Industry can weather tariff storm by improving energy efficiency
United States President Donald Trump’s tariff threats were already causing Canadian business investment to stall before the breakdown of trade negotiations. With new uncertainty over the latest wave of 50-per-cent tariffs, firms are determining how to allocate investments in major projects, equipment, and expansion.
Statistics Canada and the Canadian Chamber of Commerce report that few firms plan to relocate to the United States in response to previous tariffs, but several—especially those in the manufacturing and natural resources sectors—plan to delay major investments.
In this context, there is a low-risk, tariff-proof strategy that firms are increasingly embracing to improve productivity: the strategic management of energy.
Strategic energy management achieves energy savings in industrial processes and large buildings through behavioural and operational changes often through gathering insights from operational data and employee engagement.
This focus makes a lot of sense during uncertain times because many of these savings are achieved through better operations instead of importing equipment. It can extend the life of existing equipment and avoid large, unplanned expenditures due to breakdowns.
Energy management can also clarify expected payoffs and system-wide benefits. This gives industry the data and analysis required to make productivity-enhancing investments in equipment and manufacturing systems when the time is right.
With an expiry date of March 2027, the federal program that enables much of this work—the Green Industrial Facilities and Manufacturing Program (GIFMP)—is about to run out of money. Ottawa should make expanded industrial energy management a part of its tariff response strategy.
Firms across Canada are already reaping the benefits of production flexibility and labour productivity—two strategic assets in today’s uncertain economic environment.
For example, Trans-Atlantic Preforms, a plastics manufacturer in Cape Breton, N.S., achieved a 35-per-cent energy use reduction between 2023 and 2026, which has helped it save enough to offset tariff-related pressure. The manufacturer worked with Efficiency Nova Scotia to implement electrical metering and energy data logging, reduce energy use during peak times using real-time data, and switch to a centralized chiller system.
Lethbridge Iron Works will save $1.1-million in energy costs annually after developing a major capital plan to triple capacity while improving efficiency with support from Emissions Reductions Alberta. Federal investment in energy efficiency is allowing the family-operated foundry to expand to new markets, thereby reducing tariff exposure and improving employee job security. Enerva Energy administers industrial energy efficiency on behalf of Emissions Reductions Alberta, and its program is oversubscribed, demonstrating clear demand.
Much of this work across the country is done by Red Seal-certified tradespeople who install, maintain, and retrofit thermal insulation systems. The International Association of Heat and Frost Insulators and Allied Workers uses thermal imaging and software to identify missing, damaged, or improperly installed mechanical insulation and estimate the cost and energy savings benefits of repair. This analysis has shown paybacks in as little as six months and frequently within two years.
These programs tackle many of the challenges that all regions of Canada must face, especially amid tariff-driven economic uncertainty.
A practical response to ongoing tariff threats and economic uncertainty should include renewing funding for GIFMP and expanding it to small-to-medium-sized industries. Program strategies like roving energy managers and improving flexibility through open application windows would enable immediate implementation and multi-year development project pipelines.
Energy management can help businesses weather immediate challenges in a way that retains staff by directing them toward finding ways to save energy and money through operational optimization, and then inform business strategies to pivot and compete in a new economic context by making data-informed equipment and manufacturing system upgrades.
A renewed focus on industrial energy management can launch energy efficiency as a nation-building project with a goal to double energy productivity. Canada committed to this at the COP28 United Nations Climate Change Conference. This would complement the federal government’s current agenda to double the electricity system because energy productivity delivers what we want: more economic impact for every unit of energy consumed or produced in Canada.
This country can double energy productivity by making industries more resilient and competitive, and by making household energy costs more affordable for Canadian customers.
Amid a renewed period of trade disruption, we must make the most of Canada’s resources. Energy efficiency is an abundant resource found within our borders and delivered by Canadian workers that offers a readily available strategy to offset tariff-related costs for industry.
Brendan Haley is Efficiency Canada’s senior director of policy strategy and an adjunct research professor at Carleton University’s School of Public Policy and Administration.
The Hill Times