Energy Efficiency Act

Honourable senators, today I rise to speak to Bill S-4, An Act to amend the Energy Efficiency Act.

This bill seeks to update the federal framework governing certain energy-using products and systems, including through standards and labelling requirements, and to provide the government with more modern tools to verify compliance and enforce the rules.

That objective, on its own, seems non-controversial and straightforward. But if you look more closely at the text of the bill, it becomes clear that this legislation goes well beyond a simple technical update. The bill does three things.

First, it significantly expands government regulations. Second, it expands who may be included in those regulations, notably through the addition of the category of “commercial entity.” Third, it enlarges the enforcement toolkit by modernizing the inspection regime and adding corrective orders, higher penalties and administrative monetary penalties.

That is the stated intent of the bill. The question is this: Does this bill achieve its objectives only at the cost of adding more red tape, penalizing small businesses and granting the minister overly broad discretionary powers? That is a question for the committee to address, and later the Senate, but let me provide some food for thought, beginning with the scope.

Bill S-4 broadens the meaning of “energy efficiency standards” beyond the traditional notion of measuring energy consumption to include what the bill explicitly calls the “. . . responsible use of energy.” That opens the door to regulatory requirements and establishing standards related to durability, design, interoperability, systems integration and even the type of energy used.

Honourable senators, I don’t have an issue with standards. I have an issue where they are not clear. When a regulatory framework becomes so broad that the regulated parties can no longer easily understand its limits, uncertainty becomes the rule rather than the exception. That uncertainty carries real costs — compliance costs, legal costs and, ultimately, higher costs to consumers, the direct opposite of the bill’s stated intentions. A modern regulatory framework should provide clarity. Bill S-4 risks doing the opposite.

The second concern I have is that the act widens the net to include a broader spectrum of actors beyond those covered in the original act. Historically, the Energy Efficiency Act focused only on suppliers, those who manufacture, import or sell products and, therefore, control design, labelling and performance claims.

Bill S-4 introduces a new category called “commercial entity,” meaning a business that uses energy-using products for commercial purposes. In practice, this could affect a wide range of actors, such as small- and medium-sized enterprise retailers, distributors, building managers and other links in the supply chain. Many of these businesses will not have been involved in the design of the product, have no control over the label and rely on information provided by manufacturers or importers. In fact, colleagues, in many cases, this is equipment that’s already resident, paid for and capitalized on in a business.

Is it reasonable, then, to extend compliance obligations and sanction risks onto actors who do not have control over any of these links in the supply chain? Experience tells us that this type of expansion tends to penalize smaller players first — those without compliance departments, in-house counsel or the ability to absorb regulatory shock.

Bill S-4 also significantly expands inspection and verification powers. The bill explicitly authorizes requests for data, documents, test results and even access to digital modelling and simulation tools. It introduces remote inspections as a standard compliance tool — all in the name of modernization, which is fine. The problem is the absence of clear safeguards for the user.

How will trade secrets and intellectual property be protected, particularly where information sharing with foreign governments or organizations is authorized? How will cybersecurity risks be managed when remote access and digital systems are involved?

Modernizing regulations should not mean expanding authority without limits. Parliament has a responsibility to ensure that proportionality and protection of sensitive information are built into the framework itself.

I also have serious questions about enforcement.

First, the bill broadens inspection powers by shifting from a pure compliance-control model to a prevention-of-non-compliance model. Inspectors may intervene where they have reasonable grounds to believe that regulated activities are occurring on the premises or that relevant products or documents are present. This more proactive approach may increase the frequency of inspections. For small businesses, that means a greater administrative burden, increased uncertainty and operational risk.

Second, Bill S-4 introduces corrective orders. A corrective order may require a business to immediately stop importing, shipping, selling or advertising a product. The economic consequences of such an order would be catastrophic, in particular, colleagues, for small- and medium-sized enterprises.

At the same time, the bill substantially increases criminal penalties and introduces an administrative monetary penalty regime. These, colleagues, as I mentioned earlier, will apply to companies that have little or no control over the product manufacture, development or labelling.

This, in turn, raises the question of fairness. If a business disputes the interpretation of a requirement, will it have enough time and opportunity to make its case before the economic damage becomes irreversible? Further, this would make it even more difficult to attract or retain investors due to the uncertainty created by government intrusion into areas where the business may have no control.

When you add to this the power to publish names or descriptions to “encourage” compliance — that’s in the amended legislation, colleagues — without clear thresholds and fair process, this becomes a tool of reputational pressure, which can be particularly damaging for small- and medium-sized enterprises that cannot easily absorb what could turn out to be entirely undeserved reputational damage.

These are not just theoretical concerns. Energy policy is not abstract for Newfoundland and Labrador, the province that I represent, or for Canada for that matter. It affects remote communities, industrial employers, offshore supply chains and the basic cost of keeping the lights on in a harsh climate.

Newfoundland and Labrador depends on long and complex supply chains, Newfoundland being an island, and Labrador being remote. Supply chain integrity often guides our way of work and our way of life. Energy-using equipment is often imported, shipped interprovincially and installed by operators who do not manufacture or design the products they rely on. When compliance obligations and enforcement risks are expanded without clear lines of responsibility, regions like mine — and other parts of Canada; it’s a large and primarily rural country — feel the effects first.

Few operators and service providers in Canada have in-house compliance teams. They depend on predictability, clarity and reasonable timelines and cost of goods. Sudden corrective orders, discretionary enforcement tools and escalating penalties can discourage investment and delay efficiency upgrades rather than accelerate them.

There is also a regional equity dimension. Remote and northern communities have fewer choices, longer replacement cycles and higher costs. A framework that is too rigid or too discretionary — which is what this is — risks limiting their access to appropriate technologies rather than encouraging their adoption. Energy-efficiency policy should work with regional realities, not against them.

Bill S-4 also creates a new exemption regime, granted by ministerial fiat. There are two streams to this: first, exemptions of up to six months where the minister considers immediate action necessary, such as to harmonize a rule, correct an error or respond to exceptional circumstances; and, second, so-called pilot project exemptions that may last up to three years and be extended to a maximum of six years to test a product, a process or even a regulatory approach.

On paper, this is presented as a tool to promote innovation. Used carefully, it could indeed help businesses test new technologies without being hampered by outdated rules.

My concern is competitive fairness. When the government can grant targeted exemptions to one business, a category of businesses or certain products, it effectively creates parallel regimes: those who must comply immediately and those who benefit from reduced requirements. That can create competitive advantages for some, disadvantages for others and uncertainty in the market as a whole. And without a doubt, it will require additional costs that will be passed on to the already-suffering consumer.

If we want to avoid arbitrariness, we need guardrails. The question is how to ensure that exemptions do not become permanent carve-outs in disguise.

This section also, in spirit at least, clashes with the enforcement regime that I mentioned earlier, which can create a chilling effect for businesses where, in this section, the minister intends to light a fire under them to “encourage” them. It is an odd juxtaposition in the same bill.

Finally, there is a smaller but important change to reporting requirements that deserves attention. Bill S-4 removes references to U.S. states in the standards comparison reported to Parliament. That matters because reporting is not a communications exercise. It is a tool that allows Parliament to understand where Canada truly stands.

U.S. states vary widely in their approaches. Including them in the reporting requirements provided a more accurate picture of what is happening on the ground. Removing them reduces the quality and credibility of the comparison. The fewer reference points Parliament receives, the easier it becomes to tell a selective story. Transparency and accuracy are strengthened by more comparisons, not fewer. So why remove comparators that make reporting more informative?

Honourable senators, Bill S-4 contains objectives that are understandable, but it also raises serious concerns.

The committee, when this bill is referred to it, should therefore review it with one central question in mind: Can the government achieve its objectives without adding red tape, without threatening the real viability of small businesses and, finally, with safeguards that ensure proportionality, predictability and procedural fairness?

That is the test this legislation must meet.

Thank you.