Government Operations Committee on April 18th, 2013

[John McBain]

I would follow that up, certainly. Part of the comment I made in my opening remarks was that in the past energy efficiencies were unique or special projects. They were in a separate category. They are embedded in what we do now.

Energy efficient materials used to be very expensive, and very limited. You almost had to sole source, which, as you know, in the world of the government is not a good thing. Now it is part of what we do.

We aren't given a budget that says spend this on that and spend that on this. It is one budget. I don't know any real property manager in Europe, United States, or Canada who says they have enough money to do everything they need to do. So the idea is that by being more energy efficient in construction and retrofit and in refit you're going to have more money available to spend on other parts of your mandate.

[The Vice-Chair, Conservative, Peter Braid]

Thank you, Mr. Albas, and thank you, Mr. McBain.

Monsieur Blanchette.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you, Mr. Chair.

Mr. McBain, while listening to you, I was struck by the fact that all we seem to do is react. Yet we know that buildings need to be improved, renovated, and so on. For instance, the Federal Buildings Initiative does not really seem to contain a comprehensive plan to promote renovation and improve efficiency.

Do you have an overall idea of what you could do if you had the required funds and how much money that would help you save? Money-saving opportunities are sought out, especially in times of budgetary restraint.

Is the problem due only to a lack of money, or also to a lack of political will? Why are we using a piecemeal and project-by-project approach rather than a comprehensive one?

I could be wrong, but I would like you to explain this situation.

[John McBain]

I'll take it from my perspective, looking at it from a large portion of the federal inventory. First of all, I think that the federal sustainable development strategy does set our overall objective, because we do have targets that are driving us to be more efficient.

Second, we have established, since 2005, LEED gold as the target for all new construction. That is our standard. We have since then adopted LEED silver for renovation and BOMA BESt for operations. We know the parameters of what we will target and aspire to achieve. I would say that our success in achieving that is 100% at this point.

Regarding your other question about the need for a pot of funds for this, I think at my previous appearance I spoke about ministerial accountability to deliver a program. To suggest that there be one piece of funding for a specific aspect, to me, limits that accountability.

We need to understand which buildings we're going to keep and which buildings we're going to dispose of, because I don't want to spend money on just a blanket approach. I have to take into account the priorities of the program. Those are things that affect my ability to set targets in putting in place an overall plan and hanging it on the lawn and saying, “I'm going to do this building in this year when I don't know what the tenants are doing”. So you start to bring in the largess of the federal government and you need to plug-in all of those factors.

[Geoff Munro]

As a departmentally specific response to your question, first of all we are driven by the 17% reduction in GHGs. An 85% percent reduction in GHGs translates into energy savings. By that I mean that energy efficiency is 85% of GHG reductions. That's the formula we tend to use. That's an average, of course, because individual aspects will be up and down.

You raised the spectre of a proactive versus reactive approach, which I think is a very important point. Certainly in our department, and from what we understand in the departments we work with, every building requires a building management plan. That is revisited on a regular cycle to make sure the building management agenda is set forward in an appropriate way.

If you look at the past, energy efficiency was not part of those buildings' management plans, and if you look at it now, they are. I think there is a proactive approach being taken—again, at least in our department, and in some we're talking with—to consciously go in that direction,

[Denis Blanchette, NDP, Louis-Hébert, QC]

I understand all that, but we are going through a period of budgetary restraint. As you know, in the case of renovations, investments need to be made before benefits can be reaped. The Federal Buildings Initiative is based first and foremost on loans.

One of our witnesses told us that access to funds for financing this initiative may help. I am not necessarily talking about your department in this case, since you are fairly advanced.

Be that as it may, do you think it could be useful to create a fund, which would be financially self-sustained through savings made, in order to accelerate the process?

I am convinced that, if you had five new buildings and the required funds, and I asked you tomorrow morning to find ways to save a significant amount of money, you would come up with a plan in a few seconds.

What do you think about that idea?

[The Chair, NDP, Pat Martin]

A very short answer, please.

[John McBain]

For us, the benefit of the federal buildings initiative is that the private sector service provider is funding the initiative. To me that's the important aspect of it. The energy savings are what make the FBI so productive, from our perspective.

I'm sorry, but to me the need for a revolving fund isn't that evident when I look at the structure of how the FBI is constituted.

[Geoff Munro]

I guess I would add that the FBI was in fact designed in the Office of Energy Efficiency for the reality of the funding that was available when the program was designed—which, quite candidly, hasn't changed.

Because the departments don't have the capital, as Carol indicated, that's why it was created. Should that situation change as a function of your recommendations or some decision taken by the government in that regard, the program would obviously be adapted to respond to whatever was available.

[The Chair, NDP, Pat Martin]

Thank you very much.

That concludes your time, Denis.

Next for the Conservatives, we have Peter Braid.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Mr. Chair.

I have three or four questions. I'll try to get through all of them.

I'll start with you, Mr. McBain.

Currently the standard for new building construction is LEED gold. How would react or feel about LEED platinum?

[John McBain]

I'd say that school is still out.

As I said earlier, LEED has certainly established itself as a well-known brand in North America, but it is not without cost. It has a very intensive data requirement for what you have to document, what you have to provide for certification in the evaluation process. We have four buildings that are LEED gold right now, and we have another nine, as I said earlier, that are coming online.

I would like to look at that along with work that has been done by the National Research Council to evaluate whether we get or realize the benefits that LEED gold is designed to achieve. I would like to do that.

LEED platinum would certainly bring another level in terms of investment, but whether it would return a payback to the taxpayer, in my view, is still not yet known.

Again, to be fair to LEED, it is very holistic. It's about a whole environmental approach; it's not just about energy.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

I appreciate the way you framed that, because what we're ultimately concerned about, and certainly as we begin to consider recommendations, is to be certain that anything we propose will provide savings for the taxpayers in the end, through improved energy efficiency or reduced energy costs, whatever the case may be.

Mr. Munro, I have a similar question, but on a different program. A couple of weeks ago during the constituency break, I participated in an announcement in Guelph for the first Energy Star-rated new home built in Canada. This, of course, is a program administered by NRCan. Are there any opportunities for the Energy Star program, as it's more widely applied down the road to office buildings and to commercial real estate, to perhaps have this program apply to federal government buildings, for example? Do you have any thoughts there?

[Geoff Munro]

The simple thought is to pass the buck, because Carol actually runs the Energy Star program as well, within the Office of Energy Efficiency. I will ask Carol to respond.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

How convenient.

[Voices]

Oh, oh!

[Carol Buckley]

Thank you, Geoff.

Thank you for the question.

The member is referring to an announcement of a new standard for Energy Start for homes. This is a standard that Natural Resources Canada has developed in consultation with 3,000 stakeholders across Canada, in a standards-based format, to ask how, if we're building a new home, we can make it 20% more efficient than codes.

We have another brand called R-2000, which is about 50% more efficient than codes. We provide training and tools for builders so that they can build homes in these ways, market and differentiate their product in the marketplace, and meet the consumer demand for a more efficient home. It's a great program. It's a great brand. It's well known from the equipment side and from the housing side.

From the government perspective or the building perspective, we have adopted the American Energy Star portfolio manager benchmarking tool. Earlier, there was a question about whether our interactions with our counterparts in the United States are helpful and useful to us. They certainly were, because we're adopting this tool that is being used in the United States, and it also feeds back to the questions about BOMA BESt versus LEED. These are private sector labels out there to help people do a better job managing or building buildings with respect to environmental performance.

We're bringing this database to Canada. We have done a survey of the entire building stock of Canada with Statistics Canada, so we have Canada's buildings performance in a database. Federal government property managers and private sector property managers can use this database to determine how their building stacks up against 300 or 400 office buildings of that size and nature in that region of the country. They can use that as a tool to ask, “How am I doing?” If I'm doing bottom of the pack, it's a rationale to make an investment to improve. If I'm doing top of the pack, well, maybe I'll put my resources elsewhere.

This is an Energy Star tool that we are implementing for buildings, including bringing it to our federal building colleagues.

[The Chair, NDP, Pat Martin]

I'll let the other vice-chair take over.

John McCallum, you have five minutes.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you very much.

I think a number of us have been trying to ask this question: to what extent is this driven by money or a lack of money, particularly at a time of fiscal restraint?

Let's say you had an unlimited budget. How would you do things differently? Or not unlimited: let's say you had twice as much money as you have today. How would that affect your behaviour?

[John McBain]

I'd like to think that the processes we have in place would apply. I'd just be working with a larger amount of money and I would be able to go farther down my list of priorities.

Geoff mentioned the building management plan. As the real property branch, buildings are what we do. It's our core mandate. For a lot of other organizations, it's a means to deliver a program. When it's core to what you do, you have a very robust approach.

We do asset management plans. We do building management plans. Out of that, we set priorities of our needs. We have four main categories. The first is health and safety. That always gets funded. The next are program priorities that get into things such as timely recapitalization, where you can pay me now or you can pay me later, and it's better to do it now. We do those things as the next priority, but before we get down through all four categories, budgets expire.

To your point, I would be able to get farther down my list, I would be able to do more enhancements, and I would be able to look at various other priorities that I can't look at now. That doesn't make me unique or different from any other real property manager in North America or Europe.

[John McCallum, Liberal, Markham—Unionville, ON]

At the macro level, I somehow get the sense that collectively we're being a little bit irrational, because if these things pay off in the long run, if improved energy efficiency saves money and the benefits exceed the costs over time, then why don't we just do more? It seems that it's a net benefit to the taxpayer, so put in more money today and less money into these energy contracts that cost more, and over the medium term that would save money for the taxpayers. Or is there something wrong in what I'm saying?

[John McBain]

On the simple logic, I wouldn't argue with that point. I would say, though, that from my perspective, the portfolio interventions are very important, the portfolio strategy. For example, I'm not going to put a lot of money into energy efficiency in a building when I may only have a five-year occupancy plan left for the building before I dispose of it, or before the tenants move on to a different use. It's not just the factor of energy; it's the total life-cycle cost. I get my investment, I get my return, but how long am I going to use that building?

[John McCallum, Liberal, Markham—Unionville, ON]

Okay.

Ms. Buckley, I’m looking at your chart here. In the total scheme of the federal government, this is tiny, really. You have two or three projects, you have annual energy savings of $1 million. Now, $1 million for the federal government is nothing. I know you gave your four reasons. Even if for the next two years you'll only have three projects and $1 million to $2 million a year, so there doesn't seem to be a very significant impact. Do you foresee an increase?

I'm not criticizing you. It's just a fact coming out of your chart.

[Carol Buckley]

We are providing a service to departments, so we are attempting to meet their demand for help in putting projects of an energy-saving nature in place. We have a budget and we operate in that budget, so fortunately our people are busy. When they're too busy, we have enough funds that we can contract for some more help.

Do I foresee more activity? Well, it's hard to look forward. If it looks like there are only three projects under way, we in fact have five major capital retrofits under way that we're working on with departments.

Should it be more? It could always be more. We are there to provide a service to departments and we respond to departments. We're also out marketing our services so that we can drive more demand for it. I think there's a certain amount of momentum around the sustainable development strategy, and that has certainly created an uptake in interest and demand. Nineteen departments meet with us three, four, five times a year to learn more about energy savings. We didn't have that before, so it's partly the case that sustainable development strategies are driving that interest and partly that we're trying to do a better job. We did a needs assessment with our community to say, “What can we do better?”, and we're trying to respond to that.

Those are hard questions to answer. I hope I've done my best to satisfy you that we'll continue to plug away.

[The Chair, NDP, Pat Martin]

That's it for your time as well, John.

Thank you to our witnesses for a very helpful presentation, as we wrap up and conclude our study. Today we intend to give some direction to the analysts.

One thing came up during testimony that I would like your views on. When you're looking at the triple-bottom-line—of energy efficiency, saving money, reducing greenhouse gas emissions—one thing that's often overlooked is the benefit to the indoor air quality of the building, the lighting quality. Is there any demonstrable benefit in productivity or days lost due to sick time as a result of the improved indoor air quality of these buildings being renovated? Is anyone tracking that? Can you share any of that with us?