 jobs as auditors, installers, and contractors insulated, upgraded, and analyzed Canadian homes. Meanwhile, carbon emissions from 100,000 households in Ontario that used the initiative went down by 26 per cent. With buildings representing one of the few sectors of the Canadian economy where emissions are still increasing, the climate upsides are obvious.

For a government trying to communicate the energy transition to a country feeling the economic squeeze, one could hardly envisage a better policy. It channelled money directly to Canadians—not corporations—and demonstrated first hand the connection between climate action and cost savings. And it achieved it in a comparatively cost-effective way. Indeed, re-funding the program to help another half a million households would require just one-third of the dollars currently destined for the fed’s carbon capture and storage investment tax credit—an incentive program that is expected to largely benefit the windfall-profit-laden oil and gas industry.

What’s more, energy efficiency offers an elegant solution to Canada’s power planning challenges. With demand for electricity set to more than double by 2050, it’s easy to forget that the cheapest power plant is the one that doesn’t have to be built, and the lowest-emission energy is the energy that isn’t used. One study found that Ontario could save $ by maximizing energy efficiency instead of relying more heavily on natural gas power plants. Another concluded that energy conservation could save enough electricity to power three million homes by 2045 and save ratepayers $500-million per year.

As such, it’s encouraging to see the government hinting that the Greener Homes Grant will live again, but this time in a more equitable and accessible format. However, details of its supposed resurrection remain scant.

Done right, this is an opportunity to double down on the good parts of the program while tweaking some issues that plagued the initial design. Most importantly, financial support for assessments and upgrades should be available to households before the work is complete to make the program more accessible to those without access to the cash upfront.

This next phase should also exclude Canada’s highest earners by applying a geographically specific income test, accommodating regional differences in cost of living. On top of that, the broader Greener Homes Initiative—which included the grant along with other programs like interest-free loans—should provide support for energy upgrades in rental housing, conditional on landlords signing affordable rent agreements, so Canadians who do not own their homes can benefit from lower energy bills, too.

Finally, the federal government should collaborate with provincial governments to co-fund support for heat pumps. As it stands, the policy represents a rare moment of provincial and federal alignment, with almost all provinces of every political stripe—with the exception of Alberta and Saskatchewan—operating funding programs for heat-pump adoption.

Put simply, the Greener Homes Initiative is smart political calculus: support for Canadians, emissions reductions, and job creation in one tidy package. It would be a mistake to deny it more dollars in the upcoming budget. Its current hiatus must serve to build a better program—one that benefits those who need it most.

This was co-authored by Jana Elbrecht and originally appeared in the Hill Times.