5. Institutional Landscape³⁵

Energy policy, like environmental policy, is an area of shared federal-provincial jurisdiction. There is no head of power in sections 91 and 92 of the Constitution that encompass any but a part of energy issues. For example:

• Provinces have jurisdiction over energy resources, including conservation and management
• Provincial jurisdiction over property and civil rights also cover the power to regulate energy for health, safety, environment and consumer protection - this also allows the regulation of efficiency standards for buildings and equipment within the province
• The Federal government has jurisdiction over inter-provincial and international trade, which covers equipment and vehicles
• The Federal government also has "spending power" which allows it to act in a variety of areas, including R&D and programs to support energy efficiency
• Both orders of government have extensive taxation powers which can be used to influence energy choices and behaviours.

Within the Federal government, Natural Resources Canada has the lead on energy efficiency policy, R&D and most programs. However, other departments and agencies play important roles (see below).

Municipalities have no constitutional status; however, they play an important role in residential and commercial development and have the most direct connection with individuals and households. In some cases, municipalities own or have influence over distribution utilities.

5.1 Federal

Natural Resources Canada (NRCan) is the lead agency. Aside from setting overall energy policy, including energy efficiency policy, the department spends approximately $30M per year on energy efficiency R&D and $220M on energy efficiency programs of various types.³⁶

R&D funds are managed through the Office of Energy R&D. A large part of the research is conducted in-house through the Canada Centre for Mineral and Energy Technology - CanMET Energy Technology Centre). The Office of Energy Efficiency (OEE) administers a variety of programs that are delivered by a variety of agents across the country (e.g., Energy Star, EnerGuide, R-2000, etc.), as well as the Energy Efficiency Act, which sets minimum equipment standards. OEE also:

• Manages the National Energy Use Database
• Publishes an annual report on energy efficiency trends
• Administers the current agreement with automobile manufacturers on reduction of fuel consumption and GHG emissions, and
• Administers the Motor Vehicle Fuel Consumption Standards Act. This Act is currently not in force, however, the government has signalled its intention to regulate fuel consumption standards following the expiry of a voluntary Memorandum of Understanding in 2010.

Other active federal entities include:

• The Canada Mortgage and Housing Corporation, which conducts research and administers some programs
• The National Research Council
• Transport Canada, which administers some programs aimed at vehicle efficiency and urban transportation. Transport Canada also administers large infrastructure funds ($1-2B per year), whose objectives include transportation demand management measures and measures to promote transit
• Environment Canada, which develops climate change policy and will administer any Large Final Emitter regulations and the Offset System, including, potentially, offsets created through EE.
• The department of Finance which sets tax policy, including eligibility for tax rebates and treatment of energy efficiency investments, etc.
• The National Round Table on the Environment and the Economy (NRTEE), with its policy research on energy and climate change
• Sustainable Development Technology Canada which provides venture finance for the deployment of technologies, including energy efficiency technologies developed by the private sector.

Internationally, Canada participates in a variety of organizations dealing with energy issues. With respect to energy efficiency, these include the International Energy Agency and the North American Energy Working Group Expert Group on Energy Efficiency.

5.2 Provincial

Provinces typically have a Ministry of Energy that develops overall policy and runs a variety of programs, including their own and federal-provincial programs. The provinces of British Columbia, Manitoba, Ontario, Québec, New Brunswick and Nova Scotia, and Prince-Edward-Island have implemented energy efficiency statutes or standards for equipment. The Québec legislation includes an additional statute for building energy efficiency, through which the province can stipulate energy efficiency standards, conservation measures, inspection procedures and penalties for non-compliance. Although Ontario references the Model National Energy Code for Buildings (MNECB), the other Provinces use only the National Building Code and do not include energy efficiency standards. In 2006, Ontario introduced a number of energy efficiency standards into the Ontario Building Code to be phased in over the next few years.These will culminate in 2011 with the requirement for new homes to achieve an EnerGuide rating of 80/100 (i.e. highly efficient) and for new non-residential and larger residential buildings to achieve energy efficiency levels 25 per cent better than the MNECB.

Most Provinces also have independent energy regulators. Examples include the BC Utilities Commission, the Alberta Energy and Utilities Board, the Ontario Energy Board, and la Régie de l'énergie du Québec. The role of the regulator depends on the nature of the markets involved. For natural gas, and "deregulated" electricity markets (e.g. Alberta), the regulators are the primary agent for promoting energy efficiency, through rate policies. In addition to regulatory incentives, government-owned integrated electricity utilities (e.g., BC Hydro, Hydro-Québec, Manitoba Hydro) can practice integrated resource planning, including a focus on energy efficiency. In Ontario, this function has been assigned to the Ontario Power Authority, which also houses a Conservation Bureau whose mandate is to promote demand management and efficiency. Québec also has l'Agence de l'efficacité énergétique.

Examples of funding levels for energy efficiency include:³⁷

• The Ontario Power Authority will spend up to $1.5 billion over the next few years on conservation programs, with $400 million earmarked for use by local distribution companies
• BC Hydro has dedicated a budget of $600 million over 10 years
• Hydro-Québec's budget for energy efficiency in 2006 is approximately $170 million; and,
• Manitoba Hydro is forecasting expenditures of approximately $90 million over five years.

Provincial involvement in transportation efficiency primarily involves promotion of transit systems and contributions to transportation infrastructure.

Currently, the main federal-provincial forum for energy efficiency discussions is the Council of Energy Ministers and the associated ADM Steering Committee on Energy Efficiency. Provinces collaborate with each other through the Council of the Federation Energy Strategy. They also cooperate regionally with adjacent U.S. States through mechanisms such as the Western Governors Energy Strategy and the conferences of New England Governors and Eastern Canadian Premiers.

5.3 Municipalities

Municipalities design and implement a variety of energy efficiency programs and they are also important energy consumers. They also have significant leverage over residential, commercial and transportation energy efficiency through their oversight of development and building practices: municipalities enforce building and energy codes and are responsible for urban planning.

Examples of municipal programs include the Energy Efficiency Office (EEO) of the City of Toronto which has undertaken a variety of programs under the umbrella of the Better Buildings Partnership and the Better Buildings New Construction Program and Community Action of Energy Efficiency (CAEE) pilot programs being undertaken in several B.C. municipalities.

Municipalities also play an important role in energy efficiency through the Federation of Canadian Municipalities (FCM), which among other things, manages the $550 million Green Municipal Fund and the Partners for Climate Protection network.

5.4 Utilities and Retailers

Natural gas distribution companies are mainly (but not always) privately-owned companies that operate in defined areas. Because investment in distribution systems leads to a natural monopoly, these companies operate in a regulated environment, under the supervision of the regulators described in Section 5.2. Natural gas distribution companies include: Terasen Gas and PNG in BC, ATCO Gas and Alta Gas in Alberta, SaskEnergy in Saskatchewan, Manitoba Hydro in Manitoba, Enbridge Gas and Union Gas in Ontario, Gaz Métropolitain and Gazifiere in Québec, Enbridge Gas New Brunswick in NB, and Heritage Gas in NS. In several markets, gas retailers/marketers operate as separate entities from the distributors although in all markets but Alberta distributors also continue to sell gas as well as providing distribution services.

Electricity distributors can be part of a large integrated government-owned corporation (e.g., BC Hydro, Manitoba Hydro, Hydro-Québec) or they can be independent entities (private or public) that operate in similar fashion to gas distributors. In Ontario, distributors are a mix of privately and publicly-owned companies, with most being owned by their host municipalities. In Alberta, most electricity distributors are private firms (e.g., FortisAlberta, ATCO Electric), although ENMAX is owned by the City of Calgary. As with gas, in deregulated markets, electricity retailers/marketers operate independently. Examples include EPCOR, Direct Energy, and Toronto Hydro Energy Services.

Other market players in both electricity and natural gas include:

• Demand Aggregators - firms that contract with individual customers to reduce their peak electricity demand and then sell the savings to system operators.
• Energy Service Companies (ESCOs) - firms that provide finance for energy-efficient investments in return for a share in the savings.

Most electricity and natural gas distributors/retailers have established demand management and energy efficiency programs (e.g., programmable thermostats, furnace and water heater replacement programs, PowerSmart, PowerWise, PowerSense etc.). Examples of funding for public utilities were provided in Section 5.2. Examples for private natural gas distributors include:³⁸

• Terasen Gas expects to invest approximately $2.2 million per year in 2006 and 2007
• Enbridge Gas will invest approximately $19 million in 2006
• Union Gas will invest approximately $14 million in 2006³⁹
• Gaz Métro spent approximately $10 million in 2005.

5.5 Associations, Institutes and Collaboration Mechanisms

There are a number of institutes, councils and programs that are active in the field of energy efficiency. Some are affiliated with governments whereas others are member-based independent organizations.

• For buildings, examples include NRC's Institute for Research in Construction (IRC), and the Canada Green Building Council (CGBC). The Canadian Energy Efficiency Centre provides information and training on energy efficiency best practices, and the Canadian Building Energy End-Use Data and Analysis Centre (CBEEDAC) provides data.
• For industry, examples include the Canadian Industry Program for Energy Conservation (CIPEC), the Canadian Industrial Energy End-Use Data and Analysis Centre (CIEEDAC).
• For transportation, examples include the Transportation Association of Canada (TAC) and the Centre for Sustainable Transportation (CST) and the Centre for Data and Analysis in Transportation (CDAT).
• The Canadian Standards Association (CSA) is active in the development of a variety of equipment standards.
• International technical societies such as the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the American Council for an Energy-Efficient Economy (ACEEE) involve Canadian professionals and are major sources of information on energy efficiency technologies.

Utilities are represented by Associations that undertake research and advocacy. Examples included the Canadian Gas Association (CGA) and the Canadian Electricity Association (CEA). The downstream petroleum industry is represented by the Canadian Petroleum Products Institute (CPPI). There are also provincial associations, such as the Ontario Electricity Distributors Association, that represent groups of utilities. A number of industry associations have joined together in an alliance, the Energy Dialogue Group, to promote informed debate on energy policy.

The Canadian Vehicle Manufacturers Association (CVMA) and the Association of International Auto Manufacturers of Canada (AIAMC) are key players regarding the fuel efficiency of vehicles. Other relevant industry associations include: the Canadian Construction Association, Building Owners and Managers Association, Canadian Home Builders Association, the Urban Development Institute, and the Canadian Association of Energy Service Companies.

A variety of Non-Governmental Organizations (NGOs) have a research and advocacy focus on energy efficiency. Examples include the Pembina Institute and Pollution Probe. NGOs have also allied with each other and with industry and utilities to increase attention to key messages. Examples include the Canadian Renewable Energy Alliance (which includes a focus on energy efficiency), and the Canadian Energy Efficiency Alliance. The Canadian Energy Efficiency Alliance also operates the Canadian Energy Efficiency Centre which undertakes information dissemination and training.

Stakeholders also participate in a variety of consultation mechanisms, including:

• The National Advisory Committee on Energy Efficiency
• The Council of Energy Ministers DSM and Energy Efficiency Working Group and Industry Working Group on Energy Efficiency
• The Energy Efficiency Working Group of the Energy Sector Sustainability Table.