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OPINION: Ottawa’s energy-efficiency standards will increase home prices in B.C.

New housing isn’t keeping up with B.C. population growth and energy standards won’t help
Construction workers building a home in the Latimer neighbourhood of Langley. (Matthew Claxton/Langley Advance Times)

By Tegan Hill and Elmira Aliakbari

British Columbians face a housing crisis—that’s not breaking news. But now, new federal regulations aimed at “decarbonizing” the building sector will push housing prices in the province even higher with very little environmental benefit.

Specifically, according to Ottawa, new residential homes must now “use 61 per cent less energy by 2025 and 65 per cent less energy by 2030 in comparison to 2019.” And new commercial buildings must “use 47 per cent less energy by 2025 and 59 per cent less energy by 2030 in comparison to 2019.”

Consequently, according to a recent study, these new regulations will add more than $78,000 to the cost of a newly constructed home in B.C. by 2030.

That’s a big problem.

Moreover, recent strong population growth has already compounded B.C.’s housing challenges. In 2022, the provincial population grew by 147,540 people while just 38,361 new homes were built. Put simply, new construction is not keeping up with B.C.’s growing population.

And when supply can’t keep up with demand, prices increase. In other words, British Columbians already face an affordability crisis, and higher building costs due to Ottawa’s new regulations, part of a broader plan to reduce emissions, will only push up prices further.

And because older and higher-income British Columbians are often already homeowners—and these regulations will only directly affect the price of new homes—costs will fall disproportionately on younger people and families looking to enter the housing market.

Finally, the study also predicts the new federal regulations will lead to a 2.4 per cent contraction in B.C.’s economy as of 2030. So not only will Ottawa’s plan drive up housing prices, it will hinder provincial prosperity more broadly.

Of course, the Trudeau government claims these regulations are necessary to protect the environment. But energy efficiency mandates, in practise, often fall short of achieving meaningful reductions in emissions. While they make it cheaper to heat or light your home due to greater energy efficiency, for instance, they can also inadvertently lead to increased energy usage, a phenomenon known as the “rebound effect.” Basically, homeowners use the savings from greater energy efficiency to purchase other goods and services, which can then increase emissions.

Over time, this phenomenon can effectively cancel out most of the initial energy savings achieved through stricter efficiency rules. In fact, the same study estimates that these new federal regulations will reduce emissions in B.C. by a paltry 1 per cent by 2030. That’s a lot of pain for little gain.

The Trudeau government’s new regulations will impose huge costs on British Columbians at a time when the provincial economy is struggling and housing is already unaffordable. Federal policymakers should rethink these policy changes, particularly as they’ll have very little environmental benefit.

Tegan Hill and Elmira Aliakbari are analysts at the Fraser Institute.