Environment Committee on Feb. 8th, 2018

[Randal Froebelius]

In many industrial buildings, the landlord or the owner of the building provides the HVAC unit that's on the roof, but the tenant pays the utility costs. It's a bit the reverse of what you said, but it's the same problem. Most of those rooftop units operate at between 50% and 60% efficiency right now, so you're burning gas, but new technology is coming that will deliver up to 80% or 90%. With existing technology you can get it up to 80%, but when the unit fails, the owner of the building doesn't have an incentive to replace it with a more energy-efficient unit because the tenant's paying the utilities. The tenant's complaining that their unit's broken, so they just change the unit out as cheaply as they can; they don't really have to recognize that the tenant is going to pay for the utilities. One of the ideas proposed yesterday was to put incentives in place so that owners can change those units out more easily, taking advantage of incentives, so the tenants end up with lower energy costs and lower greenhouse gas emissions.

[The Chair, Liberal, Deb Schulte]

Thank you.

Go ahead, Mr. Aldag.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

Welcome. It's a very interesting panel, and thanks for what you've shared.

I want to start with Mr. Bernhardt.

I recognize that we need to talk about federal jurisdiction, but when you were talking about permitting and the work that you're seeing happen, it struck me. When I was first elected, a gentleman came to see me. He was a retired commercial pilot who wanted to give back to the environment, so in his retirement he set up a solar installation company. In the Lower Mainland, in three years of operations, he'd been able to install zero solar panels because of the permitting costs. He came to me and said, “Well, can the federal government help with anything?” He was saying that in many of the municipalities throughout metro Vancouver, it was anywhere from $3,000 to $5,000 to get a permit to install solar panels on a detached house.

All of his business was off the grid, in fishing camps and those types of things. There's a municipal piece, but are you seeing that with the kind of permits that you were speaking about? Are there disincentives to doing the kind of greening initiatives within urban areas? Are there areas that are leading, and is there a role for the federal government to deal with organizations such as FCM to try to make it easier to permit for energy retrofits?

[Rob Bernhardt]

There's a myriad of barriers and tripwires through the regulatory environment at all levels. With time and experience, we anticipate working through all of them.

Although permitting is done at the local government level, in our view the federal government has a key role. In our view, government is about taking leadership, setting an example, being the voice, setting the vision, and letting people know where we're going. That is hugely influential. Something like the federal-provincial agreement we have now on the building strategy is a massive step forward. It's that kind of momentum, that bigger vision, being clear about where we're going and being clear in the messaging, that allows us to overcome all of those tripwires. There are hundreds of them, and we hear about them all the time. We can't get into all that detail here. We just know that it's out there. When you get into the details of the building code, you see it's all through there. We have committees working on that, but I would suggest at this level that we set the vision and say this is where we're going.

We're on a good track. Canada has the potential to be a world leader. It's very clear. We listen to the BOMA folks too. We shouldn't underestimate the ability we have to take a leadership role globally. There aren't that many countries that have the systems in place, the federal-provincial agreements—this is a big deal—and the standards of professional practice and institutions like the NRC. If we deploy these tools effectively, we can do some amazing things. We have people around here. We're hearing about building owners. The leaders like this stuff. They want to do it, and they'll invest hundred of millions to do it.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

That's great. Thanks for those insights.

I want to turn to BOMA. You see how quickly the time goes.

The thing is, as I was listening to you, I was thinking yes, the energy gains we can make through operations are huge. I reflect on the number of buildings I've been to that have installed programmable thermostats that have never been programmed or, as you said, operators that change. Is there any way of quantifying the level of savings we can make by operating more greenly? As we're making these investments, we can green buildings, but if we're not following through....

I've heard landlords say that they have invested so many thousands of dollars into a green system, but they haven't saved any money. You see the windows open in the wintertime or thermostats that haven't been programmed. How do we actually quantify the investments and what we can save through operation?

Just to let you know where I'm going with that, you said there may incentives, federally or from other levels of government, in training and those types of things. Where is the return? What can we actually achieve through better operations?

[Randal Froebelius]

I'll start with just one point, which is that when you are presenting an energy-saving project to an owner for approval, oftentimes you'll use a very simple payback analogy. If you say it's going to cost $1 million for this retrofit, rightly or wrongly, a lot of owners will say,“Okay, what's my payback?”

Usually the benchmark is less than three years, and if they're going to get that money back within three years, then it's usually an easy approval. If you think longer-term than that... A three-year payback is a pretty incredible ROI. You could ask why a four- or five-year payback isn't okay. Many will do that if it's the right thing, if they're going to be doing a renovation anyway, but for a million dollars to be paid back in less than three years, you'll have instant approval.

With respect to longer-term operating costs, the number 15% to 20% has come out before. For a lot of the operating costs that I referred to earlier, energy can be a third of that, easily, depending on the type of building. Again, tenants don't want to pay higher operating costs, and if you can start to erode those costs down, then that's a win-win for everybody. As well, a lot of those retrofit costs are called recoverable expenses in buildings too, so owners are incented, because not only are they going to reduce energy consumption but they can also recover the cost of their retrofit. They can still recover that three-year payback from the tenants themselves within their rents.

You couldn't ask for more things to be in place to make it worthwhile to take advantage of doing it. Again, it comes down to tenant satisfaction. If tenants, when they go home at night or they drive by at night, see that the lights are off, they get a good feeling. They feel as though they're not paying for those lights, or they know that the temperature is being turned down.

What tends to happen is that overall comfort in the building improves when people are running the buildings better. When they're starting to think about things like that, during the middle of the day the building is that much better as well.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

I'm going to add just two seconds, to say that there is no finish line.

[Benjamin Shinewald]

Right.

[John Aldag, Liberal, Cloverdale—Langley City, BC]

For your constituents or whatever, it's not about getting from here to there; it's about ongoing continuous improvement. You can always drive more efficiency.

[The Chair, Liberal, Deb Schulte]

Thank you very much.

Mr. Bezan is next.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Thank you, Madam Chair, and I'm glad to be back at committee. It's been quite a few years. I used to chair this committee. It's been quite some time since I've been sitting at the table here.

I've been listening with a lot of interest.

To get a better picture here, BOMA, you have your BOMA BEST program. I've always been familiar with the LEED standards of gold, silver, and bronze. I know those are focused mainly on new buildings. I suspect BEST is for new and for retrofits as well.

Can you give us what the linkage is and why BOMA BEST is best?

[Benjamin Shinewald]

Sure. That question I'm thrilled to answer. I get that question all the time.

I'll let those from the organization that runs the LEED program speak for themselves. I want them to represent their message themselves.

Our members are common members. The guy on my board is down the hall from a guy—I mean “guy” generically—on their board. The LEED program has, I think, 14 or 16 different areas of assessment—new construction, community design, on and on and on—only one of which is existing buildings. We are focused only on existing buildings in our program. We have a tenant module about to relaunch, so there will be an inside-the-building module coming very soon. They do a whole series of areas. We look only at the existing sector. That's because they're a bit more of a movement about green buildings and we're an industry association. We represent corporate Canada in a very large way on the built environment side.

They did an outstanding job of branding, and that's why their name is so well known. They only certify the top quartile of buildings. Their idea is to deliberately try to pull the market from the top. Ours is a more broad-based, inclusive approach. Any building can do it. We believe that even the poorest-performing building in the country should start doing it, period. In fact, the last time I looked, in Canada I believe there were about 120 LEED certifications for the existing building module. As I said, we're around 2,800. Even in those 120 or so LEED certifications, I'll bet that north of 100 of them are also certified by us, because our program is really about the building operator and the property manager doing a better job. Theirs is a bit of a different focus.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

You're providing it on the commercial side.

[Benjamin Shinewald]

Yes.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

You also mentioned that federal buildings should be BOMA BEST certified.

[Benjamin Shinewald]

Absolutely.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Do you know what percentage of the current federal buildings are?

[Benjamin Shinewald]

Not many. It waxes and wanes over time. I can get back to you with a firm number after the meeting.

We did put through about 52 or 53 buildings in Atlantic Canada last year. That's a lot of buildings for that region. PSPC is doing it. We have had agreements here. PSPC has done other buildings in the national capital region and elsewhere. We've had engagement with Parks Canada over the years, with Transport Canada and remote airports. Those have all expired, to the best of my recollection.

It's really quite scattered. I will get you a very clear answer on that, but there's tons of space to go. It's not only about certifying your owned buildings, whether they're managed or not; it's demanded when you lease space. Frankly, it's likely that the space you're leasing is already certified by us, because everyone else is demanding it. That's a place you shouldn't forget about.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

If you think about it from a federal standpoint, the most immediate impact we can have is on our own buildings.

[Benjamin Shinewald]

Yes, that's 100% right.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

First and foremost, national building codes apply to federally regulated industries and our buildings.

[Benjamin Shinewald]

We are relaunching a new program soon, called BOMA BEST sustainable workplaces. Probably one of the key areas in the commercial side is tenant engagement on these issues. Guys like Randal spend half their day trying to talk to their tenants. Their tenants aren't really on their radar.

They want to do it for a whole bunch of reasons, one of which is that tenants are the final frontier in sustainability. There are tons of stories. I used to work at a law firm that wouldn't have dreamed of being in a non-green building. They lease the space, they fit it up, and they think they're done. That's like driving a Prius off the lot with the windows down and air conditioning on. Turn the computers off at the end of the night. Recycle your garbage and your waste. Have an e-waste policy. This new program, BOMA BEST sustainable workplaces, which is available now but will be relaunched in the next two or three months, will be targeted at tenants to do their share as well.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Let's look at the overall federal policy. You guys are talking incentives. We have the codes, which are the stick. Rob's been talking about collaboration and having different types of partnerships and agreements in place. How do we bring this all together? What do the incentives look like? What do we have to do federally to get the proper framework of policy in across the country, especially when property is so solidly a provincial jurisdiction?

[Benjamin Shinewald]

There are a bunch of different answers to that. My answer, very quickly, is that Randal talked about three-year paybacks. Incentivize it to four and that will make a huge difference right away, because that's a one-third increase on the paybacks.

Randal runs MaRS, the innovation hub in Toronto. There are tons of Canadian entrepreneurs working on this kind of stuff in the building, the massive heritage modern structure he works in. Get those guys moving and you have a win-win as well, because you help Canadian entrepreneurs too.

[The Chair, Liberal, Deb Schulte]

Does anybody else want to chip in? Okay.

Mr. Rogers is next.