Housing | Topics

The wild west of energy efficiency

By : Julie Barlow

Although programs to make houses more energy efficient are becoming increasingly popular in Canada, they are dogged by lack of regulation in the renovation industry. To make the programs viable in the long run, the federal government has to step in and play a larger role.

Encouraging homeowners to reduce their energy consumption could go a long way toward helping Canada meet its target of reducing greenhouse gas emissions by 30% by 2030. The Consumers’ Council of Canada 2017 report Incenting Energy Efficient Retrofits shows that Canadian homeowners are more than willing to do their share.

Michael Lio, author of the study, was not surprised to discover that 82% of consumers who participated in a “retrofitting” program to make their homes more energy efficient were happy with the results. Retrofitting includes measures such as replacing old appliances, changing light bulbs, upgrading furnaces, upgrading windows and adding insulation. The programs, which are offered by federal, provincial and municipal governments, provide homeowners with incentives that include discounts, refunds, rebates, tax breaks, credit on utility bills and low interest loans. The survey found that 50% of homeowners had participated in a program to make their home more energy-efficient. “If you have a 20-year old furnace that you’re going to replace anyway, and the gas company offers you money to put in a higher efficiency model, are you going to turn that down? Of course not!” says Michael Lio, an engineer, and president of the Toronto-based energy efficiency consulting firm buildABILITY Corporation.

That’s the good news. The bad news is that the retrofitting industry has problems to overcome. The study identified risks to consumers that include poor quality work, the inability of homeowners to assess the quality of retrofits, price fixing, and retrofits that do not result in energy savings.  The industry also lacks regulation. “It’s a bit of a Wild West,” says Michael Lio.

Incenting Energy Efficient Retrofits is the first study to look carefully at the retrofitting industry in Canada from a consumer’s perspective. The study confirmed that consumers felt there were many good reasons to participate in incentive programs. Apart from simply reducing energy consumption, consumers want to make their dwellings more comfortable, increase the value of their homes, improve their understanding of energy efficiency and help Canada meet its climate change goals. “But we wanted to do a consumer-focused analysis of the retrofitting industry. If there are risks, those risks will trickle down to the homeowner and the homeowner has to deal with them.”

Knowing the Risks

The major problem Incenting Energy Efficient Retrofits found was that few consumers actually understand the risks involved in retrofitting. “It’s like if you ask someone if they are happy with a surgery. All they know is whether or not they experienced pain,” Lio said. “Homeowners don’t know what the actual benefits are and then, if the benefits happen they have a hard time measuring them.”

Consumers often have no way of ensuring that retrofitting work is done well. This is partly because there is little or no regulation of the energy efficiency retrofitting industry. “In most provinces, builders are licensed, so if a consumer has a problem with a builder, they can complain to the licensing agency. But there is no regulatory process in the renovation business and consumers have little or no recourse,” Lio says. “Even when they discover a problem, homeowners can’t complain to their energy supplier. Utilities companies don’t have lists of renovators who are qualified to do retrofitting.”

Obtaining recourse is even more complicated because the problems with retrofits often appear long after the work is completed.

It can be ten years before insulation work results in moisture or mold. It’s hard to tell right away if a contractor installed proper ventilation as part of the measures to improve airtightness. Sometimes homeowners experience headaches or end up with wet windows, and too much time has passed for them to make the connection between those problems and the poor work of the contractor who weatherized the house.”

Michael Lio, engineer, president of the Toronto-based energy efficiency consulting firm buildABILITY Corporation and author of the study

Incenting Energy Retrofits concludes that “Since they use tax payers’ money, the incentive programs should have a responsibility to ensure good quality work.”

The study also identified factors that make it hard for homeowners to participate in retrofitting programs in the first place. Difficulties include navigating the processes involved, being properly informed about the programs or the amounts of the incentives, figuring out how to find and hire workers, getting information about loans and being protected from fraud. Key informants in the study confirmed that complicated paperwork and terms and conditions can deter homeowners from participating in retrofitting programs.

Moving Target

Although retrofitting has a lot of promise for reducing greenhouse gas emissions, frequent rule changes are undermining the whole industry, according to Michael Lio. “In Ontario, the government at one point offered incentives to replace windows. So you had every window installer and manufacturer trying to capitalize on these incentives. But then the next government cancelled the program and the incentives vanished overnight.” Lio has seen the syndrome repeat itself frequently. “What does that do to all those businesses? All those furnace installers? All of those airtightness testers who tried to build a business when the eco-energy incentives were around, then a new government comes in and says, ‘we’re going to discontinue this.’ We can’t simply turn on and off the taps on a whim. We owe it to people who are building businesses to give them some stability.”

Michael Lio also deplores the fact that the federal government has backed off from playing a leadership role in the retrofitting industry. Between 2007 and 2012, the federal government paid out $934 million in grants over the life of the program to 640,000 homeowners. Thanks to these energy efficiency measures, participants in the programs reduced their overall energy consumption by 23%. Unfortunately, the last federal program, ecoENERGY Retrofit – Homes, ended in 2012.

Michael Lio believes the federal government has to step in and play a leadership role to make the industry viable.

The Canadian government needs to start developing a longer-term perspective on societal benefits. And try to establish an approach that weathers changes to a particular colour of government. It’s not acceptable to have a red government come in and do one thing, then a blue government come in and do another, then an orange do something completely different.”

Michael Lio

Should the government really be responsible for making people’s homes better? This makes sense if one considers that energy inefficiencies are largely the product of old standards that need to be updated. The survey found 78% of respondents were in favour of the government funding programs that allow homeowners to upgrade the energy efficiency of their homes. “We know incentives work. We’ve seen this. You give someone an incentive to switch out their windows and they look at their single-glazed windows and want to get rid of them, and if there’s a government incentive that will help us to put in high performance triple-pane windows, people will sign up for that,” Lio says.

The Study

Incenting Energy Efficient Retrofits: Risks and Opportunities for Consumers,  produced by the Consumers Council of Canada in 2017, includes a national survey of 1500 homeowners across Canada, focus groups in Toronto and Montreal, and 36 interviews with key informants active in the business. The objective of the study was to examine what homeowners thought about the benefits and risks of programs that offer incentives to engage in energy-efficiency measures such as upgrading furnaces, improving insulation, and replacing windows.

The study showed that consumers are strongly in favour of programs, but that the programs themselves require more regulation and structural improvements: as it stands, there is no way for consumers to assess the quality of the work done on their homes, or obtain redress if the work is poorly done. This study was a call to action for governments—especially the federal government—to institutionalize and regulate retrofitting incentive programs.