The Deep Retrofit Imperative: Can Canada Afford to Ignore Energy Efficiency?

By: Mostafa Saad, PhD Candidate at Concordia University

This article is also available en francais.

When we discuss energy conservation, we often forget to bring up one of the most important efforts we can undertake – retrofitting and increasing energy efficiency in existing buildings. Mostafa Saad explains the importance of retrofitting buildings in Canada by answering the question: “How can deep retrofits reduce energy demand, strengthen resilience, and address grid strains?“

Canada stands at a pivotal moment in the evolution of its building sector. On the one hand, the urgent need for more housing calls for the rapid construction of new buildings. On the other, a less visible but equally important fact demands our attention: most of the buildings that will stand in 2050 have already been built. These existing structures present both a significant challenge and a powerful opportunity as the country moves toward a low-carbon future.

Right now, the situation is clear: 56% of Canada’s residential buildings and 70% of its commercial and institutional buildings still rely on fossil fuels. This dependency endures even though Canada’s broader energy infrastructure has made remarkable progress, most notably, the transformation of its electricity grids.

Over the years, Canadian electric grids have reduced emissions dramatically, cutting them by about 75% from a past that heavily relied on coal. This shift to cleaner electricity has opened the door for buildings to lower their greenhouse gas emissions. In response, the building sector has turned increasingly to what’s known as “fuel switching,” replacing systems powered by fossil fuels with electric alternatives.

Why the Energy Transition isn’t Enough

At first glance, fuel switching seems like a straightforward solution: replace old equipment, plug into cleaner electricity, and watch emissions drop. But this strategy, while helpful, is too simplistic on its own. The numbers tell a more complex story. Between 1995 and 2022, energy consumption in Canada’s commercial and industrial buildings rose by roughly 50%. Switching the energy source alone hasn’t significantly curbed overall demand.

Consider new commercial buildings as an example. Although they have become more energy-efficient on a per-unit basis, the gains have not fully offset the growth in overall energy use. From 2000 to 2021, commercial floor space expanded by about 27%, while energy consumption increased by 21%. Yes, that’s a slower rate of growth, but it’s still climbing, and it prompts a critical question: Are these improvements truly enough to meet Canada’s climate and energy targets?

For years, the focus on fuel switching has overshadowed the importance of strategies that permanently reduce the amount of energy buildings consume. Major renovations since the 2000s tell a revealing story. While the building stock cut greenhouse gas emissions by about 25% through a mix of fuel switching and other measures, many buildings missed out on fundamental efficiency improvements.

These missed opportunities include upgrading insulation, improving air tightness, and making other physical improvements that lower a building’s baseline energy demand. Unlike fuel switching, these measures tackle the root cause of high energy consumption. They don’t just change where the energy comes from; they reduce how much energy is needed in the first place.

The Impacts of Delay

Failing to prioritize these deep efficiency measures doesn’t just affect individual buildings, it impacts the entire energy system. As more buildings go electric without being optimized to use less energy, they put extra strain on the grid. This creates several interconnected challenges.

  • Grid Capacity: When buildings remain inefficient, they drive up overall electricity demand. This forces utilities to invest in larger, more robust infrastructure designed to handle peak loads that could have been much lower if buildings were improved first. By making buildings more energy-efficient, we can ease pressure on the grid, reduce infrastructure costs, and achieve more lasting emissions reductions.
  • Energy Security: Inefficient buildings remain vulnerable to sudden changes in fuel prices and energy supply interruptions. By cutting their underlying energy needs, these buildings become more resilient and better able to weather market volatility and external disruptions.
  • Electrification? Not possible: When buildings remain inefficient, they require disproportionately large amounts of electricity to meet their energy demands. In other words, the less efficient the building stock, the fewer buildings the grid can support in shifting away from fossil fuels toward fully electric systems.

A balanced approach that pairs fuel switching with deep energy efficiency measures is the key to meaningful transformation. Achieving this requires several policy shifts:

  • Building Codes That Address All Buildings: While codes often focus on new construction, they must also set stringent efficiency standards for major renovations of existing buildings. This ensures that whenever an upgrade is undertake, it moves the building closer to best-in-class efficiency.
  • Integrated Efficiency and Fuel Switching Requirements: Simply mandating a switch from fossil fuels to electricity won’t guarantee reduced demand. Policymakers should require that any fuel-switching project also includes identified efficiency improvements.
  • Incentives for Holistic Improvements: Financial incentives, such as tax credits or utility rebates, should reward projects integrating efficiency upgrades and electrification. Support should also recognize the long-term value of these measures rather than focusing only on quick fixes.
  • Monetizing Avoided Emissions: Deep efficiency improvements not only reduce a building’s direct emissions, but they can also “free up” capacity on the grid and help avoid the need for additional power generation. These “avoided emissions” can sometimes be quantified and sold as carbon credits, creating a new revenue stream for building owners and further encouraging efficiency investments.

As Canada continues to clean its electricity supply and increase its building stock, it must move beyond a singular focus on fuel switching. True progress comes from aligning electrification efforts with ambitious, lasting improvements in how buildings use energy.