Feds take heat for cancelling popular Greener Homes Grant program

The rising cost of living is the top issue Canadians want the federal government to address this year. Poll after poll shows Canadians are worried about inflation — 45 per cent of Canadians believe they’ll rack up more debt this year, while 40 per cent of Canadians are losing sleep over financial worries.

Yet, the federal government is cancelling a program that helps Canadians’ slash household energy bills.

The Canada Greener Homes Grant program reimbursed Canadians for up to $5,000 for home retrofits, such as installing heat pumps, solar panels or insulation. The federal government prematurely wound down the $2.6-billion program because of its popularity, running out of funds ahead of schedule.

Next month's federal budget offers an opportunity to reverse this seemingly tone-deaf decision.

The Greener Homes program is a success: it gave out 165,000 grants and supported over 76,000 jobs in the retrofit economy, from construction, made-in-Canada manufacturing, home energy audits and more. Plus it cut, on average, 1.2 tonnes of carbon emissions per household per year.

Despite its success, the program was not perfect. By only reimbursing participating households for retrofit costs, the program excluded low-income households and renters who couldn’t afford the upfront costs of buying heat pumps, for example.

We understand the federal government plans to launch a new energy-efficient grants program for low-income households, including tenants, where public funds are given upfront rather than requiring reimbursements. This is an important step forward.

However, removing most homeowners’ eligibility from the program is a step backwards that is out of sync with Canadians’ affordability concerns. Higher interest rates are leading mortgage-holding Canadians to take on more debt, while 80 per cent of Canadians with a mortgage report that debt is a major source of stress. Middle-class households report not being able to save or are struggling to pay monthly bills.

The federal government should expand the Greener Homes Grant program to enable low-income residents, tenants and more homeowners — not fewer — to slash their energy bills.

Canadians may be confused about whether they receive a carbon price rebate, but they are sure to notice if they get incentives or a free heat pump, followed by a drop in their energy bills. A poll released last summer found 47 per cent of Canadians are interested in owning a heat pump. Installing a heat pump can reduce Canadians' household energy bills by between $350 and $1000 per year.

Statistics Canada reports that between 2013 and 2021, the share of heat pumps installed in Canada doubled — from three to six per cent. This is good news, but it’s not enough. Heat pump adoption must increase to 10 per cent for Canada to reach its 2030 emissions reduction goal.

The Greener Homes Grant program has the potential to make life more affordable for many more Canadians. For that to happen, three key changes are needed swiftly:

1. In Budget 2024, the federal government must enhance the program with funding while expanding it to include low-income Canadians, tenants and more homeowners.

2. The program must offer grants at the outset rather than ask Canadians to shoulder upfront costs. Participation would climb if this financial obstacle was removed.

3. The federal government must do a better job telling Canadians about grants for home retrofits. While the Greener Homes Grant program ran out of funds due to popularity, a 2023 poll found that only 44 per cent of Ontarians were at least somewhat aware of federal programs that offer financial support for retrofits.

For Canada to meet its legally binding Paris Agreement climate target, the federal government must use every tool in its toolbox. The Greener Homes Grant program is a tool that clearly works. Let’s hope that with Budget 2024, Canada will grow this tool to meet our nation’s climate commitments while addressing Canadians’ affordability concerns.

Keith Brooks is the programs director for Environmental Defence.