clean, efficient buildings: recommendations for on-reserve ... · more detail on estimation...

Clean, Efficient Buildings:

Recommendations for On-Reserve Housing in

British Columbia

August 24, 2018

Summary Indigenous communities in BC face a number of unique challenges including poor quality housing,

limited access to natural gas, and in some cases no access to grid electricity. These factors contribute to

energy poverty, where a typical indigenous on-reserve household is estimated to spend about three

times as much of their income as the median BC household on meeting their basic energy needs.

Further, ineffective heating systems often result in social and health consequences such as lower air

quality and mould in on-reserve homes.

Homes in on-reserve communities present some of the highest-impact opportunities in BC for positive

economic and social outcomes from energy efficiency investments. Energy efficiency retrofits such as

the installation of high-efficiency heating systems and improvements to building envelope can create

new training and employment opportunities, dramatically reduce household spending and greenhouse

gas emissions, and help address longstanding health and social challenges, especially when paired with

other necessary housing improvements. For example, we estimate that heating system retrofits could

be completed across on-reserve communities without access to natural gas at a total cost of $14,000 per

home, with an annual return on investment of 12-14%.

To address energy poverty on-reserve and create opportunities for increasingly skilled jobs in indigenous

communities throughout BC, we recommend that the BC Government:

1) Deploy capital at scale to meet the investment need for efficiency retrofits in on-reserve

indigenous housing through either dramatically increased funding programs, customized

incentive programs, new financing tools, or a combination of these options.

2) Ensure that the process for participating in funding, incentives, and financing programs is

streamlined and user friendly so that programs are accessible to communities without an

undue burden for funding administration.

3) Increase investment in capacity development & training, so that communities can participate

in the economic opportunities and create skilled jobs in the process of developing and

implementing projects, and also so that communities can be self-reliant in the maintenance of

new energy-saving equipment.

4) Provide flexibility in retrofit project design and combine high-impact measures such as

ventilation improvements when possible so that indigenous communities can effectively pair

90-425 Carrall Street // Vancouver, BC V6B 6E3 200 – 515 Third Avenue West// Prince Rupert, BC V8J 1L9

efficiency retrofits with other essential home repairs such as improved ventilation, fixed

windows, or mold remediation.

5) Ensure communities are supported in adopting higher-efficiency building codes and that they

have the training and financial support needed to implement higher-efficiency standards while

effectively addressing the huge demand for new housing on-reserve.

6) Design programs to meet the needs of lower-capacity communities, so that those without

own-source revenue or limited staff capacity are still able to participate and capture the energy-

saving benefits of cleaner, more efficient approaches.


Introduction Ecotrust Canada supports the development of a long-term clean growth strategy in British Columbia,

and we believe that policies supporting the development of Clean, Efficient Buildings play a key role in

that strategy.

We are encouraged to see that the province is committed to working in full partnership with indigenous

communities. While many policies in the intentions paper will be relevant to all types of communities in

BC, the paper does not make specific reference to adapting policies to meet the needs of indigenous

communities specifically.

Ecotrust Canada has over two decades of experience working with rural and indigenous communities in

BC to advance community and economic development goals, including a number of recent projects

focused on addressing challenges related to on-reserve energy and housing.

In this submission, we outline the problem of energy poverty in on-reserve indigenous communities,

provide an overview of the systemic barriers faced by indigenous households seeking improvements in

energy efficiency and reductions in energy costs, and offer a list of recommendations about how the

province can address energy poverty in indigenous communities while creating sustainable growth and

driving down greenhouse gas emissions.

Unique Factors affecting Indigenous Communities Indigenous communities in British Columbia face a number of unique challenges related to housing and

energy use that cause or exacerbate other social, economic, and environmental issues on reserve. There

are three primary causes at the root of these distinct challenges:

- Poor Housing Quality In Canada, housing on-reserve has long been acknowledged as inferior

to housing off-reserve. Reserve communities experience significant

issues related to inadequate housing and overcrowding, compounded

by a tendency for reserve housing to be built from poor quality building

materials and a lack of funds for building maintenance and upgrades1.

The result is that on-reserve homes typically have inadequate

ventilation that leads to poor air quality as well as mould and moisture issues2, and leaky building

envelopes that result in significantly higher energy use.

1 Standing Senate Committee on Aboriginal Peoples. (2015). Housing on First Nation Reserves: Challenges and Successes.

Canada: Parliament. Senate. 2 Lawrence, R., & Martin, D. (2001). Moulds, moisture and microbial contamination of First Nations housing in British Columbia,

Canada. International Journal of Circumpolar Health, 60(2), 150–156.


- Limited Access to Affordable Fuels Space heating represents the majority of energy spending in BC households, and 95% of BC residents

have access to Natural Gas as an affordable source of heating fuel. Yet, only 40% of on-reserve residents

have access to Natural Gas3. As a result, many on-reserve communities bring in heating oil (diesel) or

propane, or use expensive electric furnaces or space heaters to heat their homes. These fuels typically

cost about four or five times as much per unit of heat when compared to Natural Gas.

- Limited Access to Grid Electricity There is also a disproportionately high number of indigenous communities in BC without access to the

main power grid. There are an estimated 7,100 indigenous residents living in “off-grid” communities,

representing over 11% of BC’s on-reserve indigenous population. This compares to just 0.5% of BC’s

population as a whole living in “off-grid” communities.

3 Data obtained from FortisBC, June 2018.


- Solutions must meet the needs of all communities Virtually all indigenous communities are challenged with low quality housing, resulting in energy poverty

and health and mould issues regardless of what fuel they are using or whether they are on or off-grid.

Hence, solutions must be developed for both on-grid and off-grid communities to address this challenge.

Consequences

- Energy Poverty A household can be considered to be experiencing Energy Poverty when their household energy

spending is twice the median household spending on energy or more4. Since the median household in

British Columbia earns about $70,000 and spends about 3% of their income on energy, the ‘energy

poverty line’ is 6% for our province.

Across Canada, just 21% of the population is considered to be in energy poverty5. In contrast, a typical

on-reserve household earns $37,0006 and spends about $3,000 per year on home heating costs7. We

therefore estimate that the median on-reserve household in BC spends about 9% of their income on

household energy – three times that of the average BC household. This suggests that it is highly likely

that the majority of Indigenous British Columbians are experiencing energy poverty, with many that are

more than 50% over the threshold.

4 Rezaei, M. (2017, October 25). How Canada can end energy poverty and winter cut-offs. The Canadian Press. 5 Ibid. 6 Assuming two income earners per household. Median income data from Statistics Canada, Aboriginal Population Profiles, 2016 Census. 7 Assuming energy use at 1990 levels, about 45% higher than current averages. More detail on estimation methodology and assumptions can be found in Appendix II.


- Health and Mould Issues In some indigenous communities in BC, more than half of homes are affected by excessive mould

growth. Indoor mould growth has been linked by the Centers for Disease Control to upper respiratory

tract symptoms, cough, and the development of asthma, particularly among children8. Furthermore,

overcrowding and inadequate housing puts a strain on family dynamics and negatively impacts

children’s psychosocial development9.

- Environmental Risks The transportation and storage of fossil fuels, including diesel and fuel oil, to rural and remote

communities for home heating creates the additional risk of fuel spills on land and water, potentially

contaminating water sources and impacting the health of local wildlife.

The Opportunity: Deep Efficiency Retrofits in On-Reserve

Housing

- Retrofit Options Completing deep efficiency retrofits in homes and buildings in rural indigenous communities across BC

would deliver dramatic reductions in energy use, energy costs, and greenhouse gas emissions while

improving health outcomes for residents and creating new business and employment opportunities on-

reserve.

There are two major types of deep retrofits that can work together or separately to achieve better

outcomes and reduced heating costs for on-reserve households:

1) Heating System retrofits that replace the existing heating system with a new system that offers

higher efficiencies or uses a more affordable fuel. Since fuel costs are such an important factor

in heating costs, addressing the heating source itself is fundamental. Three leading technology

options are Air Source Heat Pumps, Ground Source Heat Pumps, and Biomass.

2) Building Envelope retrofits that reduce air leakage and improve insulation to reduce energy use

for space heating. This can include upgrades to doors and windows, installation of new high R-

Value insulation, and thorough air sealing in high heat loss areas such as the attic. These

important retrofits can be combined with ventilation improvements to simultaneously improve

air quality.

8 Centers for Disease Control and Prevention, “Facts about Mold and Dampness”, 2017. Accessed online at https://www.cdc.gov/mold/dampness_facts.htm 9 Standing Senate Committee on Aboriginal Peoples. (2015). Housing on First Nation Reserves: Challenges and Successes.

Canada: Parliament. Senate.

https://www.cdc.gov/mold/dampness_facts.htm


The financial benefits and business case for deep efficiency retrofits varies depending on housing size

and quality, cost of fuel, and climate. As an example, a recent retrofit project with twenty homes in Bella

Bella that replaced diesel furnaces with high-efficiency heat pumps has achieved household energy cost

savings of 40-50% in the first few months of operation. Details on specific technology options and their

benefits are available in Appendix I.

Self-reliance has been at the core of the project from its outset, with project coordination managed

locally and installations completed by local workers that are trained by a qualified project contractor.

Maintenance training, spare equipment, and parts will also be provided so that the community can

effectively manage these new heating systems going forward.

- Scale of Opportunity The opportunity is very large when considering the number of communities and households on-reserve

in BC. There are an estimated 19,500 total homes on-reserve in BC, including 11,700 without access to

Natural Gas10.

One of the most promising opportunities for deep efficiency retrofits in on-reserve housing is to replace

outdated heating systems with high-efficiency equipment in communities without access to Natural Gas.

To demonstrate the potential scale of opportunity, we have estimated heating costs for homes on-

reserve without Natural Gas access, and calculated investment amount, cost savings, and Return on

Investment (ROI) for heating system retrofits in these homes. Results are provided in the table below.

Detail on our assumptions and methodology for calculating these estimates can be found in Appendix II.

10 Data obtained from Indigenous Services Canada & FortisBC, June, 2018.


It can be noted that the total scale of opportunity is significantly larger and encompasses both heating

system retrofits and building envelope upgrades.

Table 1: Opportunity for Investment in Heating System Retrofits in On-Reserve Communities

without Natural Gas

Current Heating

Costs

$31 Million

annually

Investment to

Replace Heating

Systems

$157 Million

Annual Cost Savings $20 Million

annually

Return On

Investment

12% - 14% Annually

- Additional Project Benefits In addition to cost savings, there are a number of other major benefits to be considered, including:

- Significant opportunity for employment and business creation resulting from installation and

maintenance activities for new equipment

- Potential for dramatic greenhouse gas emissions reductions ranging from 30% to 99%, depending on

the source fuel and the retrofit opportunity pursued

- Health and social benefits resulting from improved air quality and a reduction in mold, with the

greatest benefits realized by children, vulnerable groups, and individuals with poor health.11

11 Maidment, C. D., Jones, C. R., Webb, T. L., Hathway, E. A., & Gilbertson, J. M. (2014). The impact of household energy

efficiency measures on health: A meta-analysis. Energy Policy, 65, 583–593. https://doi.org/10.1016/j.enpol.2013.10.054

Case Study: Heiltsuk Heat Pump Project Over 300 homes in Bella Bella rely on diesel or fuel oil for their home heat as a result of the remote

location of the community. The high cost of fuel and the relatively poor construction quality and low

level of insulation available in community homes leads to very high costs for home heating throughout

Bella Bella. In addition to heating costs, the environmental risks and impacts of fossil transportation &

storage on land & water is a major concern for Heiltsuk Tribal Council and Bella Bella residents,

especially following the sinking of the Nathan E. Stewart in October, 2016.


Challenges Preventing Access to Deep Retrofits

- Barriers to Financing Any discussion of policy pertaining to Indigenous communities must be based in an understanding of

colonialism and contextualized within the Indian Act of 1985. Section 18 of the Indian Act dictates that

reserve lands are “held by Her Majesty for the use and benefit of the respective bands for which they

were set apart”, setting out the reality that homeownership is dramatically different on-reserve than in

other places where simple ownership is the norm.

While it is possible for a band member to obtain a “Certificate of Possession” for their home on-reserve,

section 89 of the act restricts the seizure of property on-reserve. This means that band members cannot

use their homes as collateral to securitize a loan, thereby limiting the potential for private lending for

housing upgrades and retrofits. While banks may lend to a band that can in turn administer funds on

behalf of band members, the implication overall is that the main source of funding for efficiency projects

on reserve is Government grant programs.

- Vastly Insufficient Funding Programs In general, there is vastly insufficient funding available to meet the need for community investment in

energy retrofits on-reserve. The pool of funding available annually for exclusive access by First Nations in

Ecotrust Canada has been working in partnership with Heiltsuk Tribal Council since 2016 to design and

implement a solution for high heating costs in the remote community of Bella Bella. A business case

analysis determined that the best opportunity for the community was the installation of high-efficiency

electric heat pumps, so the community developed a plan to complete heat pump installations across

community homes.

Twenty heat pump installations were completed in February 2018 to pilot the project, with support

from BC Rural Dividend and the Oil to Heat Pump incentive program. So far, community residents have

noticed savings in the range of 40-50% on their heating costs, and some have noticed a significant

improvement in indoor air quality and the health of their children. Heiltsuk Tribal Council is still seeking

funding to complete the retrofits throughout all 300 remaining community homes that use fuel oil

(diesel) as a primary source of heat.

Self-reliance has been at the core of the project from its outset, with project coordination managed

locally and installations completed by local workers that are trained by a qualified project contractor.

Maintenance training, spare equipment, and parts will also be provided so that the community can

effectively manage these new heating systems going forward.


British Columbia to develop and implement energy projects broadly in 2018 is just $2.8 Million. If these

funds were entirely dedicated to completing energy efficiency retrofits in on-reserve housing, there

would be enough money for retrofits on just two hundred homes annually. At that rate, it would take

about one hundred years to complete retrofits throughout all current BC homes on-reserve.

As a result, communities are forced to compete for limited funding resources to support a wide breadth

of project types. For example, the BC Clean Energy Business Fund has received ten applications for

energy efficiency project funding support in indigenous communities, but only five of these applications

were successful.

A detailed review of current funding programs is available in Appendix III, and summary results from a

survey of funding programs are found in Appendix IV.

- Capacity Limitations Community staff and leaders are often stretched between many competing priorities for the investment

of limited resources. Funding programs typically require ‘in-kind’ contributions from communities, but

the reality is often that staff time is not available without an injection of new dedicated funding to hire

support. Community members may also not have skills and training to complete the required work,

resulting in a high reliance on outside contractors and consultants for project development and

implementation unless dedicated training and capacity-building support is in place.

Consequences of Current Funding System The current system of funding indigenous community energy projects in British Columbia is both inefficient and ineffective in achieving the desired results at scale. There are many consequences that result from the current model of funding indigenous community energy projects in BC: o Communities waste valuable time and resources in completing applications with little chance of

success o Only a very small portion of potential projects are realized, despite the strong business case

and co-benefits for deep efficiency projects in general o Limited application windows and decision waiting periods extend project timelines

unnecessarily o Fund matching requirements can exclude communities that lack capital or own-source revenue

to match o Piecemeal funding approach means even communities that are successful must piece together

multiple winning applications to proceed with their project. o Communities with the highest capacity and the most resources are often most able to succeed and

develop successful applications, leaving those with fewer resources falling further behind


An improved system would deploy resources at scale to meet the investment needs of communities,

create more accessible application and reporting processes, and provide ensure user friendliness and

simplicity throughout the entire process.

Potential Financing Solutions In addition to new or improved funding programs, the government could advance financing solutions

that specifically address the gaps in the current system, particularly the lack of credit and collateral, lack

of capital, and limited capacity experienced by indigenous communities in BC. Detail on the barriers to

financing can be found in Appendix V.

We have assessed a number of financing program design options for their utility in deploying financing

to on-reserve communities, and descriptions for each are provided below:

- On-bill financing(OBF)

A utility-led financing program where the loan is repaid on the utility bill. Predicated on the assumption

that cost savings will exceed the financing fee, OBF has a bill neutrality requirement. Eligibility

determined by account status and bill payment history, and repayment enforced by a possibility of

service disruption.

- Investment banks

A purpose-driven publicly capitalized financial institution able to increase the efficiency of public monies

by attracting private investment. Preferential loans offer greater accessibility to bands that apply and

administer funds for their members. Investment banks engage in a variety of activities (interest rate

buy-downs, warehousing, co-management) to reduce the cost of capital.

- Utility equipment leasing

A utility-led leasing program for energy efficient equipment. Customers lease equipment such as heat

pumps or water heaters and make monthly payments to the utility for a pre-determined term, at the

end of which the customer may purchase the equipment or return it. Eligibility determined by credit

checks and account status, and repayment enforced by equipment repossession with service disruption

as a backstop.

- Performance contracting A private sector approach wherein an energy service company (ESCO) is hired by a community to

achieve a certain level of agreed-upon cost and energy savings. The ESCO is paid a percentage of the

cost savings for the duration of the contract and is responsible for all aspects of planning, financing, and

installation of upgrades. Capital may come from the ESCO itself or from a third party.


- Loan guarantees

A government credit enhancement tool which enables bands to get around the collateral barrier when

applying for loans. Government determines eligibility based on risk of default, and if approved, bands

can borrow using the government’s credit rating. Often partnered with approved lenders to finance

retrofits on reserve.

12

12 Zetterberg, J., & Ng, B. (2014b). Financing Energy Improvements on Utility Bills: Technical Appendix - Case Studies, 86. 13 Manitoba Hydro. (n.d.). Power Smart PAYS Financing. Retrieved August 3, 2018, from

https://www.hydro.mb.ca/your_home/power_smart/pays/index.shtml 14 Wasney, E. (2016, June 28). Waywayseecappo presses ahead with geothermal energy program. The Brandon Sun. Retrieved

from https://www.brandonsun.com/local/waywayseecappo-presses-ahead-with-geothermal-energy-program-384661241.html 15 Loney, S., & Braun, W. (2016). An Army of Problem Solvers: Reconciliation and the Solutions Economy. McNally Robinson.

Case Study: Manitoba Hydro Experience The most commonly cited example of an on-bill financing program in Canada is the Pay-As-You-Save

(PAYS) program run by Manitoba Hydro. PAYS was introduced in 2012 as a supplement to Manitoba

Hydro’s existing on-bill programs in an effort to reach a wider market, including those who were not

deemed creditworthy under traditional underwriting criteria.12 PAYS underwriting requirements are

that the customer be in good standing, the home is insured, and that the applicant is the homeowner.13

Eligible projects are generally single-measure (space/water heating, insulation) and contractors

alongside customers must validate their desired measures before applying.

In 2013, a local social enterprise by the name of Aki Energy partnered with Manitoba Energy and

several First Nations to deploy PAYS financing on-reserve for ground-source heat pump retrofits. Their

unique approach centred on reducing heating costs for communities while simultaneously improving

economic opportunity on-reserve by training community members to install and maintain heating

systems.

The scale of achievement between 2013 and 2016 amounted to 77 geothermal installers trained to

work in 4 communities with a total of 350 homes receiving new heating systems.14 While Manitoba

Hydro initially committed to investing $19 million in community geothermal, Aki Energy was able to

compel just $8 million in project financing and training before their program was cut.15 According to Aki

Energy, they were ordered to discontinue their pilot by INAC, with no clear explanation other than that

the program was under review.


Recommendations for Clean, Efficient Buildings On-Reserve

1) Deploy Capital at Scale to Meet Investment Need for Retrofits

We estimate that a total of $260 Million would be required to just replace heating systems across

indigenous community households in BC. Therefore, dedicated funding of $26 Million annually would be

required to fully execute this one major retrofit across on-reserve housing in BC within ten years, with

additional funding required to complete building envelope improvements or other measures.

We see three distinct options for expanding the availability of financial resources to complete energy

efficiency retrofits across on-reserve households in British Columbia:

Option A: Dramatically Expand & Refocus Funding Programs

This option would require a very significant expansion and refocusing of funding programs to enable

investment in on-reserve energy efficiency retrofits at scale. This would require both refocusing existing

funding programs on energy efficiency retrofits, and expanding funding allotments about tenfold.

Option B: Customize Inventive Programs to meet the unique needs of Indigenous communities

One of the policies discussed in the intentions paper is the creation of new financial incentives to install

high-efficiency heating equipment or to complete building envelope retrofits across BC. A significant

portion of any new incentive funding could be dedicated to indigenous communities, with 100% cost

coverage for a set list of high-impact efficiency retrofits (ex. air-source heat pumps). Funding programs

could then be refined to focus on supporting the soft costs of project development, coordination, and

training.

Ecotrust Canada has experience working with Heiltsuk Tribal Council to access the existing Oil to Heat

Pump incentive program. From this experience, we have learned that for incentives to effectively be

deployed with indigenous community partners, program application and reporting requirements would

must be streamlined and community-wide applications would also need to be permitted in order to

provide a simple, accessible process for communities. It might also be necessary to provide communities

the option of receiving payment up-front for retrofits to be completed, as not all communities will have

access to cash or credit to cover costs up-front.

Option C: Develop New Financing Tools to supplement funding and incentive programs

Alternately, a modest funding or incentive program expansion could be complemented with new

financing tools that are specifically designed to overcome barriers to financing on-reserve. In this model,


funding resources would be best focused on costs associated with project exploration and planning,

development, local coordination, and local training, with financing focused on equipment and

installation costs.

Based on a thorough assessment of each option and how they perform against the program design

criteria, on-bill financing is found to be the best at addressing the challenges Indigenous communities

face in securing financing for energy efficiency retrofits. It has the most flexible eligibility criteria (utility

bill payment history), a strong enforcement mechanism (service disconnection), and a simplified process

for the customer (on-bill repayment, bill neutrality). These key program design elements overcome the

fundamental barriers to financing on reserve and present a viable opportunity to achieve utility bill cost

savings and co-benefits at a scale unimaginable under present funding structures. The success story of

Manitoba Hydro’s PAYS program and its ability to address broader issues of economic inequality on-

reserve through social innovation further illustrates the great potential for this type of program in British

Columbia (and beyond) to support efficiency retrofits in on-reserve housing.

It can be acknowledged that some concerns exist with respect to stakeholder acceptance as an on-bill

program had previously been piloted in off reserve communities in B.C. without much success, however

the discrepancies between that context and the on reserve context suggest that Indigenous

communities would likely be much better markets for such a program due to greater cohesion, higher

heating costs, and poorer quality of housing. Taking the learnings from other jurisdictions, considering

the unique contexts of B.C. communities, and co-constructing program design with and for Indigenous

communities has the potential to generate a specialized, made-in-B.C. approach to achieve high

program update and successful outcomes.

It should also be noted that the financing options are not mutually exclusive and may be combined to

satisfy government objectives – for instance, use of a loan guarantee to help secure financing and lower

the interest rate, or the warehousing and sale of loans by the utility to a private investor to increase

available capital.

Ultimately, financing for project implementation should be viewed as a part of a comprehensive

approach that seeks to holistically address challenges with capacity, access to capital, economic

opportunity and housing on reserve.

2) Ensure funding, incentive, and financing processes are streamlined

and user-friendly for communities Current application and reporting requirements are inefficient and ineffective in deploying resources in

a timely manner to the projects that need them. Application and reporting processes need to be

dramatically streamlined and simplified so that communities can focus their efforts on the essential

tasks of project development, instead tracking down funding and writing reports.


3) Increase Investment in Capacity Development & Training Regardless of the method of capital deployment for equipment and installation costs, additional

capacity development and training support will be necessary to ensure that communities have the

resources to identify, develop, & coordinate deep efficiency projects for themselves. More importantly,

training local people to install and maintain systems allows communities to confidently adopt new

technologies with greater self-reliance. While some outside capacity will likely always be necessary to

support project development and system maintenance, the goal should be as much as possible to hire

and train local people to complete work and benefit from project activities.

4) Provide flexibility to combine efficiency retrofits with other essential

housing improvements The challenges related to high energy use are linked with many other challenges in housing on reserve,

including poor ventilation and inadequate general maintenance. Ideally, programs to address energy

efficiency improvements can be deployed with small pockets of flexible funding to simultaneously

address other issues in the home, for a comprehensive improvement in health and comfort. At the very

least, simple ventilation improvements can be affordably paired with building envelope and/or heating

system retrofits for better indoor air quality and health outcomes.

5) Ensure communities are supported in adopting high-efficiency building

practices and new building code standards Provide dedicated support for indigenous communities to adopt higher-efficiency standards for new

home and building construction on-reserve. Support could take the form of funding to cover the

additional costs of efficiency, sharing of best practices in indigenous housing construction, and

dedicated technical support for communities pursuing new housing projects to build high-efficiency

buildings and meet the new requirements.

6) Design programs to meet the needs of lower-capacity communities Current programs present barriers that prevent lower-capacity communities from taking advantage of

them, such as matching funding requirements, limited or no eligibility for staff expenses, and

expectations for in-kind contributions to project administration. The reality is that many communities do

not have their own resources to contribute to project development or project management, and that

matching funding can be a barrier to communities without own-source revenue. Unless programs are

designed to be fully accessible to communities regardless of their ability to contribute financially or

otherwise, only the highest-capacity communities will be able to take advantage of programs.

Limitations There are two major limitations to these recommendations submission that should be noted:


- Data Availability There is a dearth of quality data for on reserve communities in general, and energy use on reserve in

particular. In lieu of specific data sets, we have used available figures to estimate energy use and build a

business case based on the age of housing on reserve and our work with communities to date. While

there is always a risk in producing estimates, we believe this approach is preferable to the alternative –

not providing any quantified estimate of the scale of the challenge.

- Community Engagement This submission has been prepared to meet timelines for Clean Growth Strategy feedback.

Unfortunately, this has not allowed for substantial community engagement to validate the above

recommendations. We have planned engagement for Fall 2018 to achieve this purpose, and will follow-

up with ministries engaged in the Clean Growth Strategy as appropriate to explore partnership on this

important work.


Appendix I: Outline of Retrofit Opportunities in On-Reserve

Communities

Heating System Retrofits Ground Source Heat Pumps In most climates, ground source (sometimes called geothermal or geoexchange) heat pumps (GSHP) are

a viable solution for improving energy efficiency and reducing both utility bills and GHG emissions.

GSHPs harness heat from the ground through a series of pipes to heat and cool buildings. The

subterranean temperature, which is constant at depths of 10 meters and greater, heats fluid running

through the pipes that is then returned to the heat pump and used to heat the building using electricity.

GSHP also boasts a coefficient of performance16 of 3 to 5; the highest of commercially available

technologies. However, the economic feasibility of GSHP depends on location, due to varying prices of

energy: they are more economical in places where electricity is expensive, and fuels are costly or

unavailable.

Air Source Heat Pumps Air source heat pumps (ASHP) are similar in concept to ground source heat pumps, but are less labour

intensive to install and thus have lower capital costs and a shorter payback. They are best suited to

milder climates such as coastal British Columbia, as COP decreases with temperature. While slightly less

efficient than GSHP, ASHP still have a COP of 2.5 to 3.5, boasting significant energy savings over and

above electric baseboards and furnaces. In case study comparing the economic viability of various fuel

switching options in the Yukon territory (a region with a generally colder climate but with access to

abundant hydroelectric electricity), ASHPs were found to be the only intervention with significant cost

savings for households, particularly for older homes.

Biomass Heat For a community that lacks access to abundant, low-cost electricity, biomass may be a suitable option.

Depending on the specifics of the community, a district energy system (centralized) or wood pellet

boiler (decentralized) will be more or less economically viable. While biomass may sometimes present a

less compelling business case than heat pumps, the benefits to communities – particularly remote

communities – are unquestionable. When used for household heating in place of oil or propane, wealth

is kept in the community, the community can reduce their GHG emissions, and they are less likely to be

subject to price volatility. A centralized system might work better in more densely populated

communities, or in conjunction with plans for energy generation beyond heating; a decentralized system

may be more appropriate in a community where use of wood stoves is common due to the high cost of

diesel and oil, and can facilitate incremental fuel switching.

16 Coefficient of Performance (COP): The ratio of heating or cooling output to the energy input needed to run the equipment.


Building Envelope Retrofits Air sealing and insulation improvements can be completed to address air leakage and to improve R- Air

sealing and insulation improvements can be completed to address air leakage and to improve R-Values,

especially for heat escaping through the attic and roof of each home. Doors and windows can also be

replaced with models that are more effective at retaining heat.

Ventilation Replacement Ventilation systems in on-reserve homes are often broken or installed incorrectly, leading to increased

moisture buildup and contributing to mould growth and associated health issues. Ventilation system (ie.

Bathroom fan) replacement can affordably achieve improvement in air circulation and a reduction in

humidity.


Appendix II: Methodology for Estimating On-Reserve Heating

Costs & Investment Potential

- Assumptions for Opportunity Assessment

Given the lack of quality data on indigenous community energy use, we used the best available data to

create a reasonable estimate:

- We know that housing quality is poor and that the median age of housing on reserve is likely

older than 199117. We therefore used British Columbia energy use and heating energy share

data from 1990 to best represent current housing on reserve1819. This results in an estimate of

79 GJ of annual heating energy demand.

- 60% of on-reserve households in BC do not have access to affordable Natural Gas20. This reflects

a population of 37,500 indigenous British Columbians in an estimated 11,700 households.

- We multiplied estimated heating demand by typical equipment efficiency (85% for Propane &

Diesel (Heating Oil); 100% for Electric Furnace) and current average pricing, assuming an equal

mix of electric, propane, and diesel (heating oil) across communities without access to Natural

Gas.

- Assumed equipment & installation costs of $12,500 per detached home and $7,500 per

attached home or apartment.

- Assumed project development & coordination costs of $80,000 per project, with an average

project size of 50 homes.

- Assumptions for Energy Poverty Calculation

- We estimated average energy costs for homes without access to Natural Gas at $3,703.

- To estimate average energy costs for homes with access to Natural Gas, we multiplied current

BC average household energy costs by the higher intensity of energy use in 1990 to arrive at an

estimated average of $3,007 annually.

- We weighted each of these estimates for their distribution at 60% for no Natural Gas

communities and 40% for communities with Natural gas access. The result is estimated average

spending of $3,285 on home energy.

17 BC Government, BC Aboriginal Data Initiative, 2006. Accessed online at http://www.bcstats.gov.bc.ca/apps/ACDI.aspx 18 Natural Resources Canada, Residential Sector British Columbia Secondary Energy Use, 1990-2015. Accessed online at

http://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/showTable.cfm?type=CP&sector=res&juris=bc&rn=2&page=0 19 Natural Resources Canada, Residential Energy Trends, 1990-2013. Accessed online at

https://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/files/energy/pdf/trends2013.pdf 20 Natural gas access based on data provided by FortisBC, cross-referenced with on-reserve population data December, 2017.

http://www.bcstats.gov.bc.ca/apps/ACDI.aspx

http://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/showTable.cfm?type=CP&sector=res&juris=bc&rn=2&page=0

https://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/files/energy/pdf/trends2013.pdf


We assume two income earners at median levels in each household, with data from Statistics Canada’s

Aboriginal Population profiles.21

21 Statistics Canada, Aboriginal Population Profiles, 2016 Census.


Appendix III: Analysis of Current Funding Gap

We have reviewed the seven most relevant funding sources in detail to assess gaps between the

estimated funding need and existing programs, and have identified the following six key challenges

limiting access for communities:

1) Insufficient Dedicated Funding

In general, there is vastly insufficient funding available to meet the need for community investment in

energy retrofits on-reserve. The pool of funding available annually for exclusive access by First Nations in

British Columbia to develop and implement energy projects in general is estimated at just $2.8 Million. If

these funds were entirely dedicated to completing energy efficiency retrofits in on-reserve housing,

there would be enough money for retrofits on about two hundred homes annually. At that rate, it would

take about one hundred years to complete retrofits throughout all current BC homes!

2) Vast Breadth of Coverage

While there are some larger pools of funding available, each of the larger sources are available to

communities across Canada and often for a wide range of infrastructure needs or project types in

addition to energy projects. A number of funds are open to municipalities, non-profit organizations, and

businesses across Canada in addition to Indigenous communities, further diluting the opportunity for BC

indigenous communities.

3) Competing with Infrastructure Priorities

One of the most substantial opportunities for First Nations pursuing project funding is to seek funding

through the Federal First Nations Infrastructure Fund. However, this fund is mandated to meet

infrastructure needs of First Nations across Canada with just $127 Million in annual funding –about

$200,000 on average for each community. Each community has a limited ability to access this fund, and

must choose their priorities between a wide range of potential infrastructure projects.

4) Remote and Rural Focus

Another prominent Federal funding source is the Clean Energy for Rural and Remote Communities. This

fund has about $37 Million available annually for the next six years, targeted for clean energy projects in

remote Canadian communities. The geographic breadth of this fund is vast, with access for indigenous

and non-indigenous communities across Canada. However, the eligibility requirements stipulate that

only rural and remote communities may apply, with a focus on displacing diesel generation in off-grid

areas. Further, only ‘innovative’ energy efficiency projects and biomass projects are eligible; heat pumps

and other commercially viable technologies are not. It is worth noting that only about 8% of BC

indigenous communities are diesel-dependent, dramatically limiting the impact of this fund.


5) Technology Focus – Biomass

Biomass is a particular focus for two of the seven most relevant funding sources- Indigenous Forestry

Initiative and . Both are substantial Federal funding sources. Projects incorporating other heating

technologies, such as Air Source or Ground Source Heat Pumps, are not eligible to apply to these funds.

This indicates that there may be a particular gap for funding projects incorporating heat pumps.

6) Energy Conservation Assistance Program

While it is not technically a funding program, it is worth mentioning that the Energy Conservation

Assistance Program as currently designed is an ineffective mechanism for achieving energy efficiency

retrofits with on-reserve communities in BC. The solutions offered (basic air sealing, new light bulbs)

provide only marginal improvement in efficiency, while deeper solutions such as insulation

improvements are often difficult to qualify for in indigenous housing due to the lack of indigenous

housing.

Table 2: Analysis of Relevant Funding Programs

Jurisdiction Total Available Scope

Annual Funding (Millions)

Low Carbon Economy Challenge Federal $500

Million

FNs, Municipalities, Non-Profits, &

Businesses. $125.0

NRCan Clean Energy for Remote Communities Federal

$220 Million

FN & Municipalities $36.7

INAC - FN Infrastructure Fund Federal $255

Million FN Only- General $127.0

NRCan- Indigenous Forestry Initiative Federal

$10 Million

FN Only- Forestry $3.3

First Nations Clean Energy Business Fund Provincial

$10 Million

FN Only- Energy $1.4

BC Indigenous Clean Energy Initiative Federal

$4.2 Million

FN Only- Energy $1.4

New Relationship Trust- Capacity Initiative Federal

$1.6 Million

FN Only- General $1.6

Total Dedicated to BC First Nations Energy Projects $2.8


Appendix IV: Results of Gap Analysis

In an effort to understand just how significant the gap in funding for First Nations is, a gap analysis was

undertaken to attempt to quantify the scale of missed opportunity. Funding programs applicable in B.C.

were contacted by email and asked to provide data on how many applications they received and

approved in the past intake period or fiscal year. The questions attempted to capture any nuance and

discrepancy between energy efficiency funding, funding for First Nations (in the event the program had

a wider reach), and funding granted overall. Specifically, they were asked the following questions:

1. How many applications did you receive to fund projects related to household heating/energy efficiency retrofits on reserve (any stage of project including capacity building) during your last intake period? How many applications were successful?

2. How many applications in your last intake period did you receive from First Nations communities to fund energy projects of any kind? How many were successful?

3. How many applications did you receive overall? How many were successful? 34 distinct funding programs were contacted by email and 7 responses were received, amounting to a response rate of 20.5%. One respondent declined to provide data due to their intake period having just closed, 2 clarified that energy efficiency projects were not eligible for their funding, and one responded with zero applications about energy efficiency projects. The remaining 3 provided the data that was requested amounting to an overall mean funding approval rate of 46%. The low response rate makes it challenging to make any assertions or draw clear conclusions on the state of grant funding programs. What is discernable, however, is that there is certainly a gap – two thirds of all applications being rejected points to a major missed opportunity. The cause for those rejections, and solutions, are perhaps the subject for another study. A related high level finding as well is that the unwillingness or lack of capacity to provide data by these programs is a major impediment to engaging in systems change work.


Appendix V: Specific Barriers to Efficiency Financing On-Reserve

Lack of credit and collateral Reserve lands are held by the Crown for the use and benefit of First Nations, which means that property

on reserve cannot be used as collateral to secure a loan. The vast majority of reserve communities (81%)

have a median income below the poverty line, and this coupled with a high cost of living means that

many have poor credit or none at all. These challenges can be addressed by program design criteria that

emphasize relaxed underwriting criteria and/or use of credit enhancement tools.

Lack of capital Communities have limited funds and a plethora of responsibilities, and if a band is in arrears its unlikely

they are able to circumvent the barriers to individual financing to help out their members. For

communities that have very little, low interest rates are essential to enabling participation, particularly

due to the fact that EE upgrades can result in significant cost savings – if financing fees exceed those

savings, it is an unattractive approach.

Limited capacity Capacity issues can be partially addressed by program design to introduce repayment mechanisms that

are simplified for the consumer and simultaneously robust for the administrator. This is of huge benefit

to the administrator as well, as it reduces risk of default and increases participation. On an individual

level, streamlining a financing program application will reduce search costs. For the administrator,

having a repayment mechanism that enables them to enforce repayment will have positive effects on

compliance. Lastly, it is sometimes possible for a band to take out a loan on behalf of community

members. However, this creates a big and sometimes awkward administrative burden for the band,

prolongs the time it takes to access the financing for the customer, and shoulders the band with the risk

of default. Ideally repayment will occur directly between residents and a financial agency to reduce

involvement of the band as intermediary.

Additional criteria that must be considered in assessing financing program feasibility are stakeholder

acceptance, comprehensiveness (applicability to a variety of efficiency upgrades), minimizing

budgetary costs and administrative ease.

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