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Why the NRCan Greener Homes Loan could makes things worse

Updated: Jul 28, 2022

Natural Resources Canada launched the Canada Greener Homes Loan today to help Canadians make their homes more energy efficient and comfortable. Originally allocated in Budget 2021, the Canada Greener Homes Loan is a $4.4 billion program offering unsecured personal, interest-free loans on approved credit from $5,000 to $40,0000 with a repayment term of 10 years.

The loans are eligible to finance retrofits recommended by an NRCan Registered Advisor. The $40,000 is delineated to specific types of retrofits, detailed in the table below. These loans are also in addition to the previously announced and operating Canada Greener Homes Grant.

Ineligible retrofits include:

  • Retrofits done before a pre-retrofit evaluation

  • Retrofits done before December 1, 2020

  • Eligible products installed in new homes additions built between the pre- and post-retrofit EnerGuide evaluations

  • Leased or rented equipment

  • Air conditioners

  • Tankless or storage water heaters other than heat pump water heaters

  • Skylights

  • Furnaces or boilers (unless you live in a northern or off-grid community)

  • Roofs

As the clock ticks for climate action, questions remain on the efficacy of this loan program.

For starters, while the program aims to finance retrofits for 175,000 property or homeowners, there is doubt they will meet the quota. Since launching in May 2021, the Canada Greener Homes Grant has received over 171,000 applications, however the Government of Canada reports only dispersing grants to 10,000 applicants. It is uncertain what is causing this bottleneck.

Even if the Government of Canada reaches the 175,000 retrofit projects for which they aim, it is far from being an ambitious target. As the Pembina Institute reported last year in their Canada’s Renovation Wave report, to decarbonize Canada’s building stock by 2050, we need to ramp up from current levels to ~5% of the building stock per year. This would be roughly 600,000 dwellings per year and sustained to the early 2040s. Lead author and Program Director of Buildings at the Pembina Institute, Tom-Pierre Frappé-Sénéclauze has criticized the Canada Greener Homes Loan in Policy Options, stating the program should offer “higher loan maximums and more generation grants.”

$40,000 is notably a shy investment if we are aiming to achieve deep reduction in energy demand, and loans are not an equitable form of financing. Indeed, this program may only serve homeowners already capable of financing the project without government incentive. While it is difficult to estimate costs for the projects these grants will fund, construction costs in general are very high, relative to where they were just a few years ago. The Altus Group’s 2022 Canadian Cost Guide shows custom built single family residential homes can cost well over $500 per square foot in some areas. Renovating can often cost more than new construction.

A larger issue is the lack of accounting of embodied carbon. Even if the program had more equitable terms and was as ambitious as Frappé-Sénéclauze hopes, there is a very likely possibility that the retrofits could cause Canada’s greenhouse gas emissions to actually increase vs decrease as the plan intends. For example, as this program offers $5,000 for insulation of any type, the material carbon emissions of insulation could outweigh decades of operational carbon emissions saved by the improved energy efficiency.

As shown through our EMBARC report, insulation is the second largest contributor to embodied carbon, making up around 26% of material emissions. As seen in the graphic below, unless the energy advisors are specifying types of insulation or requiring a degree of “carbon use intensity” in the post-retrofit evaluation to maintain eligibility to financing, there is no accountability ensuring the retrofits don’t actually increase the carbon footprint of buildings. Carbon Use Intensity adds a home’s operational carbon emissions to the carbon emissions of its materials. This metric is typically expressed over a time period (ie. CUI30 would be the total of material and operational carbon emissions over 30 years).

Clearly, the Government of Canada is interested in retrofits as a mechanism of mitigating climate change. But if they want to make meaningful reductions in greenhouse gas emissions, a more ambitious strategy is needed.

Articles on the PBC website reflect the views of the author and not necessarily those of PBC.

Raidin Blue is a summer technical writer for PBC. He earned his MES at York University and B.Sc.Hon. from the University of Saskatchewan.

Image: Credit to Greg Rosenke, retrieved from; Insulation Emissions Comparison figure extracted from Passive Buildings Canada EMBARC Report.

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