The federal government is considering making it a requirement for anyone who sells a newly built or pre-existing home in Canada to have an EnerGuide label for that home at the time of sale. Currently, EnerGuide labels are voluntary, but as part of the Canada Greener Homes Grant Initiative, they are exceptionally popular with Canadian homeowners, with some waiting up to a year to obtain the EnerGuide evaluation needed to obtain a label. Making such labels mandatory at the time of sale will only increase the demand for those labels, an unorthodox choice when the demand for EnerGuide home evaluations far exceeds the supply. These supply shortages, however, do also illustrate the desire of Canadians to live more energy-efficient lives and the overall value of tools such as EnerGuide labels. 

Reducing the carbon footprint of residential housing is vital for Canada to reach its 2030 and 2050 emissions targets. EnerGuide audits and labels can be essential in reaching that goal, along with the Pan-Canadian Approach to Carbon Pollution Pricing (PCF), which sets a minimum national price on carbon pollution. Requiring EnerGuide labels at the time of sale for existing homes can drive further decarbonization and give homebuyers additional information about the most significant purchase they will make in their lifetime. However, to be successful, such an initiative must be carefully designed, as a poorly developed or implemented plan will do more harm than good. Fortunately, Canada can look to systems in other jurisdictions, including the European Union and the United Kingdom, along with Ontario’s cancelled Home Energy Rating and Disclosure (HER&D) program for best practices (and pitfalls) in designing a mandatory time-of-sale program. 

From that experience, a new report, EnerGuide Labeling of Homes at the Time of Sale, identifies five design principles that must be met for a successful time-of-sale initiative: 

  • Accurate: The EnerGuide audits and labels must accurately assess the home's energy efficiency and carbon footprint. Inaccurate or misleading labels will erode public confidence in energy efficiency labels. 
  • Actionable: Providing an efficiency rating is insufficient; homeowners must be given information and recommendations on improving their homes' energy efficiency. 
  • Attainable: Homeowners must be able to obtain an audit and label in a reasonable amount of time if it is a requirement to sell a home. Requiring Canadians to wait several months or a year to sell a home is unreasonable and would create a backlash among Canadians who would otherwise support energy efficiency initiatives. 
  • Affordable: Home energy audits can cost from $300 to $1,000. Well-designed programs can keep the out-of-pocket costs low, or zero, to help seniors and other homeowners on a fixed income. 
  • All-Inclusive: To provide homeowners with details on their expected energy usage and greenhouse gas emissions, labels should also include expected energy usage, and greenhouse gas emissions from transportation, as where a home is located is a critical factor in a family’s energy use and GHG emissions from transportation. 

That final design principle is vital. Any policy must seek to avoid or reduce potential unintended consequences. One of the purposes of home energy labelling is to cause home buyers to seek more energy-efficient homes. While newer homes are likely to be more energy efficient than older ones, older homes are often in more walkable neighbourhoods closer to where Canadians work, shop, and play. Mandatory energy efficiency labeling could cause Canadians to favour newer homes over older ones, thus inadvertently encouraging sprawl by promoting exurban homes over urban ones.  

If the federal government were to proceed with a mandatory time-of-sale system, it must be carefully designed for the program to succeed. A poorly designed system that prevents Canadians from selling their homes will erode public support for energy efficiency labeling and lead to many embarrassing front-page stories in the media.


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