Energy Efficiency for Homeowners

Josh McLean and Chris Ling
Published February 28, 2007

Case Summary

As a Kyoto Protocol signatory, Canada initiated some programs to reduce greenhouse gas emissions. The federal government's  EnerGuide for Houses (EGH) program provided financial incentives to encourage homeowners to increase the energy efficiency of their homes (related to heating and cooling). Despite the government grants and the financial benefits to be gained from energy savings, the number of homeowners following through with upgrades in the EGH program was relatively low. This case study examines why homeowners took part in the EGH program and what types of barriers they encountered during, or prior to, renovations. 75 participating homeowners in Halifax Regional Municipality (HRM) were surveyed, and eight experts interviewed. Financial reasons was the main reason given by the participants for taking part in the program, but financial reasons was also cited as the principal barrier to completing the recommended upgrades. The case analysis also provides recommendations for any successors to the EGH program.

Sustainable Development Characteristics

The frequency and intensity of extreme weather events will continue to increase (leading to environmental, economic and social impacts) unless atmospheric greenhouse gas (GHG) levels are reduced. There is “a very high confidence” that natural ecosystems are already changing due to the impacts of climate change (Parmesan and Yohe, 2003). Examples of potential climate change impacts include more droughts, melting of mountain glaciers (Hyder (ed.), 2005), human health impacts from disease and air pollution, rising sea levels from melting polar ice, impacts to ecosystems and forests from changing weather patterns, and the associated economic impacts resulting from these changes (David Suzuki Foundation, 2006).

Reducing the use of fossil fuels will help reduce the severity of climate change impacts (Office of Energy Efficiency [OEE], 2005). Relative to its GDP, Canada produces 25% more GHG emissions than the average for the industrialized world (Bramley, 2005). On a per capita level, Canada is the second highest user of energy compared to other International Energy Agency countries (Luxembourg is the highest and the United States is the third highest) (Natural Resources Canada [NRCan], 2005a). Under the Kyoto Protocol, Canada agreed to reduce its GHG emissions, between 2008 and 2012, by 6% below 1990 levels (Government of Canada [GOC], 2005). In November 2002, Canada developed a Climate Change Action Plan with goals of reducing GHG emissions by 240 megatonnes per year. The federal government later ratified the protocol on December 17, 2002 (Canadian Broadcasting Corporation [CBC], 2006).

In April 2004, Environment Canada reported that Canada’s 2002 GHG emissions were 28% higher (731 million tonnes of GHG emissions) than the Kyoto target to be reached by 2012 (572 million tonnes). In 2005, the federal government increased its original reduction targets to 270 megatonnes per year by 2008-2012. Following the federal election in the spring of 2006, the Conservative party formed the new government and announced it would halt Canada's participation in the Kyoto Protocol to satisfy one of its election platform promises. Subsequently, Natural Resources Canada announced cuts to many climate change projects and, in October 2006, the federal government unveiled its new Clean Air Act, a ‘made in Canada’ approach that did not include the Kyoto Protocol (CBC, 2006).

Whether or not the federal government honours it, the Kyoto Protocol is not a final solution to the climate change problem. In fact, by 2050 global GHG levels should be 50-60% lower than 1990 levels in order to stabilize the GHG levels at twice that of the pre-industrialized area (GOC, 2005). Other groups, including the Pembina Institute and the David Suzuki Foundation, recommend even greater levels of reductions, 80% by the year 2050 (Bramley, 2005).

Approximately 17% of Canada’s energy use comes from the residential sector (NRCan, 2005b). This sector includes four types of housing: apartments, mobile homes, single attached homes (duplexes and row houses), and single detached homes (GOC, 2004). The majority (64.5%) of the residential buildings in Canada are single detached homes (7,191,540), followed by apartment buildings (18.5% - 2,061,257), single attached homes (15.5% - 1,721,416), and mobile homes (1.5% - 195,176) (NRCan, 2005c).

 

Critical Success Factors

Promotion of the federal EGH program was crucial to recruiting homeowners, however, in Nova Scotia many applicants to the EGH program were unaware of the matching grants program available from the provincial government, which affected the take-up rate of the federal program. If applicants had been made aware of the additional funds available from the province, this may have also resulted in more upgrades being implemented.

The key component of the EGH scheme was not only the grant available to homeowners, but included access to the audit opportunity and the specific recommendations and advice for homeowners for improvements in energy efficiences. Although the financial aspects of energy efficiency are the most important motivation, this related to cheaper energy bills in the long term, rather than the grant in the short term.

Community Contact Information

Josh McLean
e-mail: mcleanojosh@hotmail.com or jmclean@clean.ns.ca
tel: (902) 420-8803

What Worked? 

  1. The energy audits were a popular component of the program, with many respondents saying they would consider paying for an audit even if it was not part of a wider grant program.
  2. The advice and the recommendations are more important than the grant, as the majority of homeowners responded that they would have upgraded their homes with or without the grant – the audit and advice were key.

What Didn’t Work?

  1. Loss of support from the federal government was clearly a major problem, and most of those surveyed felt it was a poor decision.
  2. There was a lower number of homeowners conducting a ‘B’ audit and thus accessing the grant funding. This was due to planned upgrades not completed, or  homeowners thinking there was little prospect of having achieved significant energy savings to be awarded a large enough grant to cover their costs, making the second audit unnecessary.
  3. Some homeowners felt that there was not enough time allowed under the program to complete the upgrades to qualify for the grant.
  4. Most homeowners felt that many upgrades were prohibitively expensive.
  5. Many homeowners were not aware of the availability of matching funding from the Government of Nova Scotia to complement the federal EGH grant.
  6. The grant process was confusing to applicants as it was difficult to predict how much grant the homeowner would receive after paying for the renovations.

Financial Costs and Funding Sources

Under the EGH program interested homeowners paid a fee (typically $150) to receive an energy audit on their home. The actual value of the audit was approximately $300; with the federal government subsidizing half of the upfront cost.

A federal grant of up to $4,580 was then awarded based on the change between the first audit (A) and the follow-up audit (B) ratings. The average grant awarded under the program was $780 (2005 figures).

Originally, funds were available for a homeowner’s principal residence. In July 2005, the individual grant level was increased (from $3,348 to $4,580) to include landlords' low-rise residential buildings meeting the criteria for the program (NRCan, 2005d). In the 2004-2005 fiscal year, over 77,000 homes in Canada received an EGH evaluation, and over 17,000 grants were awarded, worth over $10 million (NRCan, 2005a).

Additional energy efficiency incentives were available to Canadians participating in the EGH program. For example, $100 grants were automatically available for homeowners who replaced older gas or oil-fired heating systems with Energy Star rated systems. The Canadian Mortgage and Housing Corporation (CMHC) offered a 10% rebate on CMHC mortgage loan insurance premiums if buying a house with an EGH-rating of 80 or higher, or if renovating an existing home and increasing the EGH rating by at least 5 points (and having a minimum rating of 40) (CMHC, 2005). Some organizations offered zero or low interest loans to help finance the cost of the renovations. For example, the VanCity Credit Union in British Columbia offered low interest loans when borrowing money to pay for upgrades recommended by the EGH program (VanCity, 2006). The Government of New Brunswick, in addition to a $50 rebate on the cost of the EGH visit, also offered either a zero interest loan up to $10,000 to help pay for EGH-related renovations, or an HST rebate on the cost of renovations of up to $1,500 (Efficiency NB, 2006). Other financial incentives, as reported by Green Communities Canada [GCC] (2006c), existed for most provinces and some territories, and were normally offered through the provincial/territorial governments, utilities, gas providers, banks or credit unions.

The Government of Nova Scotia provided $4.5 million to support the EGH program incorporating:

  1. matching the federal grant up to $1,000;
  2. providing a rebate on the cost of the EGH A audit ($150) and an additional $400 to the available federal and provincial grants, for single seniors with incomes of less than $25,000 or to seniors with family incomes less than $40,000 (Nova Scotia Department of Energy [NSDE], 2005a); and,
  3. an energy savings kit (valued at $50) that contained products and materials to reduce energy use up to $100 per year.

Following the cancellation of the federal program the Government of Nova Scotia implemented the following:

  1. a provincial EGH-type of grant of up to $2000;
  2. any low to modest income citizens, with single net incomes of less than $25,000 or family incomes of less than $40,000, were provided a rebate on the cost of their EGH audit, and an additional $400 was added to the EGH provincial grant; and,
  3. an energy savings kit (valued at $50) to all EGH participants (NSDE, 2006a).

As of November 2006, the province also offered the following:

  1. a $200 rebate when purchasing an efficient wood burning appliance (pellet stove or an Environmental Protection Agency (EPA) certified wood stove);
  2. a 10% discount on the installation cost of a solar hot water heating system;
  3. up to a $750 rebate for buying an energy efficient oil burning furnace or boiler and indirect hot water tank;
  4. rebates on high efficiency natural gas heating equipment (although natural gas was only available in a small geographical area); and,
  5. either a full or partial subsidy to pay for EnerGuide for New Houses (EGNH) evaluations (NSDE, 2006b).

The average income of homeowners taking part in the EGH program was higher than the average for HRM, $78,000 as opposed to $46,946 (Statistics Canada, 2006) suggesting a potential financial barrier for applicants  – suggestions to remove this financial barrier has ranged from upfront, interest-free loans to larger grants and other financial support.

Research Analysis 

  1. As the prime motivation of applicants taking part in any EGH or equivalent program is to reduce energy bills, it seems essential to stress the link between energy efficiency and saving money in any education or publicity program for energy efficiency – rather than the environmental benefits that these programs can provide.
  2. The federal EGH program suffered from a lack of partnerships between the three levels of government, utilities and other energy providers.
  3. There is a disconnect for homeowners between high energy bills and programs perceived as ‘environmental’ that espouse energy efficiency. A stronger link needs to be made in the publicity between these two perspectives.
  4. Other problems in achieving upgrades is the time to complete them and the lack of available contractors – any EGH administration could link homeowners to contractors able to carry out the relevant improvements.

A summary of the recommendations drawn from the case study research on the federal EGH program follows: 

#

Recommendation

Rationale

1

Develop partnerships

More funders allows for additional incentives (eg. zero interest loan).

2

Promote upgrades as an investment

Overcomes financial barriers (help it make financial sense).

3

Make zero interest loans available

Overcomes financial barriers (up front money to pay for renovations).

4

Conduct schedules follow up calls

Reduces information and knowledge barriers that occur after the A visit.

5

Replace the word ‘grant’

Reduce confusion about how program works (keep simple and easy).

6

Investigate options for contractor certification or education

Determines whether contractor certification is feasible in relation to government programs.

7

Research how grant amounts affect level of upgrades completed

Determines how program funds are most effectively used.

8

Target other groups

Allows more of the population to benefit from energy efficiency upgrades.

Detailed Background Case Description

The federal context

EnerGuide for Houses (EGH) is a residential energy efficiency program developed in the 1990’s and initiated in 1998 (GOC, 2006b). In August 2003, NRCan initiated the EGH Grants for Homeowners program in an effort to further reduce energy use (and associated GHG emissions) in the residential sector (GOC, 2006a). Under the EGH program, interested homeowners received an energy audit (‘A’ audit) on their home. A certified auditor evaluated the home for areas of inefficiency relating to heating and cooling. This included an investigation of the levels of insulation throughout the house, measurement and documentation of all windows, doors, heating, hot water, cooling and ventilation systems, and a blower door test that determined the level of drafts in the home. The house received an initial energy rating between 0 and 100. Typically, the older the home the less efficient it would be, and therefore the lower the rating. Upgrade options were modeled in a software program to determine the level of potential energy savings. A report was given to the homeowner with recommendations and advice on how to improve the energy efficiency of the home, presenting upgrade options in terms of their level of anticipated energy savings. Homeowners then had up to 18 months to complete the desired upgrades, after which a second evaluation (‘B’ audit) determined the new EGH rating.

A federal grant of up to $4,580 was awarded based on the improvement between the A audit and B audit ratings. The grant was based on the margin of improvement in the energy efficiency of the home rather than the amount spent on upgrades. By 2005, the average grant awarded to homeowners was $780 (NRCan, 2005d). Upgrades which could improve the space heating or cooling energy demands of the house, and thus the rating, included adding insulation, draft proofing, upgrading old windows and doors, and upgrading heating, cooling, ventilation and domestic hot water systems. On average, upgrades could help houses older than 25 years save 35% of energy use (OEE, 2005).

The Nova Scotia experience

From 1990 to 2001, the total emissions from the Nova Scotia residential sector grew by 8.2% (Hughes et al., 2005). The NSDE (NSDE, 2005b) provides similar results, with GHG emissions increasing by 10.5% between 1990 and 2003; a rate of increase that was identified to be less than many other provinces. Average energy use in homes in NS includes: space heating (64%), water heating (20%), appliances (12%) and lighting (4%) (NSDE, 2005c). By 2005, only 1% of the homes in Nova Scotia had received an EGH evaluation (Lipp and Cain, 2005).

In an effort to further reduce energy use, Nova Scotia ‘piggybacked’ onto the federal EGH program to promote energy efficiency upgrades in the province. On October 12, 2005, the NSDE announced its Smart Energy Choices program. Part of this program included an energy savings kit containing:

  • Lighting: 2 LED night lights and 3 compact fluorescent light bulbs (CFLs);
  • Water conservation: 2 faucet aerators and 1 low-flow showerhead;
  • Draft proofing: 1 package of foam gaskets for outlets, child safety caps, a roll of v-strip weather stripping and a storm window kit (NSDE, 2006c).

As of March 2006, despite the available grants, the number of homeowners who had followed up with their audit B was relatively low. For example, Clean Nova Scotia (CNS), a non-profit environmental organization had conducted many of the firts EGH audits in HRM. By March 2006, the level of audit B visits (homeowners applying for the grant) was approximately 20% (McKegney, pers comm., 2006). Similar observations were noted by Bird (2006), where in Waterloo Ontario, one of the EGH delivery agencies (Residential Energy Efficiency Project) had evaluated over 6,300 homes, since 1999. By October 2005, however, only 12% applicants had conducted enough upgrades to receive an audit B visit and grant. This figure of 6,300 homes includes those that had been evaluated before the grant existed, although the trend of a low level of follow-up visits was similar. Although grants existed, to fully discover how to help homeowners reduce energy use it is necessary to understand the motivations of homeowners and the barriers that exist to increasing the home’s efficiency (Dodge, pers. comm., 2006).

Post federal EGH cancellation

On May 12, 2006, the new Conservative federal government cancelled the EGH program (GOC, 2006a).  The cancellation affected those who had not yet taken part in the program. Homeowners whose audit A was completed by that date were still eligible for the federal grant. The 18-month timeline, however, was shortened for many applicants, as all files were required to be submitted to NRCan by March 31, 2007. EGH participants were encouraged by NRCan to have their audit B completed by February 28, 2007 (NRCan, 2007). Since the cancellation of the program, some provinces and utilities have taken steps to reinstate similar programs at the provincial level. On October 3, 2006, the NSDE announced that it had reinstated a provincial-level EGH program at least until March 31, 2007. The NSDE also offered additional incentives for purchasing energy efficient products.

In addition to these programs, NSDE’s Smart Choices for Cleaner Energy – The Green Energy Framework report outlined plans to participate in the anticipated federal EGH for Low Income Houses program, among other efficiency initiatives (NSDE, 2005d).

Taking part in the program

According to a survey of 75 Halifax-area homeowners who participated in the EGH program, the main motivations (in order of frequency of response) for taking part in the program were:

  1. to help reduce energy bills;
  2. to gain knowledge;
  3. to improve the home’s energy efficiency;
  4. to get the government grant;
  5. to help the environment;
  6. to improve comfort within the home, and
  7. because it was recommended by a friend or relative.

Participants undertook and planned the following energy efficiency upgrades:

 ImplementedPlanned
Draft proofing 3414
Attic insulation 2417
Windows 2022
Insulating walls 188
Basement / crawlspace insulation 1817
Other energy upgrades not related to EGH 112
Heating systems 92
Doors 98
Exposed floor insulation 21
Adding a ventilation system 25
Building an energy efficient addition 10
Solar hot water panels 01
Domestic hot water tank 01
Total 14898

Homeowners asked to identify the barriers faced in implementing the audit A's recommended improvements, cited concerns about the cost or affordability of the renovations, lack of time to complete the upgrades, and the availability of qualified contractors.

Resources and References

Bird, T. (2006). Energy efficiency audits: identifying perceived barriers to implementing recommended actions. MAES Thesis. Waterloo: University of Waterloo.

Bramley, M. (2005). The case for deep reductions – Canada’s role in preventing dangerous climate change. Vancouver: David Suzuki Foundation and the Pembina Institute.

Canadian Broadcasting Corporation. (2006). In depth Kyoto and beyond: Canada-Kyoto timeline. Retrieved February 30th, 2007 from: http://www.cbc.ca/news/background/kyoto/timeline.html

Canadian Mortgage and Housing Corporation. (2005). Energy efficient housing made more affordable with mortgage loan insurance. Ottawa: Government of Canada. 

David Suzuki Foundation. (2006). Climate change impacts. Vancouver. Retrieved February 30th, 2007 from: http://www.davidsuzuki.org/Climate_Change/Impacts/

Efficiency NB. (2006). NB existing homes energy efficiency upgrades program. New Brunswick Energy Efficiency and Conservation Agency.

Government of Canada. (2004). Your guide to the one tonne challenge. Quebec.

Government of Canada. (2005). Project green: moving forward on climate change – a plan for honoring our Kyoto commitment. Quebec.

Green Communities Canada. (2006a). Home retrofit incentive grant. Peterborough.

Green Communities Canada. (2006b). Ottawa urged to restore popular EnerGuide for houses programs.

Green Communities Canada. (2006c). Programs that piggyback onto NRCan’s housing programs.

Hughes, L., Bohan, K., Good, J., & Jafapur, K. (2005). Calculating residential carbon dioxide emissions – a new approach. Energy Policy, 33, 1865-1871.

Hyder, M (Ed.). (2005). Global warming impacts bring China to the table. Global Environmental Change Report, 17, 1-4.

Lipp, J., & Cain, S. (2005). The energy accounts for the Nova Scotia genuine progress index. Halifax: Genuine Progress Index for Atlantic Canada.

Natural Resources Canada. (2005a). Improving energy performance in Canada – report to parliament under the energy efficiency act for the fiscal year 2004-2005. Gatineau: Government of Canada.

Natural Resources Canada. (2005b). Energy efficiency trends in Canada, 1990 to 2003. Quebec: Government of Canada.

Natural Resources Canada. (2005c). Survey of household energy use in 2003: detailed statistical report. Ottawa: Government of Canada.

Natural Resources Canada. (2005d). Eligibility criteria for grants under the EnerGuide for houses retrofit incentive. Ottawa: Government of Canada.

Natural Resources Canada (2007). Home improvement – important notice. Ottawa: Government of Canada.

Nova Scotia Department of Energy. (2005a). Energy plan will provide relief and savings - news release. Nova Scotia.

Nova Scotia Department of Energy. (2005b). Nova Scotia Power.

Nova Scotia Department of Energy. (2005c). Quick tips – that will save you money this winter and all year long. Halifax.

Nova Scotia Department of Energy. (2005d). Smart choices for cleaner energy – the green energy framework. Nova Scotia.

Nova Scotia Department of Energy. (2006a). Program will help Nova Scotia homeowners cut energy costs – news release. Nova Scotia.

Nova Scotia Department of Energy. (2006b). Smart energy choices – rebates and incentives.

Nova Scotia Department of Energy. (2006c). Nova Scotia EnerGuide for houses program: questions and answers.

Office of Energy Efficiency. (2005). The EnerGuide for houses service.

Parmesan, C., & Yohe, G. (2003). A globally coherent fingerprint of climate change impacts across natural systems. Nature, 421, 37-42.

Statistics Canada. (2006). 2001 Community profiles – Halifax regional municipality. Ottawa: Statistics Canada.

VanCity. (2006). Bright ideas home financing.

Other Experts

  1. John Brennan, former Chief of the Federal Buildings Initiative, Natural Resources Canada;
  2. Donald Dodge, Program Administration Officer, Conserve Nova Scotia (formed by the Nova Scotia Department of Energy);
  3. Carl Duivenvoorden, Residential Sector Manager, Efficiency New Brunswick;
  4. Gary McKegney, EGH Advisor, Clean Nova Scotia;
  5. Kai Millyard, Special Projects Consultant to Green Communities Canada, Evaluation Manager;
  6. Paula Steele, Energy Efficiency Program Coordinator, City Green (Victoria);
  7. Peter Sundberg, Executive Director, City Green (Victoria);
  8. Bruce Young, Certified Energy Manager, Atlantic Coastal Action Program Cape Breton.