Trudeau’s energy efficiency regulations will hike house prices upwards of $80,000 over next decade: report

The stricter building regulations will only reduce Canada's emissions by 0.9% by 2030, while increasing home construction costs by about 8.3% during that period.

Trudeau’s energy efficiency regulations will hike house prices upwards of $80,000 over next decade: report
THE CANADIAN PRESS/Graham Hughes and THE CANADIAN PRESS/Jeff McIntosh
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Ottawa's war on affordability reached new heights Tuesday as stricter energy regulations for new builds will increase costs by tens of thousands of dollars.

According to the Fraser Institute, on average, new homes in Canada will cost $55,000 more by 2030 as the federal government seeks to reduce carbon emissions from residential buildings.

"With housing costs already a major concern for so many Canadians, Ottawa's new building energy efficiency regulations will increase the cost of housing even more and achieve very little in the way of reduced emissions," said Ross McKitrick, author of the report, Wrong Move at the Wrong Time: Economic Impacts of the New Federal Building Energy Efficiency Mandates.

The study attributes the expected cost increase to the federal government's Building Energy Efficiency (BEE) proposal — a crucial part of its 2030 Emissions Reduction Plan (ERP).

The proposal requires energy consumption in new residential buildings to fall 65% below 2019 levels by 2030.

Crucially, the stricter building regulations will only reduce Canada's emissions by 0.9%.

Federal climate modelling from Budget 2021 forecasted a national emissions reduction of 36% below 2005 levels — the benchmark year for Canada's 2030 climate targets in the Paris Climate Accord. However, that falls short of their commitment to reduce emissions by 40% to 45% over the next decade.

While the BEE requirements are initially minor, they quickly ramp up in the middle of this decade. They will increase home construction costs by about 8.3% by 2030.

Additionally, the rules will mainly affect purchasers of new homes and will likely fall disproportionately on younger and lower-income people trying to enter the housing market.

Across Canada, the increased home costs will range from $78,093 in B.C. to $22,144 in New Brunswick. Though the middle of the pack, Albertan homes will jump $35,499 by 2030.

Rent for a two-bedroom Calgary apartment increased 14.5% last July compared to July 2022 — a higher spike than observed in Toronto, Vancouver or Montréal.

Between 2012 and 2021, rent in the city only increased by 16.3%, with housing supply plummeting shortly after.

True North reported that those earning less than $87,000 annually can only access 40% of Calgary's housing market. In 2020, Statistics Canada said the median individual income was $44,250, with 75% of residents earning under $80,000 annually. 

According to the Calgary Real Estate Board (CREB), median home prices have increased nearly 16% since 2021, whereas they had only increased 28% over the previous ten years.

Government spokesperson Nicky Gocuan told Rebel News that the Alberta government is working to "develop partnerships" and "build more housing units" to support 82,000 households by 2031 — an increase of more than 40% over 2021.

According to StatsCan, Alberta received nearly 46,000 interprovincial migrants between 2022 and 2023 — a record high — with 33,000 coming during the third quarter of 2022.

"We are focused on finding innovative solutions that encourage new investments in housing while ensuring Albertans can find homes that fit their budgets," she said.

"To force such high costs on families during economic stress is irresponsible. Alberta's government will not stand for this and will have more to say," posted Alberta Premier Danielle Smith on X.

What's more, the new regulations will affect the Canadian economy broadly, reducing economic activity by 1.8%, translating to roughly $1,700 per worker starting in 2026.

Alberta's economy will shrink by 1.2% at that time.

As a result of the immense loss of GDP relative to reductions in GHG emissions, the emissions intensity of the Canadian economy rises slightly due to the regulation, according to the Fraser Institute.

Partially, with the help of the building regulations, the federal government intends to reduce emissions from 2022 levels to about 440 megatonnes by 2030 and then achieve 'net-zero' by 2050.

The effects on emissions are minor (0.9%) and, on a per-unit basis, cost about 50 times the carbon tax value as of 2030.

According to the Parliamentary Budget Office (PBO), a $170 per tonne carbon tax will cause the real GDP for oil and gas and transportation to decline by 10.8% and 16.2% by 2030, respectively. 

It will fall at least 0.2% for buildings, excluding the impacts incurred from the regulations.

"These are very high costs to impose on Canadians when the economy is struggling, and housing is already unaffordable for so many people," said McKitrick.

"Given these new building regulations will only reduce Canada's emissions by less than one percent, policymakers should ask whether the costs are worth it."

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