Community is the solution

Introduction

How did the 2021 extreme heat emergency affect Indigenous peoples in British Columbia? Mainstream colonial academic and policy discourse in Canada often presents a disadvantaged and vulnerable perspective of Indigenous Peoples’ experience. For example, several factors described in the literature present a compounding risk for Indigenous Peoples when it comes to extreme heat:

Housing standards and overcrowding within homes is a central safety factor when it comes to extreme heat: according to the 2021 federal census, one in six Indigenous people lived in a home in need of major repairs (almost three times higher than for non-Indigenous), and more than 17 per cent of Indigenous people lived in crowded housing (Statistics Canada 2021).
Indigenous Peoples in Canada are disproportionately affected by the negative impacts of climate change, emergencies, and disasters (e.g., people living on First Nations reserves in Canada are 18 times more likely to be evacuated due to disasters) (Government of Canada 2019).
Indigenous Peoples are also at significantly higher risk of developing chronic disease than non-Indigenous people (Hahmann and Kumar 2022). Certain medical conditions such as cardiovascular disease, hypertension, lung disease, and diabetes affect the body’s thermoregulation and increase susceptibility to extreme heat (BCCS 2022).

Despite these risk factors, the BC Coroners Service investigations into the B.C. heat wave that occurred in June 2021, found that a “disproportionately low number of Indigenous People died during the extreme heat event.” The report suggests that this may have been because of under reporting due to data collection processes and makes a recommendation for consultation with Indigenous Peoples “to ensure their voices are heard and their needs around heat planning understood” (BCCS 2022). This case study aims to address this gap through meaningful collaboration with Indigenous Peoples.

Methodology

Led by Preparing Our Home, an Indigenous-led network for disaster risk and resilience, this project documents the 2021 heat wave experiences and the subsequent cumulative impact extreme heat is having in five B.C. First Nations. Four sharing circles were conducted, supplemented with five in-depth interviews with community resilience leaders. Participants decided whether to be identified by their name or nation only. The questions were co-developed to ensure that participants’ priorities were reflected. This relational approach empowered nation-to-nation learning and a focus on solutions.

We focused on the experiences with heat in five on-reserve First Nation communities, their lessons learned (in relation to climate change), and, drawing on those lessons, made policy recommendations to create resilience to future extreme heat events:

Urban: The Tsleil-Waututh Nation, People of the Inlet, are Coast Salish Peoples whose territory includes the Burrard Inlet and the waters draining into it and North Vancouver, where the community has a current population of 600+ people.

Rurally located Nations in the Interior:
- Originally known as T’eqt”aqtn (the crossing place), Kanaka Bar Indian Band is one of 15 Indigenous communities that make up the Nlaka’pamux Nation. For more than 7,000 years, Kanaka’s traditional territory has sustained its people and today the community is home to between 70-140 residents (Kanaka Bar Indian Band 2022).
- The Líl̓wat Nation’s Territory includes 791,131 hectares of land that occupies a transition zone from temperate coastal environment to the drier interior of B.C. The majority of Líľwat7úl citizens live near Mount Currie which is home to the majority of the 2,200+ members (Líl̓wat Nation 2022).
- The Adams Lake Indian Band belongs to the Secwépemc Nation and is a member of the Shuswap Nation Tribal Council. Adams Lake was once a gathering place for neighbours to meet, socialize, and gather roots and berries and has a present-day population of over 830 members (Adams Lake Indian Band 2022).

Remote: The Haíɫzaqv (Heiltsuk Nation) are the main descendants of Haíɫzaqvḷa-speaking people and identify as being from one or more of five tribal groups: W̓úyalitx̌v, Q̓vúqvay̓áitx̌v, W̓u̓íƛ̓itx̌v, Y̓ísdáitx̌v, X̌íx̌ís. With a current population of 2,414 and growing, the Haíɫzaqv people hold strong connections between the community, the environment, and the economy (Heiltsuk Nation 2022).

Context

The land and waters colonially named as B.C. are home to 290,210 Indigenous people and 200 distinct First Nations, representing 16 per cent of Canada’s Indigenous population (First Nation, Inuit, and Métis) and around six per cent of the B.C. population (Statistics Canada 2021). To understand the experiences of extreme climate events such as the 2021 extreme heat emergency in First Nations communities in B.C., it is important to understand the colonial context in which these extreme events take place.

Dispossessing home, land, waters, and way of life

Traditionally, the formation of houses and communities were determined by the land, waters, and relationships with land-sustaining systems. Houses were designed for the local climate, local materials, and the function of the house (e.g., fishermen and women, hunters, trappers, traders, wool workers, wood carvers) (Olsen 2016).

Traditional homes for the Líľwat7úl, Secwépemc, and Nlaka’pamux: Organized in extended family groupings, the Líľwat7úl wintered in villages consisting of clustered c7ístkens, semi-subterranean “pit houses”. In temperate months, life was lived outside, fishing, hunting, and gathering as people travelled a traditional territory of almost 800,000 hectares, from coastal inlets to deep in the rainforest (Gabriel et al. 2017).

Similarly, the Secwépemc c7ístkten (winter home) could accommodate 15 to 30 people or four to five families (Favrholdt 2022). Located close to food sources and a place with loose soil, several c7ístkten would form a community. On the move in the summer for hunting, gathering, and fishing, the Secwépemc generally used c7ístkten from December to March, depending on the severity of the winter. Reused and rebuilt as necessary, these dwellings were used by the Secwépemc and other Interior peoples into the late 19th century.

Among Nlaka’pamux, pit houses were used year-round and provided relief from the heat in the summer. The homes were carefully placed away from water to ensure dry conditions.

A winter home in the Nicola Valley, believed to have been occupied as late as 1882. The photo was taken in 1908 by archaeologist Harlan I. Smith after the dwelling had been abandoned. Photo credit: Courtesy Secwépemc Museum, Neg. 43101

Through the Indian Act of 1876, the federal government displaced Indigenous Peoples to sub-standard, small parcels of land and took over jurisdiction for on-reserve housing. The Interior reserves were small, some bands had no reserve land, and one community was given a field of boulders (Harris 2002). No attempt had been made to protect Indigenous fisheries or water for irrigation. In many areas, settlers had taken all available water, leaving most reserves unable to sustain themselves (Harris 2002). This led to dispossession of land, waters, and the way of life that reflected community values.

By the 1940s, government involvement in housing assistance became more widespread with Indian agents arranging the purchase, delivery, and payment of building materials. In this era, reserve residents and band leadership were denied control over financial decisions and housing decisions (e.g., where to live, what type of house to live in, how much to spend on housing). As a result, housing knowledge that the mainstream society took for granted was not available on reserves (Olsen 2016).

Housing infrastructure is a critical factor for heat vulnerability and health outcomes (Samuelson et al. 2020). While lower quality housing is often seen as a marker of poverty within mainstream society, the housing practices established under the Indian Act created poverty (Olsen 2016). This race-based denial of safe housing as a basic human right continues today and manifests in, for example, overcrowding due to lack of housing suited for intergenerational living. Having provided this important context, we now turn to the 2021 extreme heat experiences.

How hot did it get?

The 2021 extreme heat was unlike anything the communities had seen before. Some areas in B.C. experienced record-breaking temperatures up to 20° C above normal (Table 1).

Table 1: 2021 recorded temperatures from the weather stations located near case study communities.

Location	Average (June, July)	Record	Date (of all-time max temperature)
Lytton	24.1° C, 28.1° C	49.6° C	June 29, 2021
Adams Lake (Kamloops)	25.1° C, 28.9° C	47.3° C	June 29, 2021
Haíɫzaqv (Bella Bella)	13.5° C, 16.4° C	35.8° C	June 28, 2021
Tsleil-Waututh Nation (North Vancouver)	14.4° C, 17.0° C	40.6° C	June 28, 2021
Mount Currie (Pemberton)	13.6° C, 16.4° C	43.2° C	June 28, 2021

Data sourced from Environment and Climate Change Canada

This included Canada’s highest ever recorded temperature—49.6° C on June 29, 2021—in Lytton, located on the Nlaka’pamux Nation territory and the arid, steep, rocky Fraser Canyon. On June 30, Lytton burnt to the ground in 21 minutes. The Kanaka Bar Indian Band’s weather station provided site specific data (Figure 1). It is important to note that some community members in Lytton area shared photos recording 50°+ C in their vehicles and inside their homes on household thermometers before the fire started.

Figure 1: Temperatures from June 25-July 31, from different weather stations in Kanaka Bar (courtesy of Kanaka Bar Indian Band)

What this experience taught us: community is the solution

“What are our solutions for extreme heat? When we look at this from an Indigenous perspective, it’s community. First and foremost, we have to look after each other.” ~ Patrick Michell, former Chief of Kanaka Bar Indian Band and Lytton resident

Below, we describe community experiences with extreme heat along some of the main themes that were identified in the sharing circles. These include extreme heat impacts on land and waters, and food, as well as experiences in accessing cooling spaces, and climate action.

The urban experience: Tsleil-Waututh Nation

As a coastal urban nation, the consequences of the extreme heat event saw considerable strain on community capacity, the displacement of Elders, dramatic impacts to the land and water, and consequences to food security and sovereignty. The urban narrative, provided by the first-hand experience of the Tsleil-Waututh Nation Health Director, Andrea Aleck, draws on technical, cultural, and community-based wisdom.

Tsleil-Waututh experience of the impacts on the land and water

The 2021 extreme heat emergency had significant impacts on the land and water systems that support and sustain Indigenous ways of life. These impacts resulted in inhospitable conditions for animal and plant life and have cascading consequences for food security and access to traditional medicines.

“Temperature increases have a significant impact on our waters. We are seeing a surge in red tide events, an increase in coastal erosion due to drying of the foreshore and a loss of sea plants that support ocean life and cooler estuaries. The Tsleil-Waututh Nation is working to plant eelgrass as a way to mitigate some of these negative impacts. Not only is this promoting the survival of a native species, it is providing a cultural learning and engagement tool for our community. It is part of our health to be out on our lands and waters and the activity of planting eelgrass nurtures the community perspective of health and offsets the negative changes to our environment.” ~ Andrea Aleck, Tsleil-Waututh Health Director

Tsleil-Waututh experience of the impacts on food security and sovereignty

The consequences of extreme heat on Indigenous food systems and sovereignty were addressed in great detail by Andrea. However, she also highlighted innovative, strength-based, and adaptive solutions being undertaken by the Tsleil-Waututh Nation.

“Food security and sovereignty is a critical area of work for the Health Department and due to the impacts of extreme weather—including the heat emergency in 2021—we are having to think and plan critically around this. We have developed a five-year strategic plan around food sovereignty and community gardening, this includes investments into a hydroponic building where we can grow a veggie from seed to table in a very short period of time.” ~ Andrea Aleck, Tsleil-Waututh Health Director

Tsleil-Waututh response to heat and access to cooling

As a coastal community located at the base of the North Shore mountains, the forest canopy and bodies of water have traditionally offered an escape from extreme heat. The 2021 response required an enhanced level of protective solutions specific to the care of Elders and vulnerable members of the community.

For the Tsleil-Waututh Nation, community health played a critical role in the response to extreme heat. As an immediate protective measure, an analysis of the Elders was done within the community—this assessment considered pre-existing health conditions, their living environment, and identified how Elders could mitigate the risk of heat in their own homes. To ensure that there was continuity to the care, Home and Community Care practitioners were providing enhanced wellness checks, however their findings uncovered the following:

“Even though we had provided fans and some Elders had access to air-conditioning units, we found that they were going unused as Elders could not bear the costs associated with operating the units. This required us to take additional measures and move Elders out of the community and into hotels in our neighbouring non-Indigenous communities. But there is hesitancy on the Elders’ part to leave their homes and leave the community. As a health team and a community, we know that when possible, it is important to stay in the community, that home is a safe place and family is always close by. But in this instance, we knew that we needed to have Elders living in temporary cooler spaces, so to assure safety the Elders were able to bring their companion or care-giver and we found that with additional supports, about 80 per cent of our Elders did decide to go.” ~ Andrea Aleck, Tsleil-Waututh Health Director.

The rural experience: Kanaka Bar Indian Band, Adams Lake Indian Band, and Lil’wat Nation

Over the past five years, communities in B.C.’s Interior have faced compounding hazards of increasing frequency and intensity—from the Elephant Hill wildfire that devastated Ashcroft Indian Band in 2017 to the 2021 fire that burnt down Lytton. Yet, 2021 was a complete departure from previous experiences with extreme heat.

“It’s almost like the air had a crackle in it. It was so strange, but you could smell the trees. You could feel the energy of the trees like when you put a branch of pine on a hot stove. That’s how the whole air smelt, and you couldn’t get away from it nowhere, no matter where you were.” ~ Sheri Lysons, former Licensed Practical Nurse who was the Fire Chief at the time, Adams Lake Indian Band

The duration of the 2021 heat emergency was a particular concern, as Patrick Michell, former Chief of Kanaka Bar Indian Band and Lytton resident shared: “One of the things that changed is extreme heat is occurring in greater frequency, duration, and intensity—emphasis on duration. Lytton in the past had recorded 44.4° C for one day and then in 2021, temperatures closer to 50° C occurred for days; what happens if we stay in excess of 50° C for longer periods? This heat has impacts on land and waters, not only the people.”

The rural experience of impacts on land, waters, and food

“How do we as Indigenous people deal with and prepare for the fact that our homeland is dying? I was prepared physically for the physiological effects on me. I was even prepared mentally, but what I wasn’t necessarily prepared for was the impacts on the ecosystems. That’s different. We’re going to transition from coastal to desert.” ~ Patrick Michell, Kanaka Bar Indian Band, Lytton resident

Sharing circle participants discussed how these extreme events are warnings of a fundamental eco-system disbalance. These warnings are carried by the animals, insects, trees, and the land. For example, the heat brought about swarms of insects by speeding up the reproductive cycles of houseflies, and led to a rapid rise of mosquitoes; wasps also became more aggressive. There is an acute need to listen to these warnings.

“I think what people need to start doing is looking more toward what the land is telling us rather than what science is telling us, because the land has gone and done this for thousands and thousands of years, and it knows the cycles and we need to pay attention to that. Look at what the animals, what the buds are telling you, what the waters are telling you, because they have the answers. We just need to listen.” ~ Sheri Lysons, Adam Lake Indian Band

Extreme heat was accompanied by drought. Combined, these events disrupted the cycles of seeds and plants which in turn displaced animals and began to displace trees. To adapt, the Kanaka Bar Indian Band is setting aside water in reservoirs, so that during the heat and drought there’s still water for the ecosystems, for drinking, for fire protection, and for irrigation.

The heat, insects, and the drought severely disrupted food harvesting and preservation initiatives. Berries and fruit shrivelled on bushes and trees. Bears went hungry. Food preservation becomes challenging given the amount of additional moisture and heat produced when canning: “In the summer, notwithstanding the heat wave, with 17 people living in an energy efficient home cooking a turkey or a fish, or canning for four hours, heats the inside buildings which is trapped. So how do you cook during an extreme heat event?” asked Patrick. An outbuilding that allowed cooking outside was utilized by some families, which is crucially important for food self-sufficiency.

The rural response to heat and access to cooling

We found that Interior communities were more accustomed to extreme heat when it comes to the built environment and air conditioning, given the experiences with heat in the past. We review these strategies for homes and at a community level.

Access to cool environments in communities

“We had thrived at 42°- 43° C before; we had a life. What we didn’t know yet was how to survive 50+° C. And the answer was, hunker down, and don’t go outside. It too shall pass.” ~ Patrick Michell, Kanaka Bar Indian Band, Lytton resident

Historically, across the communities, when the summer heat arrived, people went to the water. Lakes, creeks, rivers have been the “nature-based solutions” that provided much needed respite and brought families and communities together. As Patrick shared: “For my community, we all went to the creek. By 11 am, when it got hot, we would sit in creeks.”

However, with climate change these traditions are increasingly challenged: “The problem is by June, Lytton Creek is now no longer flowing, so you don’t have the surface water of Lytton Creek. You can go down to the Fraser and Thompson, but the Fraser and Thompson as a river system is now hitting 20 – 23° C. That’s bathwater. So, where’s the relief?” Patrick questioned.

“We live right on the lake, so we always had the water and the river to keep us cool. But the water felt like bath temperature [during the heat wave], even in the middle of the lake. It would normally be cooler because of the flow of water, but it was brutal out here.” ~ Sheri Lysons, Adams Lake Indian Band

Some relief came in the form of cool community spaces. In Adams Lake Indian Band and in Lil’wat Nation, cooling centres at the band office, health centre or other designated buildings were open during office hours, or until 8 p.m. – 9 p.m. at the latest. Cooling centres were trusted community spaces and were used by Elders to visit with each other. Unavailability of cooling outside of office hours was a limitation especially given hot nighttime temperatures. At Kanaka Bar Indian Band, a community building entry code was provided so that people could access the cool environment 24 hours/day. During the heat emergency, the building was staffed at night to help people.

Access to cooling in homes

The 2021 heat was particularly unbearable for Interior communities because there was no relief during the night, especially in the Lytton area. As Patrick shared: “Normally when we hit 42° C, nighttime temperatures dropped to the twenties. We had high thirties at night during the heat emergency. There was simply no cooling off.” High temperatures throughout the night present a major risk factor for heat-related mortality risk (He et al. 2022).

As heat began blanketing the Interior, kinship systems were activated and those with air conditioning housed family members who did not have it: “My daughter, my grandkids, and my son were staying at my house because I had the air conditioner,” shared Sheri.

Recently in communities, an effort has been made to build energy efficient homes that have a better insulated building envelope. The challenge was that without an air flow system these homes trapped heat, especially at night. “The bedrooms are upstairs where it was most hot. The house was muggy inside. We were sweating inside as if we were playing sports,” shared Casey Gabriel, Fire Captain, Lil’wat Nation. People living in homes with basements fared much better as the basements provided relief at night, some suggesting that “it was 50 per cent cooler.”

The remote experience: Haíɫzaqv (Heiltsuk Nation)

“Salmon is our main source of food, and it is on the brink of extinction. It’s like that on the whole coast. Skinny bears. We’re all feeling the effect of global warming.” ~ Haíɫzaqv participant

Impacts on land, waters, and food

The Haíɫzaqv community of Bella Bella, on Campbell Island, off the central coast of British Columbia is a coastal community that has sustained themselves for the past 9,000 years with gifts from land and waters. Climate change and extreme heat are fundamentally changing the Nation’s ability to feed themselves:

“A few years ago, we had heat waves two or three summers consecutively. A lot of salmon were dying. They weren’t making it into the rivers. There was no water for them to spawn. And ever since, with the climate change, our salmon populations are almost extinct.” ~ Randy Carpenter, Heiltsuk Emergency Coordinator

*Thousands of salmon dying in the Neekas River. Photo credit: Sarah Mund, taken on Heiltsuk Territory.*

The heat had an impact on drinking water and water for public works:

“Our dam was very low. I think they dredged out between 100 and 150 truckloads. Now we do have a lot of water. We can probably go 4-6 months without rain, and we will still have water.” ~ Randy Carpenter, member of the Heiltsuk First Nation

The heat affected cultural continuity: from an inability to hold cultural ceremonies to disrupted food preservation activities, making it impossible to can or smoke food indoors or outdoors, due to heat and fire bans:

“Heat wave meant that we couldn’t have fires, which meant there couldn’t be traditional barbecuing of fish, which meant there couldn’t be processing, saving, or storing of fish.” ~ Haíɫzaqv participant

Response to heat and access to cooling in community

For Haíɫzaqv the heat had major impacts on infrastructure and services. As a remote community dependent on the local airport for critical supplies, heat became a factor in operations. As temperatures heated up, the air became less dense, making it harder to take off and land safely especially on a short single runway:

“[Less lift due to heat] means you can take less fuel, less people, less everything. The heat also affects landing weight which is a great impact on our community, if something needed to be brought in an emergency or out… There were also people in neighbouring communities that were very dependent to get certain medication to stay alive… It was hard to get their meds in the heat wave.” ~ Kathy Sereda, Haíɫzaqv participant

As a remote community, the Nation developed a truly relational approach to emergency planning by bringing together a 21-member emergency preparedness committee:

“It’s got everybody in our community: fire department, hospital, health transfer building, school, RCMP, Coast Guard Auxiliary, a Councillor, a health and safety officer from Tribal Council, a person from housing reconciliation, finance, communication. We are strong in that we regularly meet 6-8 times a month.” ~ Randy Carpenter, member of the Heiltsuk First Nation

During the 2021 extreme heat emergency, none of the community buildings had air conditioning as 2021 temperatures were unprecedented in the territory. At the time of the sharing circle in winter of 2023, the Nation was working to resolve this issue. As Randy noted: “We will be prepared before the summer. We will have a building in place, and we will have air conditioners. We will be ready for if we have extreme heat coming up [this] summer.”

Access to cooling in homes: Haíɫzaqv Climate Action

“To be Haíɫzaqv is to act and speak correctly, as human beings in balance with the natural and supernatural world; to live in accordance with our ǧvi̓ḷás (traditional laws). Living up to our responsibilities means taking immediate and meaningful action on climate change.” (Haíɫzaqv Climate Action 2023)

H̓íkila qṇts n̓ála’áx̌v (Protecting our World) and the Haíɫzaqv Climate Action plan has been celebrated across B.C. and Canada. Born in response to a fuel spill which destroyed 60 per cent of the community’s clam beds and fish, the plan is aimed to remove diesel dependency for the community. A heat pump project is ensuring that homes are warm in the winter and cool in the summer: “There’s a new initiative in town where we’re changing fuel. I believe there’s probably between 150 and 200 homes in the last couple of years that have went from fuel and wood, to just electricity” (Haíɫzaqv participant). As well as preparing the community for extreme heat, fuel switching has also had a positive impact on affordability and emissions: reducing average annual costs of $3,600 per home for heating and electricity by more than $1,500. One home switching to heat pumps eliminates five tonnes of greenhouse gas emissions annually and reduced fuel consumption by 2,000 litres of diesel per home per year (Haíɫzaqv Climate Action 2023).

Recent community growth coupled with fuel switching is putting pressure on the power lines. Historically, the community has seen prolonged recurring power outages that are very stressful for community members as they rely on power both in the winter for warmth and in the summer to cool homes.

“There’s a lot of heat pumps in and they draw a lot of power when they start up. We’re going to be expanding and installing more heat pumps this spring. Something that we need to keep in mind is our power lines. Are they adequate enough to be using that much power and what are the effects that are going to happen?” ~ Ralph Humchitt, Haíɫzaqv participant

Discussion and recommendations: A lot more work needs to be done

“Give people the truth if you want them to adapt.” Patrick Michell

Across communities, the environment is changing drastically with dire impacts on land, waters, as well as human and non-human life. The B.C. extreme heat emergency of 2021 created a terrifying new threshold beyond anything previously experienced with changes that will “be affecting us for generations,” as Sheri shared.

We observed similarities and differences within our focus on urban, rural, and remote communities. In urban settings, there was an opportunity to leverage hotels for housing Elders during the heat. In rural communities in the Interior, air-conditioning in homes was more prevalent given previous experiences with heat. In a remote setting, at the time of the 2021 heat wave none of the Haíɫzaqv community buildings had air-conditioning given the historically moderate climate.

Our case study limitations include an on-reserve focus only. More research is needed to understand Indigenous experiences with heat for off-reserve populations, especially insecurely housed, the homeless, and people experiencing mental health and substance use.

To be Indigenous is to be resilient: Culture is protective

Culture is foundational to Indigenous life and is an inherent source of strength. It is a grounding element in intrinsic Indigenous values that are placed on family, community, language, and land. Throughout each of the case studies, the protective role that culture plays in relation to extreme heat events emerges through the narrative regarding the care of Elders, the relationship to the land, ties to traditional foods, and the collective action of community.

Our case study offers a counter narrative to experiences with heat in B.C. While extreme heat outcomes are often assessed as a result of individual socio-economic and health conditions (thus placing the focus on the individuals in vulnerable conditions) our case study demonstrates that these outcomes also depend on the values of the society. For example: When Elders are valued, they are protected. Despite some Elders living in substandard housing, facing health challenges, and lacking access to air conditioners in their homes, a kinship and community care-based systems proved effective in activating informal and formal resources to ensure safe outcomes.

Recommendations:

Approach Indigenous resilience planning by centring on Indigenous rights, the relevance of Indigenous Knowledge and language, the presence of Indigenous institutions of governance and the intergenerational strength of culture. Investments in culture are investments in resilience. Tangible investments need to be made available that allow for the nurturing of culture (e.g., at a neighbourhood or broader societal level) where Elders are visible, valued, and cared for as this can ensure safer outcomes.
Implement trauma-informed approaches to heat response planning. While all of the communities prioritized Elders in their response, this was not easy (e.g., due to lack of cool spaces at night and mobility issues for using “Mother Nature’s cooling centres” such as lakes and rivers). Another big challenge voiced by communities was the Elders’ desire to be independent. Participants shared that Indigenous stoicism (“others need help more than I do”), as well as shame and stigma brought by colonial services were also barriers for seeking help. Heat response planning needs to be trauma-informed at the community level and a broader system level.

The compounding nature of disasters and trauma: Fear now lives within communities

Across the communities, there were very strong distinctions between impacts of the 2021 heat wave and the subsequent compounding disaster events that followed. For the Nlaka’pamux Nation, the impacts of a wildfire that devastated Lytton and Lytton First Nation as well as homes of some Kanaka Bar Indian Band residents, are still felt to this day due to displacement and inability to return. This wildfire devastation, somewhat like the one that Ashcroft Indian Band experienced in 2017 wildfire, has left communities in profound fear. This fear is triggered by the ever-increasing frequency and intensity of extreme heat events, increased winds, and drought conditions.

There is a tendency in emergency management and public policy to focus on the event that has just passed. There is also a tendency to focus on hazard specific planning that results in silos. While the documented strengths and solutions emerged at the community level, this is not sufficient for addressing long-term compounding effects of heat, subsequent drought, wildfires, extreme smoke, animal displacement, as well as tree and animal mortality. The root causes of these compounding disasters and existential fear that they bring lie far beyond the Indigenous territories where the impacts are felt the most.

Recommendation:

Acknowledge and plan for distinct strengths, vulnerabilities, and needs of urban, rural, and remote First Nations communities. Remove hazard-specific planning silos. Plan for extreme heat and compounding effects at a watershed, provincial, and federal level. Invest to better understand the complexities tied to the compounding effects that intersect with extreme heat.

Invest in site specific data, “build homes that will last for future generations”, and reduce an over-reliance on the grid

Our case study shows that heat response plans need site-specific data at a community level given the vast differences in geography and recorded temperatures across B.C. from semi-deserts in the interior to coastal rainforests. In Lytton, the weather station’s temperature records differ from what people recorded in their vehicles and house thermometers. The weather stations placed in cooler locations may not account for the fact that localized temperatures may be hotter in some areas due to radiant heat trapped in buildings or natural features such as canyons. It is unclear whether the weather stations were updated to be able to measure the extremes. In addition to temperature, key factors like humidity, air movement, and radiant heat must be considered. Provincially available climate data sets (e.g., BC Station Data – Provincial Climate Data Set) need to be made accessible to communities in a way that can be used for planning without requiring highly specialized technical knowledge. Provincial and federal governments funding streams could be created to support investments site specific climate monitoring at the community level. This would ensure a solid basis for adaptation.

While this case study focused on the extreme heat of 2021, the participants spoke of numerous events experienced since and the importance of addressing both extreme heat and extreme cold, especially in the context of power outages. At regional and provincial scales, power outages, serviceability during extreme events, and potential for large-scale prolonged system failures need to be considered. At a community level, energy poverty and unaffordability of cooling, especially for people living with disabilities or on social assistance must be addressed. Colonial policies resulted in “one size [does not] fit all” homes that are overcrowded (not designed around intergenerational living), are poorly built and poorly insulated (using substandard materials), and not built for local climates.

Recommendations:

To ensure climate resilient homes and to counteract an over-reliance on energy for cooling, build for local climate using site-specific data and place-based approaches. Passive design elements (that do not rely on energy to stay cool) could help ensure that houses stay safe during power outages in extreme heat.
Develop better measures of success when it comes to extreme heat planning. Is it about 100 air conditioners in 100 homes in which case the onus and cost of running them for keeping safe is placed on the most heat vulnerable? Is it about moral responsibility to look after your neighbour? Is it about the legal responsibility of landlords to ensure safe housing? Is it about combatting a culture of individualism, loneliness, isolation, and social neglect?

Conclusion

The experiences with the 2021 extreme heat emergency described in this case study provide a glimpse into the vulnerabilities and strengths held within communities. Our case study shows that from an Indigenous perspective the impacts of the 2021 heat emergency on land, waters, and people are felt to this day. With extreme heat emergencies now considered hazards that all communities need to plan and prepare for, Indigenous wisdom must be considered a central part of the collective solution for enhanced resilience. The case studies brought forward in this work provide applied solutions and enable the development of policy recommendations for enhanced resilience across Indigenous and non-Indigenous communities.

Artist Statement from Sheri Lysons:

“When I was asked to paint my interpretation of climate change I had a much different image in my head. I started about 8 different paintings and none of them worked the way I envisioned. I fought to pull it together and it just wouldn’t come. At one point I felt like it was beyond my capabilities. Then it came to me, the medicine wheel, when mankind is out of balance everything suffers. Right now we are looking at a planet in crisis. We are experiencing extreme heat, fires, floods and destruction on a monumental level. To heal our planet we need to heal the water. These paintings are meant to show hope and healing.” – Sheri Lysons

References

BC Coroners Service. 2022. Extreme heat and human mortality: A review of heat-related deaths in B.C. in summer 2021. https://www2.gov.bc.ca/assets/gov/birth-adoption-death-marriage-and-divorce/deaths/coroners-service/death-review-panel/extreme_heat_death_review_panel_report.pdf

Favrholdt, K. 2022. “The Secwépemc c7ístkten or winter home” Kamloops This Week. https://www.kamloopsthisweek.com/community/history-the-secwepemc-c7istkten-or-winter-home-5627603#:~:text=Among%20the%20Interior%20Salish%20peoples,by%20the%20Secw%C3%A9pemc%20as%20c7%C3%ADstkten. (July 26, 2022).

Gabriel, C., Henry, S. and Yumagulova, L. 2019. “Preparing our Home: Lessons from Xeťólacw Community School, Lil’wat Nation” http://preparingourhome.ca/lessons-from-the-xetolacw-community-school/

Government of Canada. 2019. Budget: GBA+: Chapter 3. – Redressing Past Wrongs and Advancing Self-Determination. https://www.budget.canada.ca/2019/docs/plan/chap-03-en.html

Hahmann and Kumar. 2022. “Unmet health care needs during the pandemic and resulting impacts among First Nations people living off reserve, Métis and Inuit” https://www.researchgate.net/publication/363349826_Unmet_health_care_needs_during_the_pandemic_and_resulting_impacts_among_First_Nations_people_living_off_reserve_Metis_and_Inuit_StatCan_COVID-19_Data_to_Insights_for_a_Better_Canada

Haíɫzaqv Climate Action. 2022. Heat Pump Project. https://heiltsukclimateaction.ca/heat-pump-project

Harris, C. 2002. Making native space: Colonialism, resistance, and reserves in British Columbia. UBC Press.

He, C., Kim, H., Hashizume, M., Lee, W., Honda, Y., Kim, S. E., & Kan, H. 2022. “The effects of night-time warming on mortality burden under future climate change scenarios: a modelling study.” The Lancet Planetary Health, 6(8), e648-e657. https://www.thelancet.com/journals/lanplh/article/PIIS2542-5196(22)00139-5/fulltext

Lil’wat Nation, 2023

Olsen, S. 2016. ”Making poverty: A history of on-reserve housing programs, 1930-1996” (Doctoral dissertation). https://fnhpa.ca/_Library/KC_BP_1_History/Making_Poverty.pdf

Samuelson, H., Baniassadi, A., Lin, A., González, P. I., Brawley, T., & Narula, T. 2020. “Housing as a critical determinant of heat vulnerability and health.” Science of the Total Environment, 720. https://www.sciencedirect.com/science/article/abs/pii/S0048969720308068

Statistics Canada. 2021. Housing conditions among First Nations people, Métis and Inuit in Canada from the 2021 Census. https://www12.statcan.gc.ca/census-recensement/2021/as-sa/98-200-X/2021007/98-200-X2021007-eng.cfm

Mobilizing private capital for climate adaptation infrastructure

How circularity can contribute to emissions reductions in Canada

Worldwide interest in shifting to a circular economy in which “products are made to last longer, communities share resources and save money, and businesses are maintaining, reusing, remanufacturing and recycling materials to create more value for current and future generations,” is growing rapidly. Seventy-nine countries referenced adopting circular economy measures in their most recent submissions to the United Nations on their Nationally Determined Contributions—action plans to cut emissions and adapt to climate impacts.

Canada is at a nascent stage in adopting and implementing circular economy principles. But as more and more countries shift their economies we take a closer look at how circularity could support Canada in meeting its climate goals.

Read the paper

The link between circularity and emissions reduction

Numerous studies have found that current climate initiatives are not sufficient to keep warming below two degrees Celsius or to reach net zero goals. The 2021 Circularity Gap Report found that material handling and use accounted for 70 per cent of global greenhouse gas emissions. A shift to zero carbon energy sources or capturing carbon can address some, but not all, of these emissions.

Meanwhile, the 2023 Circularity Gap Report notes that in the past 50 years material extraction has more than tripled. So the problem of reducing the emissions associated with resource extraction, processing, and product lifecycles has been growing.

The Ellen MacArthur Foundation has suggested that adopting circularity measures in four key sectors (cement, steel, plastic, and aluminum) could reduce emissions by 40 per cent by 2050. For the agricultural and food sector, they suggest a reduction of close to 50 per cent is possible in the same timeframe by focusing on circular and regenerative practices.

Maximizing value from resources

As Canada is a resource-rich country, it is only just starting to adopt and implement circularity practices in its economy. But concerns are growing about the impacts on air, water, land, and climate of a “take, make, waste” economy.

The other challenge is that to support Canada’s transition to renewable energy systems resources like metals and cement are required. Meeting this demand through increased resource extraction risks greater emissions and environmental impacts while potentially failing to fill critical gaps. By embedding circular principles in plans for meeting this demand, Canada can be better prepared to both reduce impacts and ensure the country has the materials it needs.

Not surprisingly, countries like Japan that do not have significant natural resource wealth have long embraced circular principles. Japan has developed a cultural commitment to maximizing value from resources that other countries can draw many lessons from.

As demonstrated by Japan and other countries, circularity goes far beyond improving recycling or capturing and reusing waste. It requires a much more sweeping change of industrial, commercial, and consumer mindsets and systems. There are a number of steps a true circularity approach will require. They include: designing excess concrete or steel out of buildings, extending the life of products, shifting to “product as a service” models, ensuring materials and products are easy to recycle through better design and reduced contamination, and reducing the size of homes and vehicles. These are the kinds of steps a true circularity approach will require.

Measuring the impacts of circularity

Measuring the climate impacts of circular approaches is still a work in progress. However, there are many academic and non-governmental organization studies of the potential for circularity to reduce emissions. The 2022 Circularity Gap Report, for example, suggests that by adopting its suggested circularity policies, resource demand can be reduced by 28 per cent. Greenhouse gas emissions can be cut by 39 per cent.

But much of the emissions reduction potential of circularity remains hypothetical. Indeed, even countries with strong circularity commitments, such as the Netherlands or Finland, are just beginning to implement their roadmaps for achieving greater circularity. China and Japan may have made greater advances, but they started this work before adopting their current circularity strategies.

Measuring impact also remains a work in progress. Various international bodies are working to standardize measurement approaches and build up a robust statistical framework for properly measuring the emissions outcomes of moving to greater circularity. Better tracking of materials flows, agreement on consumption-based accounting for emissions, and the ability to compile accounts at regional and national levels are all tasks that countries and international agencies continue to grapple with.

Developing a suite of policies and financial measures to incent circularity will also require that attention is paid to potential rebound or backfire effects. Adopting efficient or cost-saving circular approaches increases product demand or energy use, and results in unintended emissions increases.

Shifting to circular economic approaches

There is little question that the global economy must become more circular. The world is currently extracting more than 100 billion tonnes of resources from the earth each year. This level of exploitation is not sustainable. To achieve both climate targets and Sustainable Development Goals, Canada needs to embrace a shift to circular economy approaches that can make our world both healthier and more prosperous.

How circularity can contribute to emissions reduction in Canada provides an overview of the current state of play when it comes to our understanding of the potential of circularity to reduce greenhouse gas emissions. There is no question that future development is likely to be rapid as countries begin to realize the potential of this next wave of climate action.

Read the paper

Hybrid heat in Quebec: Energir and Hydro-Quebec’s collaboration on building heat decarbonization

Disclosure statement: COPTICOM, who employs the authors, acts as a consultant for Énergir.

Quebec’s energy context

Two companies control almost all electricity and gas infrastructure in Quebec. The Crown corporation Hydro-Québec holds a monopoly on transmitting, distributing and purchasing electricity, and produces or buys over 90% of Quebec’s hydropower. Énergir, meanwhile, distributes 97% of the natural gas used in Quebec. It is 80.9% owned by the Caisse de dépôt et placement du Québec (CDPQ)—managers of Quebec’s pension plan, among other things—and the Fonds de solidarité FTQ, a labour investment fund that manages a part of the retirement savings of around 735,000 workers.

In Quebec, greenhouse gas (GHG) emissions from natural gas are practically all due to the distribution and consumption of gasdelivered by Énergir. The company intends to make its operations carbon‑neutral by 2050 through the development of renewable natural gas (RNG), energy efficiency improvements on the customer end and taking a complementary approach with plans for electrification.^[1]

The Quebec government has set a GHG emission reduction goal of a 37.5% decrease by 2030 compared to 1990 levels, and is aiming for carbon neutrality by 2050. It plans to achieve these objectives through major electrification of road transport, building heating and a major proportion of industrial applications.

Residential energy consumption in Quebec

In 2019,^[2] natural gas represented only 13% of Quebec’s energy consumption,^[3] compared to 36% for Canada as a whole.^[4] It is used by industry (55%), institutional and commercial buildings (28%) and residential buildings (11%), with the remainder going to other niche uses (5%). It is nearly unused in producing electricity, 99.6% of which comes from hydroelectricity and wind energy.

Residential energy consumption in Quebec is primarily electricity (74%), in addition to 12% for biofuels, 8% for natural gas and 5% for petroleum products such as oil. The majority of institutional and commercial buildings’ consumption is electricity (53%), followed by natural gas (27%), oil (16%), propane and biofuels (4%). Natural gas consumption in the building and industry sectors resulted in 12 Mt CO₂ eq in 2019, or 14.2% of Quebec’s greenhouse gas (GHG) emissions.

Dual energy agreement between Hydro-Quebec and Énergir

On July 13, 2021, Hydro-Québec and Énergir signed a dual energy agreement for 2022–2045. This partnership aims to convert the natural gas heating systems of Énergir customers into systems supplied by both electricity and natural gas. During cold snaps, when heating demand peaks, natural gas will be used in place of electricity, reducing the stress on the Hydro‑Québec network. Outside these peak periods, buildings will be heated by electricity alone. Dual energy is a means of maximizing the role of electricity in building heating—and thereby reducing GHG emissions associated with heating—while minimizing impact during winter peaks.

Snow falling on a cold winter weather day across residential buildings in Montreal.

In Phase 1 of the agreement, around 100,000 residential customers were encouraged to convert to dual energy.^[5] In Phase 2, the dual energy offer will be broadened to commercial and institutional sub‑sectors.^[6] The Régie de l’énergie should decide on the launch of Phase 2 in spring 2023. Note that the agreement also aims to encourage owners of new residential, commercial and institutional buildings to opt for dual energy heating systems.^[7]

The agreement is supported by the government of Quebec, which has signalled to the Régie de l’énergie its desire to encourage the conversion of heating systems to dual energy (electricity and natural gas).^[8] The agreement is also clearly aligned with 2023 Plan for a Green Economy and its objective to reduce heating-related emissions to 50% of 1990 levels by the end of the decade.^[9]

Any new or existing Énergir customer who wants to convert their heating system to dual energy can benefit from grants^[10] covering up to 80% of conversion costs^[11] from the government of Quebec and Hydro-Québec.

Dual energy conversion will reduce natural gas consumption by residential, commercial and institutional customers by over 70%,^[12] while the electrification of buildings (residential, commercial and institutional) converted to dual energy will require Hydro‑Québec to supply 63 MW of additional power in 2030.^[13]

According to Hydro-Québec, implementing dual energy will yield savings of $1.682 billion compared to what full electrification of building heat would cost,^[14] in addition to requiring that 2,070 MW of additional capacity be installed by 2030^[15] at an estimated cost of $2.7 billion (see table below).

Summary table comparing the total electrification of the building sector ("fully electrical" scenario, FE) and the implementation of the dual energy agreement ("dual energy" scenario) — Source: Régie de l’énergie du Québec, “Décision – Demande relative aux mesures de soutien à la décarbonation du chauffage des bâtiments – Phase 1 (R-4169-2021),” Régie de l’énergie du Québec, May 19, 2022.

Énergir, for its part, will be given financial compensation (called a GHG contribution)^[16] up to a cumulative total of $403 million by 2030^[17] for the loss of revenues resulting from some of its customers switching to dual energy, in order to balance the impact on rates for customers of both distributors. This compensation should cover approximately 80% of Énergir’s lost revenue,^[18] but depends on the actual quantity of natural gas that will be replaced by Hydro-Québec electricity.

cumulative rate impact for "fully electrical" and "dual energy" scenarios. — Source: Régie de l’énergie du Québec, “Décision – Demande relative aux mesures de soutien à la décarbonation du chauffage des bâtiments – Phase 1 (R-4169-2021),” Régie de l’énergie du Québec, May 19, 2022.

Is dual energy the best way to decarbonize buildings?

At first glance, the dual energy agreement between Hydro-Québec and Énergir is an attractive mechanism for decarbonizing the building sector. It enables better management of peak power demands on the power grid while simultaneously supporting a natural gas distributor in reducing its energy deliveries. It is also more economical for Hydro‑Québec than full electrification of building heating. In short, it enables all the parties involved to successfully reach a series of important economic, technical and climate objectives.

It is also a bold solution, made possible by several mutually reinforcing circumstances. First, it involves two companies with monopoly control that have set sizable decarbonization objectives for themselves. Hydro‑Québec’s shareholder, the government of Quebec, is likewise committed to a decarbonization timeline with milestones in 2030 and 2050, while Énergir’s shareholders, the Caisse de dépôt et placement du Québec and the Fonds FTQ, are purposely working to decarbonize their investment portfolios. Finally, the solution spares the customers of both companies from rate increases, compared to full electrification of building heating.

Furthermore, the dual energy agreement approach ensures that the GHG contribution paid to Énergir by Hydro‑Québec will remain in the public sphere (via the CDPQ) or at least as part of the common good (for the hundreds of thousands of Quebec residents whose retirement savings are partially managed by the Fonds de solidarité FTQ).

Nonetheless, this agreement is not without its limitations. First of all, it applies only to the building sector (responsible for 35.9% of the volume of natural gas distributed). The industrial sector, with 64.1% of the volume distributed, is left out altogether.

The agreement itself also does not include any complementary policies or instruments that might help further decarbonize the building sector and limit peak demand impacts on the power grid.^[19] The government has considered or partly deployed such measures, but Hydro-Québec and Énergir have not developed a consistent and integrated approach.^[20] With such an approach, it would be possible to assess whether the 30% residual heating demand that Énergir will continue to assume under the agreement could be partially or fully addressed by complementary methods.

The dual energy agreement could also lead to a certain degree of “carbon lock‑in” in Quebec’s building sector. Replacing heating systems at the end of their lifespan and connecting new customers to the Énergir network (and, by extension, the dual energy offer) by 2030 locks in a certain level of natural gas consumption until 2045, due to Énergir’s 15‑year customer contracts. What is even more concerning is that this goes against the recommendations of the International Energy Agency, including the recommendation to ban new fossil fuel boilers starting in 2025 if we want to reach net zero by 2050.^[21]

Finally, Énergir hopes to use RNG to replace the remaining 30% natural gas that is necessary under the agreement, in order to reach net zero for the building sector by 2050. At this point, however, there are no indications that RNG will be available in sufficient quantity to fully replace that 30%. In 2022, for example, RNG made up only 0.6% of the natural gas distributed by Énergir.^[22]

Is this an innovative model that’s reproducible elsewhere in Canada?

The dual energy agreement between Hydro-Québec and Énergir bolsters the idea that a rapid reduction in the production and consumption of fossil fuels must inevitably call for large-scale systemic efforts, which here are brought about, directly and indirectly, by the action and support of the Quebec government.

The agreement was made within a specific business, regulatory and political context. Both partners’ property is in large part public domain, both were already set on the road to decarbonization, and the government of Quebec has made strong commitments to fight climate change and radically reduce the use of fossil fuels. It is possible that other public utility companies elsewhere in Canada will be inspired to adapt this approach to their own networks.

Overall, with this agreement Hydro-Québec and Énergir, with the support of the government of Quebec, are taking a proactive approach to the energy transition, rather than a passive or reactive one. This may be the one of the most significant lessons to learn from this case study.

References

[1] Énergir, “Climate Resiliency Report 2021,” 2022, pp. 27–29.

[2] As data for 2021 and 2022 are not yet available, we have used 2019 data, given that 2020 was a statistical anomaly due to the COVID-19 pandemic.

[3] Johanne Whitmore and Pierre-Olivier Pineau, “The State of Energy in Quebec,” Chair in Energy Sector Management – HEC Montréal, February 2022, p. 5. The data in this section are drawn primarily from this report.

[4] Canada Energy Regulator, “Provincial and Territorial Energy Profiles – Canada,” July 28, 2022.

[5] Régie de l’énergie du Québec, “Décision – Demande relative aux mesures de soutien à la décarbonation du chauffage des bâtiments – Phase 1 (R-4169-2021),” May 19, 2022, p. 54.

[6] The residential sub‑sector accounts for 41.5% of emissions in Quebec’s building sector in 2019 (3.5 Mt CO₂ eq), compared to 58.5% for the commercial and institutional sub-sectors (4.93 Mt CO₂ eq).

[7] Régie de l’énergie du Québec, “Décision,” op. cit., p. 59.

[8] Gouvernement du Québec, Order in Council 1395-2022; Order in Council 874-2021.

[9] Gouvernement du Québec, “2023 Plan for a Green Economy – Framework Policy on Electrificiation and the Fight Against Climate Change,” Québec, Gouvernement du Québec, November 2020, p. 6.

[10] Régie de l’énergie du Québec, « Décision », op. cit., p. 78.

[11] Ibid.

[12] Ibid, p. 117.

[13] Hydro-Québec, “Offre d’Hydro-Québec Distribution et d’Énergir en réponse aux objectifs de décarbonation du chauffage des bâtiments énoncés dans le Plan pour une économie verte 2030 (R-4169-2021),” p. 21.

[14] Régie de l’énergie du Québec, « Décision », op. cit., p. 51.

[15] By comparison, the total hydroelectric capacity installed in Quebec in 2019 was 40,850 MW and provided 94% of electricity for the province. Canada Energy Regulator, “Provincial and Territorial Energy Profiles – Québec ».

[16] Régie de l’énergie du Québec, “Décision”, op. cit., p. 11.

[17] The maximum compensation of $403 million will be paid out if all the agreement’s target customers choose to convert to dual energy. Hydro‑Québec and Énergir. “Réponse des distributeurs à l’engagement numéro 2 (R-4169-2021),” February 24, 2022, p. 4.

[18] Régie de l’énergie du Québec, « Décision », op. cit., p. 124.

[19] In the “fully electrical” (FE) scenario, at peak times, the entire heating load is borne by electrical resistance, and there is no value added by efficient equipment. In this context, the outcome is that both scenarios rest on theoretical extremes (total electrification on one side, and complementarity between natural gas and electricity on the other) that make no effort to take into account other solutions, such as those mentioned in note 21. Hydro-Québec and Énergir, “Réponse des distributeurs à la demande de renseignements n° 1 de l’AHQ-ARQ,” December 8, 2021, p. 12.

[20] Here we are thinking of dynamic pricing or smart energy technology, energy efficiency improvements through more widespread use of heat pumps, heat accumulators or thermal insulation of buildings, the promotion of low‑carbon measures based on behavioural changes, or potential electricity interties. In the hearing before the Régie de l’énergie on February 21, 2022, Hydro‑Québec suggested that complementary measures would be rolled out over the coming years in order to reach net zero by 2050. However, there is no evidence that this involves an integrated process, and only the replacement of natural gas by RNG was mentioned, without any consideration of whether there would be enough RNG available to replace the 30% of natural gas needed in a system converted to dual energy. Régie de l’énergie du Québec, “HQD-Énergir – Demande relative aux mesures de soutien à la décarbonation du chauffage des bâtiments – Audience du 21 février 2022 (R-4169-2021),” Régie de l’énergie du Québec, February 21, 2022, p. 73.

[21] International Energy Agency, « Net Zero by 2050 – A Roadmap for the Global Energy Sector », International Energy Agency, mai 2021, p. 19.

[22] Johanne Whitmore and Pierre-Olivier Pineau, “The State of Energy in Quebec 2022,” op. cit., p. 32.

Heat pumps are hot in the Maritimes

The rise of the Maritimes heat pump adoption has been both recent and rapid. Market, policy and social conditions made the Maritimes particularly well suited to the technology.

Introduction

The humble heat pump is so hot right now.

As the global energy transition has gathered momentum worldwide, the importance of electrifying heating and cooling systems has shot up the agendas of governments pursuing more ambitious greenhouse gas emissions targets and net zero goals. As a result, the heat pump has moved with impressive speed from the efficiency-wonk margins to the very centre of energy system planning around the world.

“Heat pumps, powered by low-emissions electricity, are the central technology in the global transition to secure and sustainable heating,” the International Energy Agency announced in its November 2022 technology report The Future of Heat Pumps. Both the UN’s Intergovernmental Panel on Climate Change and the prominent global consulting firm McKinsey have echoed this endorsement. And with Russia’s invasion of Ukraine highlighting Europe’s dependence on Russian natural gas, sales of heat pumps have shot up across the continent, with sales increasing by as much as twofold in some European countries in the first half of 2022 compared to the same period in 2021.

So why have heat pumps attracted such hype? To begin with, because indoor heating is a significant wedge of the world’s contribution to the climate crisis—the IEA estimates that 10 per cent of global carbon dioxide emissions come from heating buildings—and heat pumps are often emissions-free and much more energy efficient than both fossil-fuel-generated and electric baseboard space heating. As the Canadian Climate Institute noted in a 2022 report, “Heat pumps are critical to Canada’s energy transition for several reasons. Heat pumps run on electricity, rather than fossil fuels, making them an important tool in Canada’s big switch to clean electricity. They also use up to 70 per cent less energy than conventional home heating technologies, promising savings for homeowners and renters.”

Worldwide, one-sixth of the natural gas burned each year is for heating, a share that rises to one-third in Europe, where the European Union is the global pacesetter for heat pump market growth. But there have also been substantial spikes in heat pump demand in North America, Japan, Korea and China as well. Heat pumps now account for 10 per cent of the world’s building heating, with the largest shares in Norway (where 60 per cent of buildings are equipped with heat pumps), Sweden and Finland (where the share is more than 40 per cent). Canada does not yet rank among the world’s leaders in heat pump adoption, despite its frigid winters and abundance of clean electricity (more than 80 per cent of the country’s electricity is emissions-free). Only 6 per cent of residential heating across Canada is currently drawn from heat pumps.

But there is one notable exception—an anomaly that is the focus of this report. In three Maritime provinces, heat pumps are already the primary heating source in more than 20 per cent of households. New Brunswick leads the way at 32 per cent, followed by Prince Edward Island at 27 per cent and Nova Scotia at 21 per cent. And those shares are growing much faster than any other primary heating source in the region—in Nova Scotia, for example, heat pump use has expanded from 6 per cent to 21 per cent of households since 2013.

As the rest of Canada looks to accelerate the electrification of its heating systems, this Maritimes anomaly merits closer inspection. How did the Maritime provinces become Canada’s heat pump vanguard? What conditions, policies and market forces have driven that increased uptake, and what lessons can they provide about how to drive heat pump adoption across the country? There is limited data and analysis to build on, but this report has drawn on what little there is, along with interviews with provincial government and utility officials who have developed these pacesetting programs, to provide a baseline snapshot of the Maritimes’ heat pump success story and some lessons for policymakers.

There follows a brief overview of the technology itself and a sketch of global policy and market trends, followed by a more in-depth look at the policy tools, market forces and social conditions that have driven Maritime Canada’s emergence in heat pump adoption.

Heat pumps 101

There are a number of different types and a wide range of brands in the heat pump market, but all operate on roughly the same principles. Heat pumps are essentially heat exchange systems that absorb heat from one space and transfer it to another. Air-conditioners operate on this basic technology, but heat pumps simply allow for this process to operate in either direction—in addition to interior cooling, heat pumps can absorb heat from even cold outdoor air and transfer it to indoor spaces.

Air conditioner installed on a wooden facade.

In the Canadian marketplace today, the most common heat pump systems are central air-source heat pumps, ductless mini-split heat pumps (“mini-splits”), and ground-source heat pumps. Air-source heat pumps operate by principles similar to other central heating and cooling systems—the heat pump draws in heat from outside to a central unit, which then pushes heat to the rest of the interior through heating ducts. The process also works in reverse, pumping heat from inside a building to the outside world to cool the space. Mini-splits are also a kind of air-source heat pump, but they are better suited to buildings that do not already have duct systems installed. Instead, they carry heat through a coolant system to and from “indoor head” units mounted in each room. Ground-source heat pumps are technologically very similar to air-source versions, but they draw heat from below the earth’s surface instead of the air.

Although heat pump systems of all types can be scaled to meet the heating needs of virtually any building size or type, it remains common in Canada for heat pumps to be paired with a backup—often a pre-existing boiler or electric baseboard system (this is the most common approach in the Maritime provinces to date). A new generation of cold-climate heat pumps, introduced into the marketplace over the last five to ten years, can operate efficiently at temperatures as low as -25C without back-up systems and are much better suited to Canadian winters.

The playing field

Global trends

The heat pump boom is global in scope: sales rose by 15 per cent worldwide in 2021 and continue to accelerate. Europe is leading the charge, with European Union countries alone installing two million units in 2021—an annual increase of 34 per cent—and then installing more than three million more in 2022, a further year-on-year increase of 40 per cent. The European boom predates Russia’s invasion of Ukraine but the task has now acquired much greater urgency.

Heat pumps were also specifically targeted for substantial incentives in the U.S. Inflation Reduction Act, which offers rebates to low- and middle-income households, as well as substantial tax credits.

Canadian trends

In Canada, heat pump adoption has been more sporadic and regional, but both federal and provincial emissions reduction and electrification plans assume a much more substantial role for heat pumps in the years ahead.

As the Canadian Climate Institute reported in 2022, “The number of heat pumps installed in Canadian homes has risen steadily from 400,000 to 850,000 over the last 15 years. However, in the same period, the share of home heating provided by heat pumps has only risen from roughly four to six per cent. To hit projections under the Emissions Reduction Plan, their share of total heating load will need to double in the next eight years, to more than 10 per cent of home heating provided by heat pumps.” Doing so will require targeted policies that send clear signals to markets and consumers across Canada.

Some of these signals are already beginning to be put in place. Both the City of Vancouver and the province of Quebec have introduced partial bans on fossil-fuel heating systems—Vancouver for all new and replacement installations starting in 2025, Quebec for all new construction by the end of 2023. The most recent data on installations, meanwhile, found that, as of 2018, nearly 80 per cent of Canada’s heat pumps were operating in the two most populous provinces, Quebec and Ontario, although proportionally heat pumps accounted for less than 10 per cent of heating systems overall. (By 2021, heat pumps were the primary heating systems in 11 per cent of Quebec households and two per cent of those in Ontario.) During the same period, though, a new trend has emerged: the Maritimes anomaly. The pacesetting installation rates in New Brunswick, Nova Scotia and Prince Edward Island provide the clearest picture of how to rapidly accelerate the adoption of heat pump use in Canada. Let’s examine that picture more closely.

The Maritimes Anomaly

Origins and background

The rise of the Maritimes anomaly in heat pump adoption has been both recent and rapid. In New Brunswick, heat pumps were the primary heating source in 17 per cent of households in 2017; by 2021, that number had increased to 32 per cent of all New Brunswick residences. In Nova Scotia, the share increased from 14 per cent in 2017 to 21 per cent in 2021. And in Prince Edward Island, most dramatically of all, heat pump installations rose from just 9 per cent of households in 2017 to 27 per cent in 2021.)

Graph representing the share of Maritimes households relying on heat pumps as their primary heating system (%), which have tripled in certain provinces.

Although the region’s emergence as a heat pump pacesetter was far from inevitable, there were market, policy and social conditions in the Maritimes that made it particularly well suited to the technology. Energy poverty (the prevalence of households and communities facing major financial challenges to meeting their home energy needs) was very high—at least twice as common across the region as the Canadian average, according to the federal government. The Maritime provinces also have a climate well suited to heat pumps, even older models that were not specifically designed for cold climates; the moderating influence of the Atlantic Ocean means the region rarely faces conditions of extreme cold. And the most common household heating technologies—oil-burning furnaces and electric baseboards—each have qualities that make replacing them with heat pumps either enticing or relatively uncomplicated. In the case of heating oil, predominant in Nova Scotia and P.E.I., prices are volatile. In the case of electric baseboards, predominant in New Brunswick, large electrical panels already exist in a typical homes and can be adapted for heat pump systems without significant new wiring or costly upgrades.

Equally important for the recent heat pump boom was an institutional commitment to energy efficiency in general that predated the focus on heat pumps in particular. New Brunswick has operated efficiency programs—now gathered under the banner of its climate change secretariat—without interruption since 2008. P.E.I.’s efficiency office (later named efficiencyPEI) was also established in 2008. And in Nova Scotia, the provincial government established its arm’s-length efficiency agency, Efficiency Nova Scotia (now called EfficiencyOne) in 2010.

These efficiency offices and programs were enormously helpful in the recent push for heat pump installations. They provided consistency and continuity in the face of periodic changes in government. And because they already delivered a variety of audits, programs and incentives for a range of household energy efficiency measures, they established strong, lasting relationships with residents, local heating system contractors, regulators and utilities. The New Brunswick government, for example, already had an identified list of certified installers before it ramped up its heat pump programs, and efficiencyPEI leads the country in household energy audits per capita. Put simply, governments in all three provinces were already experienced in delivering energy efficiency programs in advance of the heat pump boom, and utilities, regulators, contractors and households alike had already been engaged with consistency and stability in making home energy efficiency improvements to some degree. As one provincial official put it, a “strong culture” had emerged around efficiency in the region in advance of targeted heat pump policies.

The heat pump boom: incentives matter

In all three Maritime provinces, strong financial incentives in the form of grants and rebates provided the main catalysts for the dramatic recent increases in heat pump installations. Although energy efficiency in general had been incentivized across the region as far back as Natural Resources Canada’s first home efficiency retrofit programs, launched in 2007, direct incentives specifically for heat pumps were introduced much more recently.

The region’s first significant targeted incentives quickly demonstrated the strong demand for heat pumps in the region. NB Power, New Brunswick’s primary utility, introduced a $500 rebate on mini-split heat pumps in 2015. Approximately 13,000 households signed up in the first year, at which point the incentive was deemed a success beyond its initial intent and scaled down. In 2017, NB Power launched its Total Home Energy Savings program, which offered grants of up to $4,000 for a range of efficiency upgrades, including heat pumps. Nova Scotia’s EfficiencyOne introduced similar efficiency grants the same year. Heat pump adoption has been rapid and steady in both provinces since. P.E.I. introduced its first direct incentives for heat pumps in 2021, offering free systems to households living below an income threshold of $35,000 per year. The program has since increased the threshold to $55,000 and then $75,000. Heat pump adoption in all three provinces expanded rapidly in response.

In all three provinces, provincial incentives have since been “stacked” with federal programs to further boost adoption rates, particularly after the introduction of the Canada Greener Homes program in 2020, which provided grants of up to $5,000 to install heat pumps, and the 2022 Oil to Heat Pump Affordability (OHPA) program, which provided $5,000 rebates on heat pumps for households relying on oil-burning furnaces (which are the most common systems in both Nova Scotia and P.E.I.). The new OHPA grants piggyback on Nova Scotia’s $5,000 EfficiencyOne rebates, while New Brunswick, where very few households rely on oil-burning furnaces, now offers free mini-split systems to households with annual incomes below $70,000 through its Enhanced Energy Savings Program (a partnership of the provincial government and NB Power).

Lessons from the Maritimes anomaly

The most straightforward lesson from the Maritimes anomaly is there is no substitute for strong incentives, especially if they are targeted at lower income households, for whom the upfront-cost barrier of heat pump systems is particularly daunting. Money alone, though, is not the path to success. In all three provinces, heat pump incentives were packaged with or introduced alongside other efficiency measures. Conducting thorough energy audits not only identified households that would benefit the most from switching to a heat pump, it also established relationships between government agencies and residents. Offering rebates on insulation and other energy saving initiatives alongside the heat pump rebates has helped ensure that the systems work effectively once installed—offering cost savings to residents and leaving customers satisfied with the new heating systems.

Aerial view of Bedford, a suburb of Halifax, Nova Scotia.

The importance of clear communications has also been cited by officials in all three provinces as a crucial component. In some jurisdictions, the savings heat pumps provide can be readily apparent—in New Brunswick, for example, where most households are served by NB Power for all their energy needs, the savings on energy bills was mostly self-evident. Customers switching from a semi-annual heating oil delivery bill to an increased monthly electricity bill, however, benefit from having the savings explained more clearly.

More broadly, the switch from a tried-and-true heating source to a new and unfamiliar one is a major decision for a Canadian household. The behavioural psychology on making this kind of change is unequivocal—most people tend to overvalue the systems they have compared to a new approach (a phenomenon known as the “endowment effect”) and tend to resist becoming early adopters (due to status quo bias and numerous other common aversions to taking risks). Any obstacle or unanticipated issue along the way can discourage wider adoption of the technology.

The Maritimes anomaly offers examples of both effective communications and communications oversights, all of which are instructive.

On the effective side, all three provinces appear to have done well at identifying reliable suppliers and installers and explaining the obvious benefits of free or heavily rebated heat pumps. Though these measures did not entirely eliminate the problem of unscrupulous contractors installing systems that were insufficient to the task (as noted below), they significantly reduced the prevalence of dissatisfied customers.

In the case of New Brunswick, the heat pump rollout has been so effective that installers themselves are taking up part of the task—for example, offering their own financing packages and seasonal discounts on top of the rebates and grants. And in Nova Scotia, the introduction of heat pumps amid often-skyrocketing oil prices has led to prospective landlords prominently touting heat pumps as a beneficial feature of rental properties. The warming climate has assisted as well—in a region where very few households felt the need for air-conditioners historically, the heat pump’s added feature of interior cooling is beginning to prove attractive. (In warmer parts of the country, this aspect of the sales pitch will likely prove even more enticing.)

There were, however, some significant errors and oversights, which varied from province to province. One common issue was the emergence of unreliable, “fly-by-night” installers eager to take advantage of the generous incentives. Officials in every province emphasized the importance of identifying reliable installers and providing better oversight—adding performance and installation standards to the building codes was one repeated recommendation. All as well pointed out that they could have put more effort into consolidating and streamlining the application and installation process—in P.E.I., for example, the most recent changes to the minimum income threshold for free heat pump systems generated instant demand that quickly overwhelmed their office’s ability to respond, an oversight they have had to scramble to correct. The current list of approved applications waiting for installations numbers in the thousands. And officials in New Brunswick noted that more effort could have been made to explain the costs and requirements of routine maintenance.

Conclusion

Given the range of federal and provincial measures now in place across Canada to reduce greenhouse gas emissions, improve energy efficiency in buildings, and electrify space heating, the Maritimes anomaly will likely soon seem more like a headstart than an outlier. New Brunswick, Nova Scotia and P.E.I. have accelerated their adoption of the technology first, but it is expected to become a commonplace heating system coast to coast to coast, as either a stand-alone option or one that is supported by more traditional heating systems. The new generation of cold-climate heat pumps, which can operate efficiently without backup in all but the most ferocious of Canadian cold snaps, should further assist in making the case for the viability of the technology across the country. In the meantime, their progress provides a strong model.

Overall, heat pumps have become an easy sell in the Maritime provinces thanks to a mix of the limits of existing technologies, the self-evident benefits they offer, the effectiveness of well-designed, easily accessed incentive programs, the amplifying effects of positive word-of-mouth, and the well-established appeal of deep discounts through government incentives. The rest of Canada would do well to learn from their successes and mistakes—and follow their lead.

Acknowledgements

The author would like to thank the following interview subjects and other experts for their time and expertise in assisting with this report: Peter T. Craig at EfficiencyOne (Nova Scotia); Jeff Hoyt and Susan Atkinson at the Government of New Brunswick; Beth Pollack at N.B. Power; Angela Banks, Brittany Ziegler and Erin Kielly at the Government of Prince Edward Island; Leslie Malone at Dunsky Energy; and Sachi Gibson, Jonathan Arnold, Jason Dion and Kate Harland at the Canadian Climate Institute.

This report also draws on background information, analysis and data found in the following publications:

“The Future of Heat Pumps” (International Energy Agency, November 2022)

“Heating and Cooling Strategies in the Clean Energy Transition” (International Energy Agency/National Energy Board, May 2019)

Anna Kanduth, “Heat pumps can power major emissions reductions from buildings” (Canadian Climate Institute, 17 November 2022)

“Market Snapshot: Steady growth for heat pump technology” (Canadian Energy Regulator, 21 February 2018)

“Market Snapshot: Growing heat pump adoption – how does the technology work?” (Canadian Energy Regulator, 17 April 2019)

St. Laurent North denied

On May 3, 2022, the Ontario Energy Board (OEB) did something that observers considered nearly unprecedented in its 62-year history: it turned down an application to build the final stages of a pipeline replacement project proposed by a fossil gas utility, Scarborough-based Enbridge Gas.

The OEB’s Decision and Order on the $123.7-million St. Laurent North project cited the City of Ottawa’s community electrification plan (Energy Evolution) and the option of downsizing the pipeline due to reduced future demand for natural gas among the factors in the decision. According to the city, major drivers of that reduction include Ottawa’s Energy Evolution plan itself, as well as the federal government’s effort to convert its Cliff Street heating and cooling plant to lower-emitting technologies—changes that Enbridge did not factor into its gas demand forecasts.

The decision sent minor shock waves through the province’s energy regulatory and municipal energy communities. “Nobody expected them to lose. Zero expectation,” energy regulatory lawyer Jay Shepherd of Shepherd Rubinstein said at the time.

But “having the City give evidence that everybody is cutting back on their carbon in Ottawa, the OEB was hard pressed,” he added. “When the City goes in and says it won’t be using as much gas anymore, you can’t just ignore it.”

The question for all stakeholders—from Enbridge, to the City of Ottawa, to the various intervenors that took part in the hearing—is whether the OEB decision has application elsewhere. Is the decision an early indicator of how Canada’s energy transition can be expected to play out?

This case study is based on an analysis of the OEB ruling, related literature, and interviews with key stakeholders affected by the decision. Stakeholders are quoted throughout the study to give context and perspective to the analysis.

Utility Planning in a Time of Transition

The Enbridge application and the OEB decision played out at a moment when cities, utilities, regulators, and governments at all levels are working to understand the implications of the race to net-zero emissions—then build that urgent, new planning imperative into their policies, practices, and investments.

These profound, relatively rapid shifts coincide with mounting alarm about the climate impact of fossil gas extraction, transmission, distribution, and use. Proposals for new or renewed gas infrastructure must contend with the rising popularity of heat pumps as a practical option to electrify home heating. And they must also wrestle with the role that clean gases like hydrogen or biogas may, or may not, play.

Against this backdrop, the St. Laurent North application and decision played out at a moment when business-as-usual planning and thinking are still common among gas suppliers and utilities. In turn, that reality may have been driven by an operating model in which gas companies’ return on equity is by law based primarily on the kilometres of pipe they own and operate, rather than the volume of gas they supply.

Some stakeholders say this structure creates a business imperative to expand the gas network regardless of consumer demand, at a pace at least sufficient to offset depreciation of installed assets. A couple of them expressed concern that this model risks leaving ratepayers exposed to stranded asset costs if new or expanded infrastructure is taken out of service prematurely due to emission reduction efforts. Ultimately, there remains uncertainty about who might pay for any potential stranded assets – ratepayers, shareholders or the taxpayer.

Specifics of the Ruling

One of the issues underlying the OEB decision was whether Enbridge had adequately engaged in integrated resource planning (IRP). It suggested that Enbridge “should work collaboratively with the City of Ottawa and other stakeholders to proactively plan a course of action if and when pipeline replacement is required, including the pursuit of Integrated Resource Planning (IRP) alternatives.” It also suggested the utility adopt that same approach for future projects elsewhere in the province to the extent applicable.

The OEB issued its commentary at a time when some stakeholders are calling for gas utilities to coordinate planning more closely and deliberately with electricity distributors in their territories. The OEB set out requirements for local IRPs in a July 22, 2021 decision and order, with one of five screening criteria allowing an exception for gas system needs that had to be resolved within three years. In the St. Laurent North hearing, Enbridge could not convince commissioners that the replacement was too urgent to wait.

The company also refused to consider downsizing the pipeline, citing a consultant’s conclusion that the city couldn’t reduce gas demand enough to justify a smaller pipe. But local officials disagreed, and while the OEB did not address the contention that Ottawa could see reduced demand, the decision was widely interpreted as reinforcing the city’s position.

In the proceeding, city staff “indicated that its preference would be for an integrated energy planning approach that would require the main energy suppliers (gas, electricity, and district energy) to work together to build an energy system which meets the Energy Evolution climate goals while ensuring affordability and energy security,” commissioners Anthony Zlahtic and Emad Elsayed said.

Aerial view of Rideau River and Porter Island in Ottawa, Ontario, Canada.

At the time, an Enbridge spokesperson maintained that the rejected Phase 3 and 4 pipeline replacements “are the most prudent alternative to address the known integrity concerns within an ongoing degradation of the St. Laurent pipeline system. This is especially true given the magnitude of consequences to customers and the public in the event of system failure”—a concern that is obviously important, but that the OEB commissioners said Enbridge had failed to establish in this case.

Enbridge’s Five Year Plan

Meanwhile, the focus has shifted from the St. Laurent North decision to the OEB’s hearings on Enbridge’s five-year rate plan. The plan and the OEB’s decision on it will have significant implications for other municipalities across Ontario and their own shift from fossil fuels to non-emitting sources of energy.

The hearings should be an opportunity to emphasize and encourage integrated resource planning and, more broadly, to align the direction of the province’s gas system with larger climate targets and policies. But there is a risk of business-as-usual thinking predominating. For example, stakeholders say Enbridge’s interventions to date assume no new demand-side management (DSM) or energy conservation programs beyond those already in place, and they still schedule the St. Laurent North project for 2024-25, part of a 10-year, $15.3-billion capital plan.

The Enbridge application emphasizes a diversified pathway that centres on maximizing energy efficiency, optimizing and integrating energy system planning, investing in “low-carbon gas”, and using carbon capture, utilization and storage (CCUS) to produce low-carbon hydrogen.

That plan, in turn, is based on a Guidehouse study which acknowledges the momentum for a comprehensive shift to electrification, but ultimately builds a case for a “diversified” scenario in which there is “a “dedicated network of hydrogen pipelines and some gas infrastructure in the province,” and where “gas heating continues to play a key role in building heating, complemented by heat pumps” powered by “low or zero-carbon gas”.

Guidehouse sees its diversified scenario saving ratepayers $181 billion by 2050, largely based on reduced need for electricity infrastructure to meet peak demand. The study remains contentious among stakeholders interviewed for this study.

The lack of consensus around Guidehouse’s recommended scenario reinforces the need for a far more comprehensive analysis of the lowest-carbon, least-cost path available to electricity and gas consumers in Ontario—analysis which could be rooted in large part in the integrated resource planning at the local level that the OEB is now mandating.

Against the likelihood of significant future policy shifts, it will be important to assess not only what the most cost-optimal pathways for infrastructure development and maintenance might be, but also the risk of ratepayers bearing the costs of infrastructure that ends up stranded. “The biggest issue in this plan is going to be the energy transition,” said one stakeholder.

Gas Networks in an Uncertain Future

The shape of the future energy system is still unknown, any transition that uses less gas will take time to unfold, and many analyses see some mid-century demand for gas, if only to serve the end uses that are toughest to shift. So there remains a legitimate need to maintain a viable gas network – especially if that network may in time see a much larger role for biogas or hydrogen.

Enbridge commissioned the Guidehouse study “largely because we feel that emissions reductions have become equated with just electrification,” said Malini Giridhar, Enbridge’s vice-president of business development and regulatory. “There are multiple pathways to getting to lower emissions. We specifically wanted to understand the role and the benefits that gaseous fuels can play in getting us to net zero.”

If that system is overbuilt and gas assets are eventually stranded, however, the risk may yet land on ratepayers, not shareholders. According to one stakeholder, Enbridge’s submissions to the OEB’s five-year rate hearing appear to assume that ratepayers will continue paying for pipeline infrastructure, including new installations, at least through mid-century.

“They’ve said many times that if they build these assets for ratepayers, ratepayers have to pay for them,” he said. “Assets will not be stranded.” The rate hearing may hear arguments that, if Enbridge wants to build new infrastructure, the risk should rest with the company, not with customers who have no effective say in how the utility spends its capital dollars.

One of the strengths in Enbridge’s business model is its ability to offer investors a stable, predictable return as a regulated utility. But a stakeholder said that benefit may not be permanent if there’s a real dispute at the Energy Board as to how the benefits and costs of utility investments should land on ratepayers, as has been the case in other jurisdictions.

“The Energy Board is going to be approving spending on gas pipelines,” another stakeholder said. “They’re not going to require that they be used. The problem with an approval of too much spending on gas pipelines will come to roost down the road. So in many ways it’s a climate issue, but it’s also a really big financial issue.”

Transition Questions

The saga of the St. Laurent North pipeline replacement project is certainly open to more than one conclusion, given the need for some gas in even the most ambitious electrification scenarios and the possibility of clean gases becoming available over the longer term. But it raises a series of larger questions for communities, utilities, and regulators trying to navigate the transition to a net-zero energy system—across Ontario, and across the country.

What are the options for municipalities that take their climate commitments seriously, and wish to engage in integrated resource planning? “The regulatory arena is not for the faint of heart,” one stakeholder said, and it’s hard enough for cities to advocate effectively for the IRP processes they want when they have resources and qualified technical staff to devote to the issue. The challenge is magnified for communities, including smaller municipalities, that have little or no capacity to conduct independent analysis and make a firm case for whatever decarbonization pathway best aligns with their needs and priorities. One stakeholder pointed to Kingston, Ontario as a community that is better able to control gas distribution because it owns its municipal gas utility.
What’s the future for gas utilities whose fundamental business model is jeopardized by the imperative to decarbonize, the declining costs of alternatives, and the often ignored potential of behind-the-meter solutions? Stakeholders suggested a company like Enbridge could better prepare itself for a net-zero future by diversifying its business into electricity or heat pumps, or emulating the model emerging in Quebec, where the provincial electricity and gas utilities are attempting to integrate their energy supply and efficiency programs. The main obstacle has to do with business and finance, not technology choices.
What is the recourse if stakeholders believe a utility has failed to comply with a regulatory mandate? The OEB set a clear expectation for integrated resource planning in 2021 and reinforced it with the St. Laurent North decision in 2022. Some stakeholders said that type of mandate will dictate a more proactive monitoring and enforcement role that may be unfamiliar for an institution like the OEB. Their observations raise important questions about the role of the regulator and whether it has the authority—or, at present, the capacity—to address an essential, emerging issue on the road to a net-zero future. Ontario’s Electrification and Energy Transition Panel has been wrestling with this and a number of other, related questions, and its report later this year is expected to make an important contribution to the discussion.
What further actions must governments take to demonstrate that they’re serious about decarbonization, to allay stakeholders’ doubts based on past climate commitments? And what can stakeholders do in the meantime? Long-term infrastructure planning is necessarily an exercise in anticipating and assessing contingencies, and until emissions begin to fall, there will be some logical basis for gas utilities to assume they won’t—and yet those utilities’ expansion plans could help make the assumption a dangerous, self-fulfilling prophecy. In a federal-provincial system, the power of legislated net-zero commitments at the national level must be reflected and reciprocated by genuine, ambitious action by provincial governments—often through mandated action via legislation or regulation. But by the time elected officials of all partisan stripes are ready to work across jurisdictions on an integrated response to the climate emergency, it may be too late to get emissions under control. While all stakeholders are entitled to expect policy certainty, there is still a growing opportunity for gas utilities to navigate policy uncertainty in ways that embrace the opportunities available to them in a decarbonized future.
What is the recourse for ratepayers or others who may face significant stranded asset costs if their gas utility bets on the wrong scenario for future decarbonization? Unless this issue is anticipated and prevented, there is a possibility that it will evolve into a trade-off between two societal challenges—the imperative to decarbonize the entire economy by 2050, and the high future cost to individual households and businesses of infrastructure that, with hindsight, may turn out to be redundant to community needs.

Seven recommendations to leverage public investment to help Canada compete in the global energy transition

Unpacking the barriers to first-of-kind clean fuel projects in Canada

Comparing Canadian and American financial incentives for CCUS in the oil sector

Australia’s Green Bank

Introduction

Australia’s Clean Energy Finance Corporation (CEFC)—often referred to as the country’s Green Bank—provides financing to areas that help drive greenhouse gas emissions abatement. The bank is particularly focused on filling the investment gap that may limit clean energy deployment, while leveraging additional private sector investment into areas of clean growth. Since its inception over ten years ago, Australia’s Green Bank has committed some A$10.8 billion (C$10 billion) in funding across the country’s economy, targeting the agriculture, energy generation, energy storage, infrastructure, property, transport, and waste management sectors.

The Australian Parliament passed the Clean Energy Finance Corporation Act in 2012, committing A$10 billion in initial capital allocation, with the first projects funded the following year. The CEFC aims to generate a positive return on its investments, a model initially criticized by some opponents who could not see how low-carbon activities could be reconciled with profitability. Ten years later, the bank has gained support on both sides of the political aisle, with positive financial results and measurable emissions reductions, while also reporting a private-finance leverage rate of 242 per cent. That means that each dollar of public money invested has been matched with at least A$2.42 from the private sector.

Australia’s Green Bank invests in businesses or projects that develop, commercialize, or use renewable energy, energy efficiency, and low-emissions technologies, or those that help improve related value chains. Lacking a clear definition for low-emissions technologies, the Green Bank’s Board determines, on a case-by-case basis, whether an activity fits the category. Note that given political sensitivities, the Clean Energy Finance Corporation Act specifically prevents the CEFC from investing in carbon capture and storage or nuclear energy.

The CEFC does not give money away; it does not provide grants. Instead, it provides concessional loans that may include lower-than-market interest rates, longer loan maturity, or longer and more flexible grace periods before the payment of principal and interest is due. The CEFC also provides equity-based financing, taking up partial ownership stakes in businesses, often through commitments to related funds, including several growth infrastructure funds.

By accepting a higher degree of risk for low-carbon projects and enterprises, the CEFC helps to leverage private-sector investment. Beyond acting as a trusted co-financier, the bank’s financial tools include loan guarantees and other forms of credit enhancement, which help private lenders feel more assured of repayment and profit expectations. The CEFC will generally not be the sole funder of a clean energy investment, and will usually require co-financiers and/or equity partners.

The CEFC’s investment decisions are made independently of government, although an investment mandate provides general direction and is updated periodically. After initial screening to ensure a project or business will accelerate climate change mitigation, an executive committee makes recommendations to the Board based on commercial rigour and ability to provide a positive return on investment.

Description of the policy

Endowment

The CEFC invests on behalf of the Australian government and has maintained its lending structure through its initial A$10 billion endowment and return on investment to date. Specifically, the organization was granted A$2 billion each year from 2013 to 2017 as mandated within the Clean Energy Finance Corporation Act. The Act ensures that the government maintains control of that endowment to a certain extent, specifying that the authorized Minister has the right to ask for partial or total repayments to the public purse when or if the CEFC’s special account reaches a A$20 billion surplus.

Recently, the CEFC was awarded the first injection of new capital since 2017. The government committed in the October 2022 federal budget to an additional A$8.6 billion for the CEFC to use towards its Rewiring the Nation policy objectives. Rewiring the Nation aims to enable renewable energy transmission across national energy markets, and the CEFC’s role will be to invest in priority grid-related projects. Expanding clean electricity generation is seen as fundamental to reaching Australia’s legislated targets of reducing emissions by 43 per cent below 2005 levels by 2030, and reaching net zero by mid-century.

Meanwhile, in November 2022 the government committed a further A$500 million to the CEFC for the “Powering Australia Technology Fund,” to support the commercialization of innovative new technologies, such as energy-efficient smart city sensors and innovations in solar arrays and battery technologies. The top-up was made possible through an amendment to the Clean Energy Finance Corporation Act as part of a treasury bill amendment process.

Oversight

The 2012 Clean Energy Finance Corporation Act established the CEFC and set out the organization’s purpose, functions, and staffing arrangements, while the Australian Government Investment Mandate provides directions to the independent CEFC Board and is updated regularly. The CEFC Board is responsible for final investment decisions, and is made up of seven board members appointed by the government for renewable five-year terms. A Chief Executive Officer is responsible for the day-to-day administration of the corporation.

The investment mandate provides updated direction on the targeted allocation of investments among the various classes of clean energy technologies, concessional term expectations, the types of financial instruments in which the corporation may invest, and the nature of any financial guarantees given.

The Clean Energy Finance Corporation Act itself mandates transparency requirements, such as publishing quarterly reports on investments made, including their value, timeline, project location, and expected rate of return, as well as an annual report with total investments made and estimated value of concessions provided.

Financial pathways and mechanisms

Depending on the size of the request and nature of the project, the Green Bank’s financial support can take different forms. These include direct investments, investments in specialized funds, and the specialist asset finance program.

The CEFC’s direct investments into large-scale projects and funds average A$20 million, but can range from A$5 million to an uncapped amount, and cover some 265 transactions to date. Technologies under this category must be ready for commercialization, meaning they have passed beyond the research and development stage and have identified a clear path to market. This includes the potential for both domestic and global market application of the technologies.

Related instruments for large-scale direct investment include flexible debt or equity finance, or a combination of both, tailored to individual projects. For example, the CEFC invested A$5 million in the 300-megawatt Blind Creek Solar and Battery Project. The agreement saw a joint venture established between the CEFC and Octopus Investments Australia, one of the world’s largest investors in clean energy.

Meanwhile, financing for smaller-scale or agribusiness projects is provided via asset finance programs delivered through co-financiers, such as major banks or specialized lenders. Project proponents must go directly to these co-financiers to apply for funding. The CEFC provides finance for these smaller-scale projects in the range of A$10,000 to A$5 million, but the co-financiers must also invest and must administer the financing for the project.

These small-scale transactions are administered under the CEFC’s Specialist Asset Finance Program, which is designed to extend the reach of the bank’s finance to tens of thousands of small-scale investors without having to increase the size of the CEFC’s in-house operations or staff. Eligible projects range from small-scale rooftop solar and battery storage, to energy efficient manufacturing and farm equipment, to improved building insulation, heating and cooling, demand management systems, and zero emissions vehicles.

Recognizing the unique nature of innovative technologies, the CEFC created the Clean Energy Innovation Fund in 2015. Technologies accessing this funding do not need to be ready for commercialization, with targeted support available at the earliest stages of development.

This support is provided through three cleantech accelerator and incubator programs—Artesian, Tenacious Ventures, and Startmate. Beyond financing, these programs provide other forms of support to help guide young companies through the first few turbulent years, and also work to match these companies with domestic and international cleantech investors.

To date, around 80 cleantech companies have received funding through the Innovation Fund, with related investment totalling A$18.3 million. This includes some debt, but mostly equity investment in emerging clean technology projects and businesses, recognising the unique characteristics of budding cleantech companies, and delivering a financial return at the later end of the innovation chain. Early-stage investment company Virescent Ventures manages the Clean Energy Innovation Fund on behalf of the CEFC, while the Australian Renewable Energy Agency (ARENA) is a co-manager of the fund.

Other CEFC programs to note include the first green home loans, which launched in 2020 in partnership with Bank Australia, and the first hydrogen sector investments in 2021. Committed investments into the hydrogen sector currently amount to A$23 million across three transactions. The CEFC is also a leading investor in Australia’s emerging green bonds market, creating new options for investors, issuers, and developers. The CEFC also leverages private investment by pooling loans into portfolios, a type of securitization that allows investors to reduce their risk by spreading investments across a range of clean energy projects.

Policy strengths and limitations

Strengths

1. The Green Bank generates a positive return on investment.

In its first decade, the CEFC made low-carbon investment commitments of A$10.76 billion, from its initial A$10 billion endowment. As of June 2022, the CEFC reported that it had access to A$4.57 billion in investment capital, in addition to ongoing returns from investment. These figures demonstrate a significant return on investment to date, with additional and ongoing investments expected to see the overall size of CEFC’s assets continue to grow.

2. The Green Bank is achieving significant emissions reductions.

As of June 2022, the CEFC estimated its lifetime emissions reductions from existing investment commitments at more than 200 megatonnes of carbon dioxide equivalent. This includes more than A$3 billion in renewable energy investment, with the resulting projects generating more than 5 gigawatts of solar and wind energy. New investments in the manufacturing sector could soon boost the total figure by 0.9 megatonnes of carbon abatement annually.

3. The Green Bank has successfully crowded-in private sector investment.

Green banks encourage investors to back low-carbon technologies or projects that may be perceived as risky, often by assuming a portion of that risk themselves. Australia’s Green Bank also attracts co-financiers into emerging or unproven areas, convincing private investors to follow its lead. This type of “crowding-in” activity has leveraged investments of over A$37.15 billion for low-carbon projects from the initial A$10 billion endowment, according to CEFC estimates that factor in the additional investments leveraged from third-party private finance.

4. The Green Bank has successfully avoided crowding-out private-sector investment.

The CEFC is mandated to balance its objectives to deliver emissions reductions and profitability, with the imperative of ensuring that it does not provide financing where the private sector otherwise would. The CEFC says this means retreating where the private sector is operating effectively, and stepping up investment activity to fill market gaps where the private sector is absent. In practice, this means analyzing each transaction to ensure that there is really a need for the CEFC’s intervention. As a result of this policy, the bank may be less active in years of market strength, where there is a lot of private-sector certainty and investment, and more active in years with market instability.

Limitations

1. There is some potential for the Green Bank to be vulnerable to political interference.

While the CEFC acts independently of government, its Board is appointed by the ruling government and the CEFC must follow the government’s investment mandate. This allows the ruling government to provide instructions on the types of investments the CEFC should pursue, as well as restrict or otherwise change the design of financial instruments, providing a degree of regulatory uncertainty to the private sector. For example, the 2020 Investment Mandate, submitted by the Liberal/National Coalition government, sought to limit the amount of public support provided to low-carbon areas. This included limits on concessionality in any one financial year to A$300 million, essentially steering the CEFC towards more commercially attractive terms and market rates. At the same time, the government limited the use of financial guarantees, noting that the CEFC should seek to avoid their use given that “guarantees pose a particular risk to the Commonwealth’s balance sheet.” The current Labor party government, led by Prime Minister Anthony Albanese since the May 2022 election, has reversed these references while also amending the Clean Energy Finance Corporation Act itself to include a specific mention to emissions abatement (in addition to the existing “clean energy” wording).

2. The Green Bank does not target or measure outcomes related to equity or climate justice.

The CEFC has limited commitments related to social or environmental justice and equity. While there is a strict policy of screening investment proposals to mitigate negative impacts on Aboriginal peoples and Torres Strait Islanders, for example, there is limited concrete effort to direct investment towards positive outcomes for these groups, despite the CEFC’s Reconciliation Action Plan including a promise to examine the issue. This is in contrast to other green banks, or similarly structured funds, that have specifically made equity considerations a key metric to be included in lending decisions. The U.S. Inflation Reduction Act, for example, created the US$27 billion federal Greenhouse Gas Reduction Fund to help finance clean energy and climate projects that reduce greenhouse gas emissions—and specifically earmarked more than half of that amount, US$15 billion, for projects in low-income and disadvantaged communities, aiming to accelerate climate justice in these regions.

Lessons for Canada

Canada has at least two existing initiatives at the federal level that aim to mirror many of the functions of Australia’s CEFC. These include the Canada Infrastructure Bank and the new Canada Growth Fund. The Canada Infrastructure Bank operates similarly to Australia’s Green Bank, as an arm’s length corporation. While the Canada Infrastructure Bank is not specifically mandated to accelerate the low-carbon transition, two of its five priority areas relate to climate change—green infrastructure and clean power—with a key objective to reduce climate pollution over the lifecycle of the activities. Many of the Canada Infrastructure Bank’s financial mechanisms are similar in structure to CEFC, aiming to leverage private capital, including through debt products targeted at private-sector market participants. Noteworthy “green” endowments include C$2.5 billion for clean power, C$2 billion to invest in large-scale building retrofits, and C$1.5 billion to accelerate the adoption of zero emission buses and charging infrastructure.

In addition to the Canada Infrastructure Bank, the new Canada Growth Fund plans to spend C$15 billion over three years, modelled broadly from green bank principles. The fund, first announced in the April 2022 budget, will make concessional investments to spur clean growth. It is prepared to shoulder investment risk to leverage private sector capital, and is prepared to accept a lower return and greater risk than traditional banks or financial institutions.

Three major lessons can be drawn from the 10-year history of Australia’s Green Bank that can help the Canada Infrastructure Bank and the Canada Growth Fund define or improve their principles and approach:

1. Define, and stick to, an umbrella mandate and principles.

For green banks and green funds to be successful, investments must be mission-driven, having a specific objective beyond financial returns, and clear guiding principles to ensure efficiency. In contrast, the broad-based nature of the Canada Infrastructure Bank mandate has meant that it is not always clear how low-carbon projects may or may not be favoured over traditional endeavours, and how the myriad programs fit together towards common objectives.

Meanwhile, the Canada Growth Fund must continually underpin every decision with its overarching principle of helping Canada reach net zero emissions by 2050, while complementing this objective with climate justice and reconciliation objectives. This means focusing on deploying well-established technologies such as renewable energy and energy efficiency, but also ensuring that new innovations are nurtured through targeted initiatives—as Australia has done with its Clean Energy Innovation Fund. It will also be important to develop a strategy that will guide the prioritization of projects, something that could, for example, be performed through modelling viable low-carbon transition scenarios, and identifying areas with comparative advantages for global markets.

The Canada Growth Fund must also ensure that it is not crowding-out private sector investment, and make this a key pillar to its mandate. Lessons can also be learned from the United Kingdom in this regard, which sold off its Green Investment Bank in 2017 after only five years, with many blaming the retreat on the bank losing sight of this element within its mandate. That is, the bank faced criticism that it stuck around in sectors after they had matured, directly competing with private investors.

Finally, these investment principles should be turned into impact metrics, or key performance indicators, in order to track and report results over time. Australia’s quarterly reports and annual summaries provide data related to funding, but also key metrics related to emissions abatement, renewable energy additions, concessional spending, and proportion of leveraged private-sector investment.

2. Identify and target the most strategic private partners.

Some of Canada’s largest institutional investors have increasingly opted to invest in projects outside of Canada. Canada’s biggest eight pension funds, for example, collectively manage over C$2 trillion in assets, but are largely invested abroad. Canada should ensure that the Canada Infrastructure Bank and Canada Growth Fund target co-financing arrangements with these types of key organizations, recognizing the supersized financial strength such partnerships can leverage.

A significant part of CEFC staff’s objectives involves establishing and nurturing strategic relationships. This includes working closely with strategic private partners on financing smaller-scale projects and working with banks and co-financiers to deliver discounted finance. Canada can learn from this experience, and instead of trying to reach smaller-scale project proponents directly, can lean on the established networks of partnering banks and specialized lenders. This will avoid many administrative and transactional costs and is likely to ultimately be a more efficient use of public funds. In this regard, it will be important to bolster partnerships with end-user support programs, for example by ensuring participating banks have dedicated asset finance channels to assist customers with eligibility and loan applications.

3. Make developing institutional knowledge and relevant expertise a top priority.

Institutional knowledge and human capital are critically important to the success of green banks and green investment funds. It is crucial to hire staff with technical knowledge related to both finance and the low-carbon transition. This will be key to assessing the viability and political impact of projects, including identifying the ultimate sources of income for low-carbon energy and technologies; as well as policy levers that are already helping to spur investment in those areas, such as carbon pricing. While consultants can be used to perform some key tasks, personnel should, at a minimum, be effective at public communication and developing partnerships. Australia’s CEFC is a small organization with a broad reach, and therefore often relies on the skillset and technical capabilities of its partners, making these attributes a key consideration when selecting co-financiers and/or investable projects.

Conclusion

Australia’s CEFC offers ten years of experience with investments into low-carbon projects, businesses, and technologies. It has expanded its focus from renewable energy generation to low-carbon innovations, and more recently to infrastructure to support electrification such as smart grids. All of these climate change solutions require funding, something that the CEFC is willing to offer at more generous and flexible rates than private-sector investors. The CEFC has learned to be cautious about crowding-out private-sector investment, avoiding any transaction where private actors are already filling the gap. Instead, it aims to accelerate its operations in times of uncertainty, embracing risks related to the clean energy transition. In so doing, it has a proven track record of its financed projects resulting in measurable greenhouse gas abatement, leveraging considerable sums of private-sector finance, and demonstrating a positive return on investment. Canada can learn from this model as it implements its new Canada Growth Fund and the Canada Infrastructure Bank continues to evolve. Primary lessons learned that may shape the Canadian context include articulating and following investment principles, building relationships with strategic private-sector partners, and fostering the types of knowledge and transparency that will grow the clean economy investment landscape.