THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Tuesday, April 21, 2026
The Standing Senate Committee on Energy, the Environment and Natural Resources met by videoconference this day at 6:30 p.m. [ET] to study Bill S-4, An Act to amend the Energy Efficiency Act.
Senator Joan Kingston (Chair) in the chair.
[English]
The Chair: Before we begin, I’d like to ask all senators to consult the cards on the table for guidelines to prevent audio feedback. Please be sure that your earpieces are away from the microphones at all times. Do not touch the microphone. Activation and deactivation will be managed by the console operator.
Finally, please avoid handling your earpiece while the microphone is on. Earpieces should either remain on the ear or be placed at the designated sticker at each seat. Thank you all for your cooperation.
[Translation]
I would like to begin by acknowledging that the land on which we gather is the traditional, ancestral and unceded territory of the Anishinaabe Algonquin Nation.
[English]
I’m Joan Kingston, a senator from New Brunswick and Chair of the Standing Senate Committee on Energy, the Environment and Natural Resources. Now I’ll ask my colleagues to introduce themselves.
Senator Galvez: Senator Rosa Galvez, from Quebec.
Senator Wilson: Senator Duncan Wilson, British Columbia, the sponsor of the bill in the Senate.
Senator McCallum: Mary Jane McCallum, Treaty 10 territory, Manitoba region.
Senator Lewis: Todd Lewis, Saskatchewan.
[Translation]
Senator Youance: Suze Youance from Quebec.
[English]
The Chair: I’d like to welcome everyone with us today, as well as those listening to us online at sencanada.ca.
Today, pursuant to the order of reference received from the Senate on March 11, 2026, we are continuing our study of Bill S-4, An Act to amend the Energy Efficiency Act.
On our first panel, all by video conference, we’re pleased to welcome, from Efficiency Canada, Sarah Riddell, Senior Policy Research Associate, Appliance and Equipment Efficiency; from the Canadian Environmental Law Association, Theresa McClenaghan, Executive Director and Counsel; and from The Atmospheric Fund, Bryan Purcell, Vice-President of Policy and Programs. Thank you all for accepting our invitation and welcome.
We will ask you each to give opening remarks of a maximum of five minutes. Ms. Riddell, you now have the floor.
Sarah Riddell, Senior Policy Research Associate, Appliance and Equipment Efficiency, Efficiency Canada: Good evening and thank you for the invitation to appear before this committee. I’m Sarah Riddell, Efficiency Canada’s Senior Policy Research Associate for Appliance and Equipment Efficiency.
In 2024, I co-authored the report How to Modernize Canada’s Energy Efficiency Act. Bill S-4 is necessary and timely. Canada’s Energy Efficiency Act is long overdue for an update to reflect the tremendous technological advancements and shift to online retail that Canada has undergone since the act was passed in 1992. I’m glad to see Bill S-4 addresses this with the expanded definition of the energy efficiency standard and coverage for online retailers.
In my testimony, I would like to introduce Efficiency Canada’s three proposed amendments to Bill S-4, to further strengthen it.
The first is to expand the comparison of energy efficiency standards to include more leading jurisdictions. Bill S-4 would decrease Natural Resources Canada’s reporting on the Energy Efficiency Act from every year to every other year and would eliminate the requirement to benchmark against U.S. states from the energy efficiency standards comparison report that is published triennially. U.S. states, like California, have traditionally pioneered the development of higher standards that Canada has aligned with, including as part of the most recent amendment to the Energy Efficiency Regulations. Canada should additionally broaden our comparison to jurisdictions with leading efficiency standards, including the European Union, the United Kingdom, China and Japan.
CLASP and the International Energy Agency regularly track the world’s best minimum energy performance standards across jurisdictions, and the Appliance Standards Awareness Project tracks U.S. state adoption of energy efficiency standards, making a larger international comparison highly reasonable.
Enabling a broader comparison of the world’s best energy efficiency standards and not solely looking at federal North America standards is a pragmatic and feasible amendment that supports Canadian objectives to foster innovation and to diversify trade partnerships.
My second proposed amendment to Bill S-4 would protect existing and future efficiency regulations by preventing lowering or eliminating a standard in order to harmonize with another jurisdiction. Given that Canada most frequently aligns with the U.S., and given their current extremely volatile policy environment, it is essential to introduce an anti-backsliding clause into the Energy Efficiency Act.
I propose doing so by replacing the definition of “harmonize” in subsection 20.1 of the act with “harmonized means, with respect to requirements in the regulations, to make them correspond substantively with the requirements of a jurisdiction or to adapt the requirements of a jurisdiction to the Canadian context, except in the case that it would increase the maximum allowable energy use or decrease the minimum required energy efficiency of a covered product.”
This would protect the nearly two million Canadian households experiencing energy poverty from the higher utility bills that weakened or eliminated efficiency standards would burden them with and would demonstrate that Canada is a stable policy environment and prevent our standards from falling to the lowest common denominator.
The final proposed amendment is with regard to Part II of the act, the heading for which Bill S-4 proposes to be “Promotion of Energy Efficiency and Emerging Energy Sources.” The wording here has the implication of leaving out renewable energy, ill‑defined emerging sources or describing renewal energy in an inappropriate and confusing manner. Given that the proposed purpose (b) of the act is to “encourage the transition to a low‑carbon economy,” promoting renewable energy sources would be a prudent addition.
Renewable energy sources like solar panels and wind turbines are not an emerging technology and pair very well with smart, demand-flexible appliances like electric storage water heaters that can harness excess wind or solar power to preheat water and avoid drawing from the electricity grid during peak demand events later, saving utilities and ratepayers considerably.
Bill S-4 offers a needed modernization to Canada’s Energy Efficiency Act, and I ask the committee to consider my proposed amendments to further improve the act.
Thank you.
The Chair: Thank you, Ms. Riddell. I’d now ask Ms. McClenaghan to continue.
Theresa McClenaghan, Executive Director and Counsel, Canadian Environmental Law Association: Thank you to the committee for inviting the Canadian Environmental Law Association, CELA, to speak to Bill S-4.
As you indicated, my name is Theresa McClenaghan, and I’m the Executive Director and Counsel. We are a national NGO and a specialty legal aid clinic. As such, we focus in particular on environmental and energy issues of most concern to low‑income and vulnerable populations, including health and safety impacts. We are also co-founders of and continue to oversee the Low‑Income Energy Network, LIEN, which advocates for solutions to energy poverty while championing energy sustainability, so we make these submissions also on behalf of LIEN.
Energy efficiency is critically important to all Canadians, but especially to low-income and vulnerable Canadians. Improvements of energy efficiency in relation to products, appliances and related systems are crucial in improving health, reducing greenhouse gas emissions, reducing energy use and related costs. Low-income and other vulnerable communities are among the most impacted by climate change and often least positioned to take advantage of options to reduce those harms.
Examples from our work include undue exposure and harm from heat events, energy poverty from being unable to afford the costs of vital energy services and exposure to catastrophic events in housing that cannot withstand those impacts. Accordingly, an updated Energy Efficiency Act is an extremely important piece of legislation that can provide real assistance to all Canadians and to these communities to reduce these burdens and improve their lives.
CELA supports the need to update and modernize this legislation, and we agree that many of the provisions related to smart appliances, modern communications, modern approaches to enforcement and compliance — including options for corrective action — are all appropriate and welcome.
We agree with some use of administrative monetary penalties in constrained circumstances, but that should not replace the use of offence provisions in serious circumstances.
We submit that this legislation should be used to its full potential to reduce the energy needs and costs of all Canadians, including tenants and homeowners, seniors and young families. In this regard, we recommend that it be leveraged to ensure that all of these communities have access to constantly improving energy efficiency at affordable costs. The best energy efficiency and most cost savings should not fall primarily to those who can afford the best, top-of-the-line equipment. Rather, the energy usage of all equipment should constantly be improved. As such, we recommend a periodic update of all energy usage standards to be enabled and mandated by the act.
I’ll briefly add one line on each area of improvement. We think that the exemption section should be amended to ensure that exemptions are only short-lived and truly exceptional.
In terms of regulatory sandboxes, we support the limited use of regulatory sandboxes, with guardrails, to encourage innovation in order to reduce energy burdens, especially that any pilots allow for low-income and vulnerable community participation.
In terms of harmonization, we think it’s essential to modify those provisions to ensure that harmonization is not a race to the bottom between jurisdictions. The federal standards, advancing over time, should always be the floor, and similarly in relation to referencing codes and standards.
Finally, in addition to the important list of energy-using devices and appliances already covered by the regulation, under the act, we recommend the act should also cover medical devices that use significant energy supplies.
I will leave it there and look forward to responding to any questions you may have for me later in the evening.
The Chair: Thank you, Ms. McClenaghan. Mr. Purcell, please.
Bryan Purcell, Vice-President of Policy and Programs, The Atmospheric Fund: Thank you, chair. Thank you to the committee members for the opportunity to speak with you today.
My name is Bryan Purcell, and I’m the Vice-President of Policy and Programs at The Atmospheric Fund. We are a regional climate agency serving the Greater Toronto and Hamilton Area, a region of more than 8 million people across six regional governments. Advancing energy efficiency policy is a core part of what we do because, put simply, it is one of the most cost-effective tools to reduce carbon pollution while improving economic competitiveness and productivity and affordability.
This brings me to Bill S-4 and the Energy Efficiency Act. The Energy Efficiency Act is like the public policy equivalent of compound interest. It doesn’t make headlines or controversy, and its effects aren’t dramatic in any single year, but, over time, the returns are enormous. Between 1995 and 2024, it delivered over $110 billion in savings for Canadian households, businesses and industries, while avoiding more than 770 million tonnes of carbon pollution. Few pieces of legislation have generated that scale of sustained economic and environmental returns.
But the world has changed dramatically since the act’s passage in 1992. Products are increasingly sold online. Consumers expect and rely on digital, connected equipment. And the rapid electrification of the economy means our expanding electricity system needs grid-responsive assets to help balance supply and demand. Energy efficiency is no longer only about how much energy we use but also about using the right type of energy at the right time. Bill S-4 appropriately reflects these shifts. In particular, we strongly support the expanded definition of energy efficiency standards and the explicit inclusion of online retailers.
I would like to highlight one especially important advancement in this bill: the introduction of interoperability and demand response standards. This update enables standards for smart appliances and heating and cooling equipment to communicate with the electricity grid. This allows equipment to shift energy use away from peak periods, reduce strain on the grid and improve reliability and resilience, all without compromising consumer comfort or performance. This is foundational to a more modern, affordable and clean electricity system, and we strongly support this element of Bill S-4. We also believe that the proposed list of eight regulated product categories is strong, comprehensive and forward-looking.
Where we believe Bill S-4 could be improved is in the area of interjurisdictional benchmarking. Frankly, we are concerned with the proposed weakening of benchmarking requirements included in Bill S-4.
If Canada is to be a leader in energy efficiency, it’s critical that we benchmark our standards against leading jurisdictions. Primarily, benchmarking Canada’s efficiency standards only against U.S. national standards, as proposed in Bill S-4, is a recipe for mediocrity, not leadership, and will only deepen our economic reliance on the U.S., especially considering that the current U.S. administration is actively working toward weakening and removing energy efficiency standards. We echo Efficiency Canada’s recommendation that the legislation should continue to require benchmarking against leading U.S. states, such as California — jurisdictions that have historically set higher standards that Canada has often chosen to follow in the past.
More importantly, benchmarking should not be limited to North America. Canada competes and trades in a global market, and our efficiency standards should reflect that reality. We recommend that the act require benchmarking against global leaders in efficiency, including the European Union, the United Kingdom, Japan and China.
This would not be costly or burdensome. As you’ve already heard, a variety of organizations track and publish comparisons of best-in-class standards worldwide. The data exists, and conducting these comparisons every three years, as currently proposed, is entirely practical and reasonable and a worthwhile investment in ensuring our standards truly reflect global leadership and capability.
Finally, I want to close by emphasizing that strong energy efficiency standards are not a burden on the industry or consumers; they are a competitive advantage.
There is strong international evidence that well-designed energy efficiency regulations lead to increased innovation and patenting activity in affected industries. Ambitious but achievable standards support Canadian manufacturers that compete on quality and innovation, help diversify trade by aligning with global leaders and prevent our market from becoming a destination for inferior products. The resulting efficiency gains increase energy productivity and save consumers money — money that is then reinvested in other parts of the economy, driving broad-based economic growth.
In closing, Bill S-4 is a necessary modernization of the Energy Efficiency Act. While we strongly support it, we respectfully ask the committee to consider our recommendation to further strengthen it. Thank you.
The Chair: Thank you, Mr. Purcell. We will now go to questions from the senators.
Senator Fridhandler: I have a question on proposed sections 49 and 50 in the amendments, the provisions that apply strict liability and removal of defences and extend liability to individuals.
My concern — and I’m not an administrative law expert — is that these are the opposite of the policy goals that you’re trying to achieve. With this in place, any company will need to obtain and will obtain appropriate insurance. They’re not going to leave their company and their employees, directors, officers or agents exposed without proper insurance, which means there’s a cost that will get passed through to consumers by requiring the appropriate insurance to address these provisions. Conversely, if you had appropriate due-diligence defences and it didn’t flow through corporations to individuals to the extent it does here, while there might be some insurance cost, it would be significantly less.
From a policy perspective, I would appreciate any of your views on those provisions. They’re more administrative and not to the substance, but they’re very problematic, in my view.
The Chair: Anyone can begin.
Ms. McClenaghan: I can start.
Senator Fridhandler: We might as well hear from the lawyer’s side of it.
Ms. McClenaghan: Yes, I can start.
The provision you’re describing, sometimes we lawyers call it a strict liability provision, which means that if it’s proven that the thing happened, then there’s liability. The policy reason for that is to ensure that those who are most able to take due care do take the most care to ensure that the standard they’re conveying actually is the case. It is often the case in the sale of products to have strict liability offences.
In general, they can be helpful for consumers because consumers bear such a burden otherwise to meet the standards of proof of a civil case beyond a reasonable doubt and are not in possession of all of the facts to do that.
Senator Fridhandler: To follow up, you would understand that these things aren’t left so that the companies or the individuals who are exposed are paying this out of their own pocket. They cover this by insurance. That’s operationally what any —
Ms. McClenaghan: Absolutely, yes.
Senator Fridhandler: That cost will be embedded. It’s ultimately moving the cost back to the consumer at the end of the day, because it’s insurance that will have to be put in place.
Ms. McClenaghan: Either way, it will be the case that the cost of taking care of that product has to be, presumably, in the cost of the product. It’s quite appropriate to have insurance for this kind of liability. Often, insurance companies themselves will, then, have additional requirements and have the power of the purse, so to speak, to exact those tests and checks that are necessary that single consumers can’t do on their own.
Senator Coyle: I guess this is something you have all raised, so I’ll just put this question out there.
Last week, Minister Hodgson and his officials were here. I asked them about one of Efficiency Canada’s proposed amendments regarding section 25, the comparison of standards report and the possibility of expanding beyond the U.S. to include the EU, the U.K., China, Japan and U.S. states. The response I got from one of the officials — I don’t know if you watched it or looked at the transcript — was:
. . . we try to keep things to the extent of comparison with our current key trading partners. Through each of our regulatory amendments, we look more broadly, more specifically through the Regulatory Impact Analysis Statement, or RIAS, that we developed. That is where we look more in depth at comparison, certainly with U.S. states. That has been our tendency as well is more in depth. . . .
I’m just wondering if you — anybody here, but particularly you, Ms. Riddell, who has proposed the amendment — would be satisfied with this expansion of comparison being dealt with in the regulations. All of you have raised this issue, and I think maybe “race to the bottom” was mentioned, as well, by Mr. Purcell. Any one of you could jump in on this. We’ll start with Ms. Riddell.
Ms. Riddell: Thank you, senator, for the question.
With respect to the comparison being done through the Energy Efficiency Regulations rather than through the Energy Efficiency Act, it’s not a formalized process that is publicly available in terms of what comparison is being done until after the cost‑benefit analysis has already been done. It’s not a very transparent process in terms of what countries are being compared.
We’d like to see something more formalized in terms of the amendment to Bill S-4 to include the comparison with more jurisdictions. That way, we can ensure that all of the relevant jurisdictions are being considered for this comparison and when there will be a future amendment to the Energy Efficiency Regulations.
This is so important because the International Energy Agency did a study looking at the G20 nations from 2010 to 2022, and Canada had the worst performance in terms of energy efficiency improvement. The U.K., for example, one of the countries that we recommend Natural Resources Canada, or NRCan, begin to benchmark against, had energy efficiency improvements of more than 4% in 4 of the 12 years and between 3% and 4% in another 4 of those 12 years. Canada, by comparison, only achieved 2% to 3% improvements in only two of the years. It’s a great opportunity for Canada to learn what the other countries in that study are doing to achieve such high energy efficiency improvements.
There are organizations like CLASP that have their tool for MEPS that already does these comparisons, so it should be a relatively low lift for NRCan to look at those jurisdictions that have the best appliance and equipment standards in the world so that Canada can achieve the doubling of energy efficiency that we’ve committed to for 2030.
Senator Coyle: Does anybody have anything to add to that?
Mr. Purcell: I’d like to briefly add to that if I may.
The other concern I would have with doing that benchmarking comparison toward a broader set of jurisdictions in the regulatory impact analysis process is that the timing of that happens after both the products that are going to be updated and the proposed requirements have already been developed, so it’s actually too late in the process to influence how we set a standard.
The purpose of the benchmarking that’s described in the legislation is more forward-looking when we want to set priorities for the next three to five years in terms of what products need an update and what level of ambition we should explore in developing the regulations. It’s really at that stage that you need to be taking that broader look at international leaders and leading states in the U.S. so you can identify the products that need an update and the level of ambition we should be taking in updating those products.
In the RIAS, it’s really just a process to help refine our assessment of costs and benefits to stakeholders in industry and consumers, so it is useful there, but it doesn’t influence where we go with the standards. Therefore, it doesn’t achieve that desired effect of helping us compete with competitor jurisdictions globally and making sure we’re among leading jurisdictions, as I think we’d all like to see.
Senator Wilson: I’d like to continue on this train of inquiry regarding comparison with other international players.
We’ve heard from Efficiency Canada — and I’m sure you have, as well, because I know folks have been engaged with NRCan — that they’ve been engaged in terms of what’s happening in terms of global equipment standards in a variety of international fora, for example, collaborations under the International Energy Agency and APEC multilateral discussions on appliances. The lessons from these collaborations already directly shaped the proposed regulations. In addition, the regulatory development process includes a process to compare the specifics of proposed standards against their international counterparts.
I hear what both Ms. Riddell and Mr. Purcell are saying. However, it seems to me that one of the things that’s a big challenge about including some of this stuff in the actual legislation is the need to be able to change and update in a more fluid manner. This legislation is 30 years old. It has been updated, but every time we make a change like that, it’s going to require us to go back to the actual legislation, whereas in regulation we have greater flexibility. I think what we’re hearing from the department is they want to retain that flexibility.
My question to you is this: How do you retain that flexibility while still maintaining that international benchmarking that you’re talking about? That’s for Ms. Riddell and Ms. McClenaghan.
Mr. Purcell: I’ll take a crack at answering that and would welcome my panel colleagues’ views.
I don’t think they’re exclusive. I think the intent of the legislation — it describes, as currently done, a triennial process where our standards are compared against benchmark jurisdictions. We think that is an important process, as I mentioned, to identify where we can improve and set the level of ambition. It doesn’t preclude that when you move toward the regulation-making process and through other fora, such as international collaborations, that you have a chance to explore more deeply or do additional comparisons through that regulation-making process. That’s always welcome when staff believe that it’s of use.
I don’t see them as mutually exclusive. The act has always had a triennial benchmarking against jurisdictions. We’d like to see it at least maintain the breadth that it currently requires for that review and, ideally, increase it to several additional jurisdictions. But, yes, it wouldn’t prevent that more detailed assessment in the regulation-making process at all, in my view.
Ms. McClenaghan: If I could just weigh in. I entirely agree with that, and the additional point is that legislation is important to state parliamentary intent. The purpose section, for example, that’s being suggested is a welcome addition as well.
The regulation-making process can be quite administrative and is appropriate for things that will change frequently, but something like this principle of periodic review is something that should remain at the level of legislation. We’ve also suggested some kind of non-backsliding wording to accompany that.
Senator Wilson: Let’s talk about the backsliding. Efficiency Canada, you made mention of backsliding in your submission.
I would like to add that there are extra provisions in the Energy Efficiency Regulations where if a jurisdiction with which we harmonize repeals or revokes a standard, our regulations would apply the standard as it read on the day before. When Canada only makes regulatory changes where there is a benefit for Canadians to doing so, it must go through a comprehensive analysis and consultation process to make it happen. So adding complexity to legislation risks challenges to legal implementation later.
Can you comment on why you think further protections from backsliding are needed when the regulations already prevent accidental reductions in stringency?
Ms. Riddell: Thank you for the question, senator.
Backsliding by harmonization is a serious risk, given the current extremely volatile policy environment in the United States, and is a timely concern, as Natural Resources Canada has already proposed to eliminate the energy efficiency standard for electric coil cooktops to harmonize with the United States as part of amendment 19 to the Energy Efficiency Regulations, which is currently in process. As electric coil cooktops have the lowest purchase price, they are very common in lower-income and rental housing. Therefore, eliminating this efficiency standard could worsen energy poverty.
While this is one very particular example, there is a risk that even more important categories could be affected in the future without this sort of anti-backsliding clause being added to the Energy Efficiency Act. For example, gas furnace regulations in the U.S. are currently lower than Canadian standards. There is currently nothing preventing the Canadian standard from being lowered to harmonize with the United States, while heating is a large percentage of the energy use in buildings.
Senator Wilson: Thank you.
Senator Galvez: Mr. Purcell, from your experience with building retrofits, how much energy efficiency potential is actually delivered by the standards alone? What do you see as the biggest gap between the regulatory ambition in the legislation and the real-world uptake?
Mr. Purcell: Thank you for the question.
Yes, we work directly with building owners across our region on building retrofits and have decades of experience doing that. The way I see the interplay between the work we do, working with buildings on retrofits, and the standards, we see our role working with leading building owners to demonstrate next‑generation or high-performance equipment before it becomes the regulatory norm. That helps to enable the evidence base for NRCan to look at citing those levels of efficiency in future regulatory updates. Of course, as we set regulatory standards for equipment, we never want to set those standards at the highest level if that level has not demonstrated broad market adoption and acceptability.
That is kind of the way we look at the voluntary projects that we’re driving with industry, where we’re building it on either the economic basis of that project or the aspirations of the owner in terms of their portfolio performance. The goal with that, for us, is not just to generate emissions benefits from that building but to demonstrate the performance of those products that may be subject to or may become the basis for future regulation making.
We’ve done that in partnership with NRCan in the past, too. We have had significant funding from NRCan to demonstrate, for example, condensing boilers years ago in multi-residential buildings across our region, and that data was relied on in cost‑benefit analyses as a part of the RIAS, the Regulatory Impact Analysis Statement, to justify the amendment to the regulations that make condensing boilers the minimum energy performance standard going forward.
The kind of retrofit work we do is for market leaders and helps demonstrate what is possible, but regulation helps raise the bar for everyone and bring along the majority of the industry who aren’t proactively looking for opportunities to invest in retrofits.
Senator Galvez: Ms. Riddell, talking about adding anti-backsliding and the issue of harmonization, presently in Quebec, there are announcements that we will now be able to put solar panels and certain types of wind turbines in our gardens, and, from there, we will be able to charge all kinds of electrical appliances.
Let’s say Quebec goes ahead with this in the next months — that’s what we’re hearing from Hydro-Québec — what kind of situation might we see if the other provinces don’t adopt the same kind of program, and we don’t correct this backsliding harmonization thing?
Ms. Riddell: Thank you for the question, senator.
Quebec has shown leadership with many Energy Efficiency Regulations in the past. For example, Quebec had higher minimum efficiency standards for general service lamp lighting for many years before the federal government, with the most recent Amendment 18, caught up with Quebec’s regulations. There definitely is an important role for provinces to play as leaders in energy efficiency to show that the market is there and to show how the legislation can perform well in a provincial market. The federal government — there are many examples — caught up with those minimum energy performance standards afterwards.
There shouldn’t be a risk of anti-backsliding with requiring solar panels, as solar panels are not a regulated category in the Energy Efficiency Regulations currently, but it is exciting to see that change in legislation in Quebec to promote more renewables.
Senator Galvez: Thank you.
Senator Coyle: I would like to ask Ms. McClenaghan a question. You spoke about a number of things. One of the things you spoke about that I think is important is the access issue as related to affordability. Your concerns are for lower-income communities and individuals.
Could you speak more about how? Is that a separate issue from the particular amendments to the act that we’re looking at? Is there something adjacent that you think should be done? Or is there something in this actual bill that you would like to see changed related to that?
Ms. McClenaghan: In terms of the bill itself, one of the things we think is quite important that helps with the whole community of people who are under-resourced is the periodic review and updating of standards that we mentioned. Otherwise, all too often, the communities we’re concerned about advocating for end up with the cheapest options, let’s say, being installed by landlords, not necessarily the most energy-efficient options. The incentive is usually such that what the energy bill on the part of the tenant will be is not part of that purchasing decision. That’s not always true, but often it is true.
It’s similar with owner-occupied residences, so ensuring that the floor is constantly improving can really help and can be a part of the concern I expressed about making sure that the communities we represent are part of the solutions of the future and that we’re not just leaving those to the able-to-pay market who can go out, do the testing and then subsequently get rebates.
Similarly, on jurisdictional comparisons, ensuring that we have the best comparisons possible helps ensure that all Canadians have access to more efficient appliances and other matters regulated under the Energy Efficiency Act. It is that raise-all-boats part of it that is quite important.
In addition, we do think there are adjacent matters and implementation matters to think about. In particular, regulatory sandboxes are often used for pilots around new technologies. In that case, we advocate that remote, vulnerable, Indigenous, low‑income, senior communities — many communities — are included in those pilots because, often, the implications for them in that new technology, in the reality that they occupy, are very different from perhaps an urban, upper-income home where the product or system is being tested. This is especially true with the broadened definition of energy efficiency standards.
Senator Coyle: Thank you.
I am trying to understand: You are all agreeing on this issue of benchmarking, that it should be baked into the act itself, the benchmarking against jurisdictions beyond the U.S. that we’ve talked about. You have all said this in various ways. You do not want it to be a race to the bottom. We need to be following the leaders. Maybe we could even be a leader at some point in this area. We have the proposed amendment from Ms. Riddell. We have had a little back and forth with both Senator Wilson and I on this issue.
You have probably engaged with NRCan on this. I would expect you would have been consulted. First, were you consulted? Second, are there some reasons that we’re not hearing that you heard for resistance to this?
Ms. Riddell: Thank you, senator, for that question.
Yes, I have spoken with Natural Resources Canada regarding our proposed amendments. I think that, in terms of the increased benchmarking, we have so much opportunity in Canada that we aren’t currently seizing. For example, there was recently a report by CLASP about how efficient appliances and equipment standards are such a powerful tool for reducing greenhouse gas emissions. For example, if all countries set efficiency standards at the level of today’s best available technologies globally for the eight most key appliance categories, global energy demand in 2030 would be reduced by a fifth of what is needed to achieve net zero emissions by 2050.
So appliances and equipment are an incredible tool for achieving Canada’s net-zero goals. If we don’t look internationally to those best-available technologies that we might not have yet in Canada or that we haven’t caught up to in other ways, then we’re missing out on the opportunity to achieve those savings.
Senator Coyle: You have had those conversations, though, with Natural Resources Canada?
Ms. Riddell: I have spoken to them about our amendments, yes.
Senator Coyle: I am trying to understand what you got back. Conversations are usually two-way. You have said that, and what all of you are saying makes perfect sense. I’m curious what kind of feedback you had and why it is not in there.
Ms. Riddell: Yes. I did receive some resistance to the amendment when I spoke with Natural Resources Canada, similar to what Senator Wilson shared.
Senator Coyle: Thank you.
Senator Wilson: Thank you. I may want to come back to benchmarking.
Before we go there, I would like to talk about one of the concerns I know that some senators have been hearing, particularly those who represent remote and rural communities or communities or folks who have a harder time making ends meet, which is the affordability side of this, the concern that this could drive up the cost of appliances.
I have heard Ms. McClenaghan and Ms. Riddell talk about the benefits of this energy saving to the poorest Canadians and the most disadvantaged. What would you say to allay those concerns? You are very familiar with the details of energy efficiency and how this will play out. What do we say to those concerns?
Ms. McClenaghan: For example, one of the areas we work on is the undue impact of heat events and other climate impacts on low-income communities.
We have been doing extensive work encouraging municipalities to think about adopting maximum heat bylaws and to require landlords, for example, to have maximum temperatures in their units, just like we have minimum temperatures in the winter. Landlords cannot rent accommodations to people that don’t have adequate heat. Now we’ve approached a point where the danger in many units, especially for seniors and certain kinds of medical conditions, is very high.
One of the technologies that can help there is to do with active cooling with heat-exchange technologies. In doing so, we want to ensure they are the most efficient possible so they are not providing undue expense on the tenant, if they are paying the cost; the senior who owns the home, if they are paying the cost; or the landlord, who will then be entitled to seek an increase in their rent.
In addition, there are all of the other costs that go with those kinds of events if people have to find other accommodation or to society if they end up in hospital. So, in our view, the net benefit — in addition to the direct benefit and cost to the communities — is much higher with efficient appliances than on the contrary.
Ms. Riddell: For an upcoming report, I analyzed the life‑cycle costs of Canada aligning with more efficient lighting regulations for general service lamps and calculated that consumers would actually save between 23% and 53% over the lifespan of a lightbulb if Natural Resources Canada were to adopt these higher standards, compared to a consumer buying a lightbulb that meets current minimum efficiency standards.
So minimum energy performance standards are overwhelmingly cost-effective. That is part of Natural Resources Canada’s tests when they’re doing the cost-benefit analysis. They are an incredible tool for consumers to save money, which is why these kinds of regulations are so important, since it can be difficult for a consumer in the store to calculate their life‑cycle savings from more efficient appliances.
The role of energy labelling, which is part of the Energy Efficiency Act, and the removal of the worst-performing appliances with higher minimum energy performance standards, is important, since it helps consumers, particularly low-income Canadians, to save money over the life cycle of the appliances.
Senator Wilson: This question is for Mr. Purcell: I’m interested in the work or analysis you have been doing in terms of building decarbonization. With buildings being the third‑largest contributor to Canada’s greenhouse gas emissions, mostly from space and water heating, how important are the energy efficiency standards for energy using products in this context? Are there aspects of how products use energy that you think deserve extra attention?
Mr. Purcell: Thank you for the question, senator.
Energy efficiency standards are essential to decarbonizing buildings. They are the tools that bring efficiency to scale. So when we have voluntary programs — incentives, rebates or support services, as we offer — we reach a portion of the market. These are industry leaders or engaged homeowners. Typically, we see that you can reach a maximum. Even with the most generous incentives, if you have a budget for them, or rebates, you’ll achieve a maximum of 20% of the market because the majority of consumers, whether it is households or businesses, have other priorities. It is hard to reach everybody, even if you are offering a good deal and a very compelling value proposition.
When we get the efficiency features in products that reach a certain level, it becomes critical to take it to the next scale, to build it into minimum product standards once it has been demonstrated and shown to be acceptable to a broad segment of the market, because we can never reach all of the consumers through voluntary programs and rebates. Practically, we can’t do it, and we’ll never have that budget available.
I really see them working in concert in a virtuous circle. We use incentives, rebates and labelling programs like Energy Star as well to incentivize and reward market leaders on the demand and supply side to make products available and to adopt them. Then, once we reach a certain market penetration that shows that the product works in a scalable way and works across a variety of situations, the next step is to bring it into regulation, with plenty of advanced notice for manufacturers, so that we can extend the benefit of those new technologies or features to the broader market.
We find it’s only when product efficiency levels get regulated that product prices come down. Most manufacturers, whether it is appliances or equipment, always look to have a basic-level product and a premium product or multiple premium products. Those premium products have a range of features to justify that higher cost that they market toward consumers who are interested in that and have the means to adopt them. Without energy efficiency standards, they make those latest energy efficiency features part of the premium product, and it is more expensive for consumers not necessarily because of the cost of the energy efficiency change in the design, but because it is lumped in with a number of premium features in the product. It is basic business sense for manufacturers to market a range of products, including premium products.
We typically find that when energy efficiency regulations are increased for a product, the cost of products that meet that standard comes down very quickly because it is no longer being built only into that premium line, but it’s now being engineered into the primary line, the mass-market line. Those costs come down very quickly. We’ve seen that with many technologies over the years.
I can remember stories from some of my peers who’ve been in the industry longer about the debates over whether new houses should have to have double-paned windows instead of single‑paned. There was a lot of angst about the incremental costs at the time, but within a year of the regulations coming into effect in the building code, we saw that incremental cost mostly disappear because it became the standard product. It wasn’t just for high‑performance projects or willing consumers; it was the standard feature. Once it is engineered into that standard product line, we see what the real incremental cost is, and it is typically much smaller, especially if there is advanced notice for manufacturers so they are planning for it and have the time to figure out how to engineer that into the mass-market product in an efficient and innovative way.
Senator Wilson: Thank you.
Senator Galvez: Mr. Purcell, as Canada shifts toward electrification, how critical is energy efficiency in managing pressure on the electricity grid? And if efficiency improvements do not keep pace with the electrification that is happening, what are the implications for grid capacity, system costs and, ultimately, household energy bills?
Mr. Purcell: Thank you for the question, Senator Galvez.
It is critical. As you may know, those looking at and forecasting — including the federal government — what it will take to reach our climate targets in the long-term foresee a greatly expanded role for electricity across a variety of products or applications, such as transportation, heating, et cetera, and perceive that might require somewhere between a doubling and a tripling of the size of our electricity grid by 2050. There is no question that we are going to need more electricity.
There is a big difference between the cost of doubling the size of our electricity generation capacity and tripling it. That’s really what the efficiency imperative is: to bring that down as much as possible, to make sure that we’re right-sizing the grid for an efficient economy. Generally speaking, that is much more cost‑effective than simply building more supply, especially when you consider in today’s world the challenges with siting major energy infrastructure projects. It becomes all the more imperative that we minimize the amount of demand growth through energy efficiency.
The other element that we’re excited about in the act is looking at not just total energy use but demand and demand response capability. That is the next generation when it comes to energy efficiency: intelligent products connected through the Internet of Things that can seamlessly respond to market signals and increase or decrease electricity consumption in real-time to help alleviate stress on the grid, generating an income stream for households and businesses when they are compensated for providing the service to the grid, while cost-effectively meeting our electricity infrastructure needs.
I think that there is a huge importance to energy efficiency, in general, and energy efficiency standards, in particular, to ensure we can grow the grid while keeping it clean and making it cleaner to meet the needs of a decarbonizing economy.
Senator Galvez: Recently, I was in Europe and I was told that the capacity of some fuses comes very low because all of the equipment inside the house must be energy-efficient. If you have equipment that needs more energy, you have to ask for an upgrade of the fuse in your fuse box. Do you think we are going to get there in order to push for efficiency in domestic electrical equipment?
Mr. Purcell: That is a great question. I think it highlights one of the values of energy efficiency. For example, when we work with or advise homeowners on retrofits, many times they will be adopting a heat pump or an electric vehicle charger installation in their houses. If they have not taken steps to improve energy efficiency, they typically, especially if it is an older home, will find that triggers a need to upgrade their electrical panel. That is a significant expense for a household. It might cost $3,000 to $4,000 to upgrade the electrical panel and service for that household from 100 to 200 amps.
However, in many cases, modest improvements in energy efficiency in the home and in the products used in the home can enable them to accommodate those new technologies, like heat pumps and electric vehicle chargers, without upgrading that panel. That is an enormous saving for consumers, not to mention it lightens the load on the local electricity distributor, which does not need to increase the supply on that feeder into that neighbourhood.
There has been some change. For example, in the electrical code, enabling and encouraging actually looking at household real-time data, which is available through smart meters, instead of using outdated assumptions to advise homeowners on whether they need to expand their electrical service and panel. That process is now in place, and if we get increasingly efficient products on the market, that will enable consumers to demonstrate when they want to upgrade to these new technologies that they do not need to upgrade their panel and their service, because they have those efficiencies in place and they have room on their panels to accommodate all the services they are looking for.
It also really helps with reducing the cost for households. The same applies in a more complex way in larger buildings. We work with a lot of multi-residential buildings whose owners are worried that adopting heat pumps to heat and cool the building would require increasing electrical services. We work with them to see if there are other energy efficiency technologies we can put in place to avoid the need to upgrade that electrical service. We want the money going into cost-effective improvements in the building that benefit the bottom line and the comfort for tenants and residents, and not into upgrading electrical services. Energy efficiency is a powerful tool to achieve that.
The Chair: We have two or three more questions from senators. Are you able to stay, the three of you online, a few minutes longer, maybe 10 or 15? Yes?
Ms. Riddell: Yes.
Ms. McClenaghan: Yes.
Senator Coyle: Thank you. This is a question for Ms. Riddell. You have stated that with regulatory sandboxes, novel technologies could come to the market sooner. How do you think these particular predicted positive consequences of this legislation could impact the green jobs industry and the energy transition? Is there a link? What would you have to say about that?
Ms. Riddell: Thank you for the question, senator.
In my opinion, there are some very good use cases for regulatory sandboxes. For instance, the example that Natural Resources Canada provided with heat pump clothes dryers was that they were unable to enter the Canadian market, as the test standard didn’t apply to non-vented clothes dryers, so we had to wait until the test standard could be changed through the regulatory process, which can take two or three years before Canadians can access that more efficient appliance. With heat pump clothes dryers, for example, they’re a benefit not just in terms of more energy savings directly from the appliance, but also because they are ventless. You can use them in more places without having to create more holes in buildings to vent them. You can make the entire home more energy efficient. Those kinds of technologies, for example, really play well with other energy efficiency improvements.
Another example I can think of when a regulatory sandbox could be really useful is that Natural Resources Canada is currently developing minimum energy efficiency standards for air cleaners, or air purifiers. In the future — for example, if there was another global pandemic — there could be a situation where a new air cleaner that is being developed and manufactured that could be more effective at killing a new virus but, unfortunately, would use a bit more energy might not be able to achieve the energy efficiency requirements of the Energy Efficiency Regulations currently, so the regulatory sandbox would be an important tool for new technologies that have positive health implications to enter the market.
I would say, in terms of the six-year total time span of the potential regulatory sandbox exemptions, I would like to see more examples of when the full six-year exemption would be necessary, considering that the regulatory process for an amendment to the Energy Efficiency Regulations is about two to three years. For the six-year exemption, whether or not that might be excessive for exempting products from the energy efficiency standards, I’d like to see more information there. But definitely, the exemptions could promote green jobs in Canada with new technologies being developed.
Senator Coyle: Thank you.
Senator McCallum: Thank you for your presentations.
Energy poverty is a significant issue in Canada, particularly with vulnerable groups, as Senator Wilson has said. Addressing this challenge requires targeted policies and programs to enhance energy efficiency and affordability across the country.
I realize that policies and programs are beyond the scope of this bill, but I was wondering if you can make any comments that we could put under observations about the bill.
Ms. McClenaghan: I might start with that one.
Yes, we agree. The Low-Income Energy Network, for example, often advocates for programs to alleviate energy poverty, and that does include programs based on energy efficiency.
For example, retrofits have been discussed tonight. About 20 years ago, when we were first advancing a solution to energy poverty in Ontario, one of the first places we saw get under way was with the utilities — starting with gas and then with electric — providing energy efficiency programs to low-income households. It was necessary to do pilots for those initially to find out what the issues were, what the barriers were and what was different about those households, to take those learnings and then apply them more broadly. Of course, as those programs evolved and developed, you also had the benefits of the additional technologies and the additional standards.
We strongly advocate for programs that target low-income and vulnerable communities and for making sure they not only reach those communities but reach them in ways that work for them, that are healthy and that fit their lifestyles.
To give you a really germane example, not an energy appliance but one of the energy efficiency programs involved building insulation. There was very low uptake on a full-cost program in one community. It turned out the reason was that the offer would have left households doing a lot of the interior painting and cleanup themselves, so the utilities modified the program to make sure that it was completely done. That kind of learning doesn’t happen until you actually reach out, involve the communities and make sure you’re taking into account how things work.
Similarly for energy-efficient appliances, whenever there are programs to advance their uptake, programs to test them or programs to subsidize their use, we think, first and foremost, those programs should be targeting under-resourced communities.
Senator Wilson: I just want to close the loop back to international benchmarking.
I know we’re having a heated agreement, and we heard the same thing with Efficiency Canada in terms of they’ve bought into this, they want to do it and they are doing it. There’s no disagreement in terms of the action that’s going to happen. It’s just the level of specificity in the act itself.
I don’t know if the reason the United Mexican States and the United States are mentioned is because of some requirement related to the Canada-United States-Mexico Agreement or something, but it just seems to me there’s probably a happy middle ground that doesn’t mean we need to amend the act every time we need to add a comparator. Let’s say India starts having high efficiency standards and we want to compare against their processes. Things change. It used to be that all the appliances in my home were made in the United States and Canada. Now none of them are made in either of those countries. They’re made in Asia, and some of them are made in Europe. The world changes; it has certainly changed over the past 30 years.
Ms. Riddell, you specifically said one of the concerns you had was that if it’s in the act, it’s transparent and there for all to see, but that can be accomplished in other ways too, such as through regulations, through a process that’s implemented by Efficiency Canada that is transparent and clear so that you get that certainty. Do you have any ideas in terms of falling short of us making an actual amendment to add additional countries to the list as comparators? Do you have a suggestion for how the process might be improved to do that outside of the actual bill itself or the actual act itself?
Ms. Riddell: Thank you, senator, for the question.
I just want to start by clarifying that the United Mexican States and the United States are not part of our amendment. They are part of the current Energy Efficiency Act. However, with your question in terms of the international comparison outside of the Energy Efficiency Act and, instead, in the Energy Efficiency Regulations, unfortunately, with the Energy Efficiency Regulations, how the cost-benefit analysis is performed — the steps that are taken, including those international comparisons — is not published. As Mr. Purcell said, the process until the cost‑benefit analysis is released after the pre-consultation process and it is not transparent. There is no ability to suggest which countries to look at. That’s an internal Natural Resources Canada process.
If it’s in the Energy Efficiency Act, then it’s very transparent which countries are included, and then there’s a requirement to compare. And if it is part of the Energy Efficiency Regulations amendment process, it’s more a norm within Natural Resources Canada rather than a requirement. If there were a way to make it a legally binding requirement to do a comparison that’s very transparent and available to the public or the NGOs that would be interested, then we’d definitely be open to that. But, to my understanding, that’s not how the process currently works.
Senator Wilson: To be clear, the real interest is transparency, yes?
Ms. Riddell: Yes — to know that Natural Resources Canada has looked to the international best practices. Since Canada is so far behind in terms of energy efficiency improvements, there are so many other countries that have much better performances. Organizations like CLASP and the International Energy Agency have benchmarked Canada against those countries, so it’s very clear that there are excellent opportunities. We’d like to see Canada seizing those opportunities.
Senator Wilson: Thank you.
The Chair: I think we’ve come to the end of our time together.
I’d like to thank all of the panellists for your participation, input and contributions to the study of this bill.
(The committee adjourned.)