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How Can Policy Leaders Support Affordable Energy to Reduce the Impacts of Energy Poverty in Canada?

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the Canadian Gas Association.

If you have bought anything lately you know that inflation is real. If like many Canadians you aren’t driving an electric vehicle you will know when you have been to the pump that the price of gas has risen dramatically. And for people who don’t have public transit or walking options, the cost of getting to work or the kids to hockey is making life less affordable.

Now with war waging in Ukraine, Russia’s central role in energy provision to parts of Europe, Asia and elsewhere is properly getting more scrutiny. Geopolitical dynamics have always influenced discussions on energy policy in Canada. Already three Canadian provinces Alberta, Newfoundland and Labrador and Saskatchewan have said Canada should use the crisis in Ukraine to advance the energy options those jurisdictions have to the world. Simultaneously, high-profile federal Conservative politicians Pierre Poilievre and Michael Chong have argued Canada must also move to accelerate the development of LNG projects, particularly those on the East Coast, so that Europe has new stable supply options.

As the domestic Canadian political system turns to budget season, expect inflation and global instability to dominate those political documents. From St. John’s to Victoria, citizens are screaming for some temporary relief from inflationary pain particularly when it comes to the price of gas. In Ottawa, they are hearing those same cries while being encouraged to be more aggressive on opening Canada’s energy warehouse to the world. With the Conservative Party in yet another leadership race expect more debate on how Canada needs to do more geopolitically to displace other nations not just on greenhouse gas reductions, but as an energy provider.

So, what to expect on the policy front? It is possible governments may look at temporary gas tax collection relief in the places where they have such mechanisms. Some have called for broader sales tax waiving or reductions — it is not outside the realm of possibility — but that might be seen as risky, given the perceived precedent it could set. Others could increase subsidies for swifter transition to non-renewable energy options if the argument can be made it provides legitimate relief from ongoing personal affordability challenges. Also, I wouldn’t rule out some governments creating special one-time relief payments for citizens. Bribery with our own money has worked before.

Medium to longer term policy debates, beyond the budgets, will return to the Canadian energy regulatory environment and pace of energy transition. For example, in the current Conservative Party of Canada leadership race the pace and place of transition has been centre stage. Most of all the candidates have acknowledged that geo-political uncertainty in Europe creates a significant opening for Canadian oil and gas. One candidate has gone as far to argue that uncertainty should be impetus to expand our domestic production. This on top of the government’s own recent recognition that our energy production in Canada will be increasing creates a set of many interesting circumstances.

Maybe for the first time in years there is real disruption happening around what the shape of Canada’s energy policy is about to be over the next two decades. Watching it play out will be fascinating as the threat of climate change is not going away, and neither is instability in Europe.

“Maybe for the first time in years there is real disruption happening around what the shape of Canada’s energy policy is about to be over the next two decades.”

Tim Powers, is the Chair of Summa Strategies Canada and the managing director of Abacus Data, both headquarters are in Ottawa. Mr. Powers appears regularly on CBC’s Power and Politics program as well as on VOCM in his home province of Newfoundland and Labrador.

The drive to net zero will remake Canada’s economy over the coming couple of generations. At stake is our ability to preserve our standing as a major energy-producing nation, albeit in a sustainable fashion. Even more fundamentally, this effort will determine our ability to preserve our standard of living and quality of life. If there’s any word that’s been overused in recent times, it is transition. But managing this energy transition will be the most critical public policy challenge Canada faces in the next half-century.

Affordability will be vital to the entire exercise. If we rush head-long into a brand of change that radically increases the prices that families pay to meet their energy needs, there will be recoil and resistance. Progress will be undermined and setback. Consequently, identifying affordable energy sources — and using public policy tools to support their development is key. Natural gas sits high on this list. Abundant in supply and with high demand around the world, it represents an enormous transition opportunity. Not only will it help us move toward net zero, it will provide more affordable options at home as well as GDP-boosting potential for export. Of course, the challenge is getting such product to market which requires the engaged support of a prudent public policy approach — in particular, for the sustainable, socially-accepted construction of pipelines.

Other technologies offer similar hopes for an affordable transition such as the development of SMRs — or small modular reactors. Canada could easily, with the concerted support of governments and public policy leaders, become a champion in this new era of nuclear power. But the technology will not produce itself. Public dollars and policy support are needed to create momentum, prompt breakthroughs and facilitate scale.

Finally, Canada will need to also invest in the support of our energy producers and workers across the country. Those in energy-generating regions like Alberta, Saskatchewan, BC and elsewhere will need help to shift their focus to other options whether that be renewables, natural gas, nuclear or other. The talents of these workers need to be nurtured. Their skills need to be supported. And their ability to earn a living wage must be respected. At previous points in our history, dedicated transition programs have been put in place to help hasten change and support those most acutely affected. Our public policy tools must be similarly employed today in order to demonstrate to our energy sector workers that all Canadians recognize the challenge is not theirs alone. Nor is it simply sectoral or geographic. It must be regarded as a truly national priority.

In pursuing all these courses, and possibly others, we would be wise to keep affordability as a top-of-mind imperative. Public policies must be shaped with full consideration of practical consequences. If the price of energy transition is too costly for people to pay, the entire project will be harmed. Affordability is therefore a disciplining tool. It helps us pick the public policy priorities that will not only see us succeed but that will enable us to create and cultivate public support.

Scott Reid was director of communications to former prime minister Paul Martin, and is the co-founder of Feschuk.Reid.

Families are struggling. Inflation has hit a 30-year high while wages continue to lag, especially for workers on the lower end of the pay scale.

The cost-of-living crisis will continue to be a top political issue. As politicians focus on Canadians struggling to pay rising bills, rising energy costs will play a central role.

For months, energy costs have been a top driver of inflation and now, as costs rise to transport or manufacture goods, this is having a run-on effect making everything families need even more expensive. With interest rates poised to rise in coming months, and Canadian households holding $2.5 trillion in debt, the fiscal squeeze families face is only going to get worse.

Experts generally measure energy poverty by the percentage of household income families spend on energy, but this doesn’t even consider the impact of sky-high gas prices, which particularly affect low-wage earners in communities without easy access to public transit.

Energy poverty is only going to grow. This means more Canadians sacrificing one essential to pay for another, a greater number of families living in discomfort, higher incidences of respiratory illnesses, and poorer mental health outcomes. This is the bleak context facing policy makers as they look towards new measures to tackle energy poverty in this country.

Canadian Urban Sustainability Practitioners (CUSP) provides a tool to show what energy poverty looks like across Canada. According to CUSP, the number of households that spend more than double the nation-wide average on their monthly energy bills — which is the definition for energy poverty — stands at over 2.8 million families across Canada. In Atlantic Canada, over a third of households are now experiencing energy poverty. In some parts of Northern Ontario, it’s over 50 per cent of families.

This isn’t just about families struggling to afford high energy costs. Some communities face a lack of dependable access to energy at all, including a sizable number of Indigenous communities.

Solutions will have to work in the different realities facing a myriad of communities across the country.

Governments can start by helping families improve household energy efficiency through measures like energy retrofit programs, in particular, initiatives aimed directly at helping low-income families living in inefficient homes. Efficiency Canada, an organization pushing for a more energy efficient economy, has proposed new legislation with firm energy poverty reduction targets as well as new funding in the upcoming federal budget that could be used to leverage greater commitments from the provinces around reducing energy poverty.

“Governments can start by helping families improve household energy efficiency through measures like energy retrofit programs…”

These would be good first steps but so much more needs to be done. The fact is, we need urgent measures to reduce energy costs, but also action on bringing down the high cost of housing, medicines, and groceries. If we fail to act, we risk millions of families being left behind.

Kathleen Monk is Principal Owner at Monk + Associates, an independent public affairs firm. She appears regularly on CBC News Network’s Power and Politics and sits on the board of CIVIX, a non-partisan charity dedicated to building engaged citizens.