Ottawa’s Energy Efficiency Mandates for Buildings Will Add Fuel to Affordability Crisis: Report

New homes are constructed in Ottawa on Aug. 14, 2023. The Canadian Press/Sean Kilpatrick

Canadians shopping for a newly constructed home will have to brace themselves for an estimated average price hike of $55,000 by 2030 as a result of the federal government’s energy efficiency mandates for buildings, according to a new report.

The report released by the Fraser Institute noted that the feds’ stricter building regulations will reduce Canada’s total greenhouse gas emissions by just 0.9 percent.

“With housing costs already a major concern for so many Canadians, Ottawa’s new building energy efficiency regulations will increase the cost of housing even more and achieve very little in the way of reduced emissions,” said Ross McKitrick, a senior fellow and author of the study, in a Sept. 12 news release.

The report, which evaluates the economic impacts of the proposed regulations, says it is a “wrong move at the wrong time” by the federal government.

The study cited the Liberals’ 2030 Emissions Reduction Plan which includes a list of proposed building codes, such as a 65 percent reduction in energy consumption for new residential buildings, and a 59 percent reduction for new commercial buildings by 2030, compared to 2019 levels.

Another code called for cutting heating needs by 3.5 percent, and cooling by 3.6 percent by the stipulated deadline. Energy efficiency for both lighting and refrigeration systems is to increase by 1.3 percent per year.

‘Very High Costs’

Mr. McKitrick says the government’s proposed regulations will hike the cost of building new homes in seven years’ time, noting they are a “very costly addition” to the federal carbon tax.

“While the BEE [Building Energy Efficiency] requirements are initially minor, they quickly ramp up in the middle of this decade and will increase home construction costs by an average of about 8.3% by 2030, potentially adding an estimated $55,000 to the average cost of new homes in Canada,” he wrote.

A breakdown by provinces shows that an estimated $78,093 will be added to that same cost in British Columbia, $71,818 in Ontario, followed by Nova Scotia ($30,677), Prince Edward Island ($28,369), Newfoundland & Labrador ($22,966), and New Brunswick ($22,144) to a lesser degree. Alberta will see the additional cost of a new home in the province, on average, rise by $35,499.

The study argued that the new regulations will broadly affect the Canadian economy. “National GDP will initially decline to about 2% below the base case and maintain much of that gap through 2050,” it said.

“These requirements are expected to impose annual direct and indirect economic costs that sum to over $1,700 per worker beginning in the post-2026 period.”

Mr. McKitrick reiterated, in the release, that those are “very high costs” to be imposed on Canadians particularly when housing is already “unaffordable for so many people.”

“Given these new building regulations will only reduce Canada’s emissions by less than one per cent, policymakers should maybe ask whether the costs are worth it,” he said.