Incentives for energy efficiency for businesses

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Commercial buildings play a significant role in local energy use and electricity demand, particularly during peak periods. Local governments often want to improve the energy efficiency of equipment used by businesses, such as heating and lighting systems, to reduce energy use and manage electricity demand.

To support energy efficiency improvements and manage peak loads, local governments in BC use existing authorities under the Community Charter to reduce financial barriers and encourage voluntary action. These options focus on providing incentives rather than mandates, and include temporary property tax relief, targeted fee reductions or exemptions, and locally administered programs that provide financial assistance for energy efficiency and demand control measures. Each option must be established through bylaws and applied in accordance with specific legal and procedural requirements.

In BC, municipalities might consider pursuing this objective through business licensing, but they likely cannot require specific equipment efficiency standards through business regulation alone. The key distinction lies in the difference between regulating businesses and imposing mandatory requirements. Under the Community Charter, the power to “regulate” is separate from the power to “prohibit” or “impose requirements.” Although municipalities have authority to regulate in relation to business, that authority does not generally extend to mandating specific equipment standards. As a result, local governments must rely on incentive‑based approaches rather than direct requirements.

Regulatory pathways

Fee reduction or exemption to incentivize energy efficiency

Last update: Jun. 2026

Municipalities can likely incentivise businesses by offering reductions or exemptions from business licence fees. This approach uses municipal fee‑setting powers to encourage voluntary action, rather than imposing mandatory requirements on businesses.

How it works

Two provisions allow municipalities to require businesses to hold a valid business licence.

  • Section 8(6) of the Community Charter gives municipalities the power to regulate in relation to business by bylaw.
  • Section 15 allows municipal councils to establish systems of licences, permits, or approvals when regulating under the Community Charter or the Local Government Act.

Under section 194(1) of the Community Charter, councils may impose fees by bylaw for the exercise of authority to regulate, including business licensing.

  • Section 194(2) allows a fee bylaw to:
    • base fees on any factor specified in the bylaw; and
    • establish different rates or levels of fees for different circumstances.
  • Section 12 of the Community Charter further allows councils to:
    • make different provisions for different conditions or circumstances; and
    • create exceptions for different classes of persons, activities, or businesses.

Using this authority, a municipality could likely reduce or exempt business licence fees for businesses that meet energy efficiency or demand control measures set out in the bylaw.

Considerations

Municipal fees may be challenged if they are characterized as taxes rather than regulatory charges. To remain within municipal authority, the fee must be connected to a regulatory scheme and have a clear relationship to the behaviour being regulated. A business licensing bylaw designed to incentivise energy efficiency or demand control is likely to qualify as a valid regulatory charge.

Revitalization tax exemption for businesses energy efficiency

Last update: Jun. 2026

A revitalization tax exemption allows a municipality to temporarily exempt qualifying commercial properties from all or part of their annual property taxes in order to incentivise energy efficiency retrofits. The municipality must establish the program by bylaw under section 226 of the Community Charter, and it could be designed to to offset retrofit costs for clearly defined categories of commercial buildings.

How it works
  • Council adopts a revitalization tax exemption program bylaw under section 226 of the Community Charter.
  • Council gives notice of the proposed bylaw under section 227 and considers it alongside its financial plan and policies on permissive tax exemptions.
  • The bylaw clearly identifies eligible commercial properties, such as buildings used for commercial purposes that meet specific size or age criteria.
  • The bylaw specifies the amount of annual property tax that qualifying properties are exempt from during the exemption period.
  • The municipality may include a cap on the number of buildings that can receive an exemption.
  • Council enters into individual agreements with commercial property owners, setting out the conditions that must be met.
  • A property receives the exemption only if the exemption is in accordance with the bylaw, the property has a revitalization tax exemption agreement, and the property an exemption certificate.

Local Service Area to assist businesses with energy efficiency

Last update: Jun. 2026

Municipalities can likely run a program that lends money to owners of commercial properties using grants or loans from the Federation of Canadian Municipalities (“FCM”) or from the province through a local service area to assist business owners in energy efficiency and demand control measures.

How it works

  • A local service area is established based on a petition of owners, an alternative approval process, or assent through a referendum.
  • Once approval is obtained, council adopts a local service area bylaw to provide the service.
  • Typically, the municipality or its agent identifies approved contractors to carry out energy efficiency or peak load management measures under conditions set out in the bylaw.
  • The municipality may pay upfront for upgrades as financial assistance and recover costs from participating property owners over a set repayment period, such as 10 or 15 years.
  • Repayments may be collected as parcel taxes, alongside utility charges, and can be enforced in the same manner as property taxes.
  • The program may be funded using grants or loans from the Federation of Canadian Municipalities or the Province.

Considerations

If the financial support constitutes “assistance” under section 25 of the Community Charter, the municipality must proceed through a partnering agreement under section 21. Local service areas can include non‑contiguous properties, meaning participating commercial businesses do not need to be geographically adjacent.

Glossary Entry

Bylaws Under the Community Charter

The Community Charter gives municipalities the authority to regulate specific local matters by bylaw.

Part 2 of the Community Charter outlines the powers municipalities have to pass bylaws in defined areas, following a “spheres of jurisdiction” model. This means local governments can regulate, require, or prohibit certain activities—such as animal control or public health—within specific policy areas, or “spheres.”

Some of these areas are classified as spheres of concurrent authority under Section 9 of the Charter. This includes:

  • Section 8(3)(i) – public health
  • Section 8(3)(j) – protection of the natural environment

In these cases, municipalities must receive approval from the relevant provincial minister before adopting a bylaw—even if the bylaw also addresses issues in non-concurrent areas.

Glossary Entry

Bylaws Under the Community Charter

The Community Charter gives municipalities the authority to regulate specific local matters by bylaw.

Part 2 of the Community Charter outlines the powers municipalities have to pass bylaws in defined areas, following a “spheres of jurisdiction” model. This means local governments can regulate, require, or prohibit certain activities—such as animal control or public health—within specific policy areas, or “spheres.”

Some of these areas are classified as spheres of concurrent authority under Section 9 of the Charter. This includes:

  • Section 8(3)(i) – public health
  • Section 8(3)(j) – protection of the natural environment

In these cases, municipalities must receive approval from the relevant provincial minister before adopting a bylaw—even if the bylaw also addresses issues in non-concurrent areas.

Glossary Entry

Incentives for energy efficiency for businesses

Commercial buildings play a significant role in local energy use and electricity demand, particularly during peak periods. Local governments often want to improve the energy efficiency of equipment used by businesses, such as heating and lighting systems, to reduce energy use and manage electricity demand.

To support energy efficiency improvements and manage peak loads, local governments in BC use existing authorities under the Community Charter to reduce financial barriers and encourage voluntary action. These options focus on providing incentives rather than mandates, and include temporary property tax relief, targeted fee reductions or exemptions, and locally administered programs that provide financial assistance for energy efficiency and demand control measures. Each option must be established through bylaws and applied in accordance with specific legal and procedural requirements.

In BC, municipalities might consider pursuing this objective through business licensing, but they likely cannot require specific equipment efficiency standards through business regulation alone. The key distinction lies in the difference between regulating businesses and imposing mandatory requirements. Under the Community Charter, the power to “regulate” is separate from the power to “prohibit” or “impose requirements.” Although municipalities have authority to regulate in relation to business, that authority does not generally extend to mandating specific equipment standards. As a result, local governments must rely on incentive‑based approaches rather than direct requirements.