Energy Poverty in Canada

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The 2018 publication Energy Efficiency Potential in Canada to 2050 (free to registrants at the IEA website) contains a short but shocking section on energy poverty in Canada. Every Canadian with a stake in the rising cost of real estate, mortgage debt and especially carbon taxation would do well to read it—none more so than our energy and environment ministers.

Experts disagree on what constitutes an appropriate threshold for energy poverty. Some argue that it is experienced when households spend more than 6% of their income on fuel. Others put the benchmark at 10%. According to Canada's NEB using 2015 data and a 10% benchmark, 8% of Canadian households experience energy poverty. A recent UBC study using 2011 data and a 6% benchmark, by contrast, put the number at 21% of households. If automobile fuel costs are included—which the IEA concedes is warranted, given that 80% of Canadians commute to work in their own vehicles—the numbers double.

Energy poverty afflicts low-income households disproportionately: up to 42% of low-income Canadians will experience it, which inevitably means "lowering their comfort standards to reduce energy bills" and thus coping with all of the attendant health risks of being cold—risks that fall most heavily on the young and the elderly. But it is not only low-income Canadians who now suffer energy poverty, in this era of expensive home ownership and mounting consumer debt. The tony Toronto neighbourhood of the Beaches, for example, has witnessed a mass exodus of boutique retail outlets, in part, according to one report, because residents have significantly less disposable income. The number of house-poor Canadian households is reportedly on the rise—and not only in the country's hottest urban housing markets. Ordinary middle-class Canadians everywhere admit that they are living hand-to-mouth in their dream homes.

The IEA report is limited to exploring future energy-use scenarios for Canada that are likely to benefit from increased efficiencies (rather than from, say, specific policy reforms or shifts in consumer behaviour). Even so, what emerges from its pages is the stark but unsurprising reality that the people suffering energy poverty will be the least likely to achieve energy efficiencies in their homes and vehicles over the medium and long run. "Given the cold climate," the report concludes, "the consequences of energy poverty may be especially acute for some Canadian households."

Indeed. This is what it means to live in a vast, cold and sparsely populated land. We in Canada spend 8.5% of GDP on end-use energy, compared with 5.5% in the United States and 7.1% across the OECD. Even under the IEA's most draconian (and arguably unachievable) scenario—what it calls "the Energy Efficient Case"—the most Canadians could expect to achieve circa 2050 is rough parity with our allies and trading partners in the OECD.

These IEA data have salience for many public-policy issues in Canada, but none more so than the debate over carbon pricing, which, until now, has had an airy, Economics 101 vibe to it. In northern Europe, the scourge of energy poverty has been front and centre in the decarbonization debate for roughly a decade—as it has, perhaps ironically, in the more temperate climes of the developing world. Now, finally, after the coldest winter in memory, the debate has come to Canada.