A special report from Scotia Economics finds that while there has been significant improvement in household energy efficiency, more needs to be done. The study, Energizing Household Energy Efficiency, concludes that rising energy prices should drive increased energy efficiency, in turn generating long-term cost savings for households.
Adrienne Warren, Senior Economist for Scotia Economics, notes, “High energy costs, led by the roughly 40 per cent jump in gasoline and heating fuel prices over the past two years, are taking a toll on consumer confidence, purchasing power and, ultimately, spending. Household expenditures on energy totaled roughly $60 billion in 2010, or about $4,500 per household. We estimate that higher energy costs will add about $6 billion to this bill in 2011, spending dollars that could otherwise have been allocated to other retail purchases, saved or used to pay down debt.”
Warren also observes: “There is an ongoing urgency to reduce household energy consumption because of the discernible upward trend in the price of energy. Energy costs have, on average, outpaced the general rate of inflation since the 1980s, and increasingly so over the past decade. While natural gas price trends remain encouraging for consumers, the risk lies toward higher electricity costs and continued elevated oil prices.”
Scotia points out that “despite improvements in energy efficiency in both the residential and passenger transportation sectors over the past two decades, household energy consumption as a share of spending has remained relatively constant in a range of six to seven per cent.”
However, the report identifies several encouraging trends in Canadian household energy efficiency such as a shift toward smaller, more fuel-efficient motor vehicles; more consumers choosing higher-density, more energy efficient, urban living; and an increase in green construction that promotes energy-efficiency.
Warren adds: “Energy-efficient renovations and retrofits to existing homes have the potential to make a bigger impact in driving improvements in the housing stock. Expenditures on renovations and alterations are the fastest component of housing investment over the past decade, expanding an average eight per cent annually in inflation-adjusted terms. The $45 billion renovation industry is approaching new construction in total dollar value.”
Scotia Economics provides in-depth research into the factors shaping the outlook for Canada and the global economy.