What is the role of energy efficiency in a trade war?

Yesterday, Donald Trump imposed significant and widespread tariffs on Canadian goods. This threatens to disrupt jobs and businesses reliant on cross-border trade and could increase affordability pressures on Canadians.

In the face of this major disruption to Canada’s traditional trading relationship, the primary policy objectives will likely be people’s security and building a more self-reliant economy. Energy efficiency is a readily available solution to help achieve both objectives.

Security for people

People already feel affordability pressures and are vulnerable to climate impacts such as extreme heat and power outages. They need security; energy efficiency can help deliver it through lower energy bills and better buildings.

Statistics Canada tells us 20 per cent of low-income Canadians skip basic needs (e.g., food and prescription drug purchases) to pay their energy bills. Reducing energy costs means people can afford basic necessities.

Lower energy bills also free up dollars that can be spent to support local economies.

When faced with an uncertain future, we need lasting solutions rather than short-term band-aids. Energy efficiency provides durable improvements to economic security, in contrast to emergency measures that come and go.

Self-reliant economy

Whatever happens next, there is a new appreciation that Canada should provide for itself by using “made in Canada” products and services. 

Energy efficiency is a “made in Canada” energy resource. It uses domestic expertise and services to replace energy imports or frees up domestically produced energy resources for more productive purposes, such as powering domestic industry.

Energy efficiency for industry means domestic businesses can reduce energy waste and re-invest savings in innovation and growth. It minimizes downtime and maintenance needs, which avoids the need to import expensive products and gives time to develop made-in-Canada alternatives.

Energy efficiency and demand-side resources (e.g., batteries and shifting energy use timing) also have the advantage of being fast. We can save energy in every community across the country right now to reduce reliance on foreign energy sources, create jobs, and free up dollars to be spent in local economies. This contrasts with proposals for pipelines or transmission lines that take years or decades to plan and build.

With the right policy approaches, larger-scale and better-coordinated demand for energy efficiency can contribute to building Canadian supply chains. The 2021 Canada’s Climate Retrofit Mission report outlined how a large-scale building retrofit goal combined with a strategy to coordinate demand across several buildings could spur the development of new products, innovations, and higher productivity on the supply side. The same demand coordination strategy can be used to support and create Canadian businesses.

In response to this suggestion, the federal government launched Deep Retrofit Accelerators and the Greener Neighbourhoods Pilot Project, which create “market development teams” that plan new approaches to retrofit buildings. These initiatives could be expanded to provide the scale and certainty needed for Canadians to create new businesses or expand existing capabilities to make things within our borders.

For new buildings, Efficiency Canada publications have highlighted how standardized, high-performance demands through building codes and complementary policies provide the direction needed to spur domestic capabilities in areas like off-site building component manufacturing, digital technologies, and carbon-sequestering bio-genic construction materials.

We also highlighted the potential for a low-income energy efficiency program to coordinate bulk purchasing and contracting to provide certainty for supply chains and to time retrofits to smooth out seasonal boom-bust cycles.

The common theme is that scaling up and coordinating energy efficiency can be part of a strategy to create “made in Canada” supply chains that deliver what we need — suitable housing, affordability, and resilient energy systems.

Energy efficiency in the service of Canada

Faced with this latest policy challenge, energy efficiency remains a versatile solution. It can provide security for people and help build a more self-reliant economy. As we enter a new economic and political reality, let’s make sure energy-saving strategies are recognized for the service they can provide to Canada.