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Climate mandates will hike house prices, do little for CO2 emissions
The federal government’s upcoming energy efficiency mandates will make new homes more expensive. That’s according to a recent Fraser Institute report, “Wrong move at the wrong time,” which says mandates could increase the cost of new homes and commercial buildings by 8.3%, even as the mandates would have little effect on greenhouse gas emissions.
The Liberal Party’s “2030 Emission Reductions Plan” requires that newly built homes must use 65% less energy than houses built in 2019. The “Plan” also mandates a 59% reduction for new commercial construction. The result? The Fraser Institute report expects that housing prices will increase about $72,000 in Ontario, $78,000 in B.C., $35,000 in Alberta, and $27,000 in Manitoba.
This increased cost is projected to result in just a 1% drop in greenhouse gases emitted nationwide, while causing a loss of construction jobs, and a decline in national gross domestic production. When the cost to build new homes and business places increases on this scale, investors and consumers rethink their plans, perhaps deciding not to open a new restaurant location, or deciding not to develop a piece of property. That softens demand for new construction, and the demand for the many industries that support builders.
Ross McKitrick, the report’s author, suggests that if the free market were allowed to operate without government intervention, many individuals and businesses would choose to upgrade their new homes or buildings with energy-efficient appliances anyway, and add more insulation to their building envelope. For some the reduction in their long-term living or operating expenses would justify the initial costs, so they would make the upgrades themselves. But by making these energy-efficient systems mandatory, the government will be hampering economic growth for the nation, while increasing costs for its citizens, and all for very little benefit to the environment.
