As the Ontario Liberals prepare to roll out a massive plan to battle climate change, much of the media attention has focused on a controversial proposal to ban natural gas heating systems in houses built after 2030.
But there's another part of the plan that will affect far more Ontario homeowners, and has been fought over by lobbying groups for years: mandatory energy efficiency audits for all homes listed for sale in the province. Ontario would be the first province in Canada to require them.
Once the policy is implemented, anyone wanting to put their home on the market will have to hire an auditor to examine the property and give it an energy rating based on a federal standard. The audit also gives suggestions for how to improve the rating, ranging from weather sealing to better insulation to large-scale renovations.
The idea is not only to prompt homeowners to invest in retrofits, but also to give potential buyers an estimate of their energy bills. (Given the size of those bills over time, this is sometimes called the "second price tag" on a home.)
The government won't confirm any part of the climate change plan that was leaked to The Globe and Mail, which included $250 million for mandatory energy audits. But the Ministry of Energy has spent the past year consulting stakeholders on a mandatory audit system called Home Energy Rating and Disclosure (HER&D), and the real estate industry is bracing for battle over it.
The Ontario Real Estate Association called the proposed rating and disclosure program a "European solution to an Ontario problem" in its submission to the province last fall (the program is used all over Europe).
"It unjustly attempts to regulate MLS [the listing service for homes], erodes home equity, unfairly punishes single family homes, delays home sales, does not address homes which are sold on non-listing services and is yet another government cost imposed on people who dream of one day owning a home," it said.
"The HER&D program will stigmatize properties that have low energy ratings. As a result, homeowners will be forced to lower their listing price."
Ontario has actually had a law on the books since 2009 to authorize mandatory audits. It was part of Dalton McGuinty's landmark green energy legislation that created the infamous feed-in tariff system for wind turbines and other clean energy sources. But the audits were the only substantial part of that bill that never got put into practice, thanks to backlash from two influential lobby groups: realtors and seniors.
"To be honest with you, we didn't fully understand and appreciate the pushback from the realtors and other organizations," says Jay Nordenstrom, an insulation manufacturer executive who helps lead the Canadian Energy Efficiency Alliance, a broad coalition of construction firms and energy utilities pushing for the audits.
"It was impressive in the sense that they were very well organized, and we kind of were not prepared for that."
Phil McNeely, a former Liberal MPP who introduced multiple private member's bills on mandatory energy audits before leaving office in 2014, says he heard from organizations worried about people living in aging homes.
"They felt that it put a hardship on seniors who might have had more involvement in the older homes, and that it would put a big burden on them," McNeely says. "It was seniors groups, it was real estate, it was developers. They didn't want any changes, and they won the day."
Today, it seems the province is finally getting set to move on the file. What's changed since 2009?
For one thing, an enormous pot of money is now available. When Ontario's cap-and-trade program starts up next year, it will bring in about $2 billion annually. Millions of dollars will flow toward retrofit programs, and the province will likely cover the cost of the audits themselves (about $300 each).
Natural Resources Canada is also getting ready the next generation of its EnerGuide Rating System. It will come with much more detailed information, breaking down exactly how much energy the home is expected to use annually.
And finally, Nordenstrom says more data is now available showing that mandatory audits are not harmful to home sales.
"These aren't new programs, they've been going on for at least 15 years in other markets," he says, pointing to the cities of Chicago, Austin and Canberra as examples.
"It does not slow the market, in all jurisdictions we've seen," he says. "The big difference that you'll see is the change in renovation spending. Ontarians spend over $26 billion per year on renovations ... What we would love to see is a re-purpose of prioritization on the home."
In other words, instead of renovating the kitchen right away, Nordenstrom hopes a homeowner puts energy efficiency improvements at the top of the list.
It's true, however, that homes with better energy ratings will sell for more. A government slide deck on the Home Energy Rating and Disclosure system notes that in Europe, "a one-level rating increase in a home’s rating has increased resale value by two per cent to eight per cent."
Energy Minister Bob Chiarelli – who was careful to emphasize he isn't confirming any details of the climate change plan – says he's heard the concerns of the realtors, but that the government will make sure it has financial supports in place should mandatory audits be implemented.
"I think the real estate industry might be a little worked over on the issue," he says. "The homes are still going to sell. My understanding is the biggest issue is the cost, because that was the issue that was raised initially. But the cost will be covered."
(The Ontario Real Estate Association declined to provide a comment for this article.)
The final answer and full details on energy audits will likely come in June, when the government is expected to release its climate change plan.
Brian Platt is a freelance journalist.
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