Growing a Clean Energy Economy

Published on November 23, 2018

Recently, a study prepared for Clean Energy Canada evaluated both the positive and negative impacts of energy efficiency on both employment and the economy, using the measures of improving efficiency that are outlined in the Pan-Canadian Framework on Clean Growth and Climate Change (PCF) for their calculations.

As improvements to energy efficiency can lead to a significant amount of money saved in utility cost, but also require a sizable initial investment in many cases, this study was done to evaluate the net economic effects of improving energy efficiency in regards to the Canadian economy.

What Was Assessed

In this study, the three ways in which energy efficiency affects both the economy and employment were assessed: the increased demand for goods and services that are efficiency-related, how efficiency savings can be redistributed into the economy, and how energy sales are reduced as a result of lower demand.

If demand for efficiency-related goods and services increase, jobs in fields such as the construction or home renovation sectors also increase in order to meet the new demand. The study includes that a cost to the economy may be incurred through backing energy efficiency programs to increase demand, but it will contribute to net economic growth and job creation.

Also assessed was how domestic utility revenue can be limited by lower energy consumption, leading to the possibility of lowering employment rates if, for example, new power plants don’t need to be built or older one’s expanded.

Energy Efficiency Can Grow the Economy

The study finds that approximately 75 - 85 percent of efficiency’s positive impact on the economy comes from the increased amount of household disposable income that is freed up from lower utility bills, and an increased global competitiveness of Canadian businesses due to their ability to run at a lower operating cost.

This means that money that is saved from energy efficiency improvements over the long term is more than enough to make up for the money spent in the up-front initial investment. As homes use less energy and energy bills go down, households will have access to a larger amount of disposable income. That additional income can be put back into the economy and be used to grow local businesses, or even be used to further increase household efficiency.

A higher demand for energy-efficient goods and services also stimulates the economy by increasing the amount of jobs that are required to fulfill the increased demands for things like smart home thermostats or to have spray-foam insulation products installed by a professional installer.

The Study’s Findings

Should Canada invest in the energy efficiency measures that are outlined in the PCF, the study reports that 118 000 full-time jobs will be created in Canada, and the Gross Domestic Product will be increased by 1 percent between 2017 and 2030 - that accounts for a $7 boost in GDP for every $1 spent on efficiency improvements.

Households can expect a total of $1.4 billion of savings between 2017 and 2030, averaging $114 a year per household. Greenhouse gas emissions are expected to be reduced by 52 million tonnes by 2030, meaning that Canada would reach 25% of its commitment to reducing emissions in the Paris Agreement.

A second policy of energy efficiency was also considered in this assessment, one that has higher and more aggressive levels of energy savings than those found in the PCF. Named the PCF+, this second policy would net Canada even greater GDP growth and job creation by 2030, further demonstrating the benefits of improving energy efficiency over the long term.

A Clean Energy Future

Investing in renewable energy and energy efficiency is looking to be rather promising, not only in terms of economics and employment rate, but also in terms of environmental protection. If Canada follows the efficiency measures and carbon pricing outlines in the PCF, it is expected to result in strong economic and employment returns, and will also work to help achieve Canada’s commitment to the Paris Agreement for combating climate change.

In terms of what the individual can do to contribute, improving home energy efficiency can significantly contribute to helping lower Canada’s greenhouse gas emissions, while also saving money on utility bills, and helping to improve home comfort and air quality levels.

For Ontario homeowners who are interested in contributing to a clean energy future, our Registered Energy Advisors are able to guide you on your way to improving your home’s energy efficiency, and make sure you have the right energy saving solution for your needs. They are able to conduct a Home Energy Assessment, providing them with all the information about your home they require, in order to provide you with a list of possible energy-saving solutions for you to consider - ranked in order of cost-effectiveness.

As the economic benefits of improving energy efficiency have been evaluated and found to be positive on both a global and local scale, we hope that more Canadians and Canadian businesses take these findings to heart, and work to reduce their own energy consumption and greenhouse gas emissions.