Thank you, Madam Chair and the committee, for providing this opportunity to speak to you and be part of this important conversation.
I will not be talking about building materials. I'll be shifting focus to an equally important, if not more important, segment of the climate change solution, which is the HVACR sector. I want to talk a little bit about the role of the HVACR industry in promoting energy efficiency and mitigating climate change.
First, just to be clear on the scope of the HVACR sector, HVACR is heating, ventilating, air conditioning, and refrigeration. I know most of you know that. The scope of our organization is the space heating and cooling of buildings through various methods—hydronic or air systems—which obviously is an essential service in this country. It includes domestic hot water, ventilation, indoor air quality products and services, and refrigeration processes that serve the needs of industry, grocery stores, institutions, hospitals and schools, ice rinks, and various other specialty applications.
Building controls is part of our sector as well. It ties all of these systems together. It's a roughly $7 billion a year activity in Canada, and as I mentioned, it's an essential industry in Canada given our climate. Our members and the industry in general are active in every corner of the country, wherever it's a home or a building, yet our industry is largely hidden from sight because we're behind the walls and under the floor providing these essential services. We're mostly out of sight and out of mind for Canadians.
HRAI, the organization I'm representing here, has been around since 1968. We have roughly 1,350 corporate members. That includes 90 manufacturers, 60 or so wholesalers-distributors, over 1,000 contractors across the country, and a number of associates: utilities, colleges, training institutes, consulting engineers, and so on. Across the country, we have 28 staff, a dozen instructors who are very active in training, five regional managers, and 20 chapters.
Our primary services, like any industry association, mostly have to do with industry advocacy, but we are also heavily involved in industry training, including technical design and business management. The technical design courses that we offer are primarily designed to help technicians meet building code requirements. There's a very heavy energy-efficiency component to that.
We own a trade show that's held every two years called CMPX 2018, which is running in about a month from now. We are also actively involved in environmental stewardship programs. We run a number of programs that the industry manages, taking back products of the industry that have harmful environmental impacts, such as mercury thermostats and spent refrigerants, which are no longer allowed, per regulation.
I want to talk a little about the role of our industry in relation to the pan-Canadian framework. Under the PCF, as I'll call it, there's a significant emphasis on GHG reductions. I think you're all aware that the most significant contributor to greenhouse gas reductions, not only in Canada forecasting into the future but also globally, is investments in energy efficiency. Roughly half of the expected goals will be achieved through investments in energy efficiency. That's significant for our industry because that's where our members live and breathe.
Federal government consultations are well under way now on a variety of issues that affect our industry. There's a consultation that we're participating in called the “market transformation for space heating and water heating equipment in Canada”. We're very happy to be engaged with that.
The PCF acknowledges that space heating is an important part of the solution to reduce greenhouse gas emissions in the building sector and also in relation to water heating. Heating on average represents between 56% and 64% of energy use in homes; in buildings, it's the single largest source of direct-sector emissions. Therefore, improvements in the performance of space heating technology can reduce energy use significantly for a typical residential home or building. As per NRCan, if all residential heating systems were replaced with heat pump technology by 2040, for example, this would reduce residential energy use by 25% and greenhouse gas emissions by 24 megatonnes.
A variety of measures related to buildings have been contemplated under the PCF. They include net-zero energy ready building codes by 2030, a model retrofit building code by 2022, labelling and rating requirements as early as 2019, and setting standards to the highest level economically and technically feasible for heating equipment and other technologies. Our industry, I want to emphasize, supports these measures but with a number of important caveats, which I'll come back to shortly.
Just to illustrate, some of the technologies we're talking about include commercial gas furnaces, cold climate air-source heat pumps, gas-fired heat pumps, ground-source or geothermal heat pumps, micro combined heat and power, and integrated systems building controls. This is the tool kit that our industry works with.
The government's plans include what the government has referred to as strategic interventions in the market to accelerate the adoption of high-efficiency space-heating technologies between now and 2035. The government has what has been defined as aspirational goals. A lot of our members have difficulty with the term “aspirational goals”, because they're very hard to pin down, but they include such things as that by 2035 all major space-heating technologies for sale in Canada will have an energy performance of more than 100%. For those who aren't familiar with heating technology, that essentially means that all technology for heating homes will be electric by 2035 because there is no gas-powered or oil-burning technology that can beat 100% efficiency. If that's the goal, that has important implications for our industry.
The plan will also identify barriers and challenges to achieving these goals, and those are part of the big discussion we're having with NRCan and others right at this moment. We'll be looking to implement a variety of measures to overcome barriers using all available tools.
The pan-Canadian framework and all of the things that spill out of that present tremendous opportunities for our industry. As it happens, HVAC unitary products are becoming more and more efficient. The transition to heat pumps presents an opportunity for all of our contractor members across the country. It's a job-growth strategy in a sense, because heating systems will have to be converted in existing homes and buildings. Building smart building controls and implementing systems that will allow better management of buildings creates all kinds of opportunities for our industry. An emphasis on not just product innovation but also building-systems innovation focusing on best practices and enhancing trade skills is very important for our sector. All of that is to say there are tremendous opportunities for our sector. As I mentioned, the industry has a variety of tools in its tool kit to help achieve the goals that the government has set out.
I'm not going to talk about those right now. In fact, I realize I left you at a disadvantage, because I'm looking at a presentation that you don't have. I will make it available to the committee if there's interest in having it. It includes some references to these technologies. The challenge the industry has around the pan-Canadian framework and the transition to a low-carbon economy is the need to adapt. The changing energy mix and transition from oil and natural gas heating to electric pose challenges for many of our members and participants across the country.
Production innovation is feasible, but the reduction of per unit cost for equipment in the context of increasingly stringent performance standards is a challenge. The growing sophistication of codes and building systems poses additional challenges for our sector. In terms of transition to who's going to do the work and how they are going to do it, there's a need for emphasis on skilled labour transitions, which means training.
The HVAC industry is prepared to engage with government at all levels to assist in meeting the challenges of the Paris Agreement. I want to make that clear, but there are some really important principles that need to be seen or adhered to if we want to have constructive engagement. The first is that manufacturers of products that are brought into this country need a runway. There's a product cycle, a time frame to develop and refine products in relation to standards and regulations, and they need time. They need to have foresight on where the regulations are going with time to adapt. Industry consultation is paramount to good program and regulatory design. Knowledge of products comes from our industry and knowledge of our customer base. Consultation facilitates advance preparation for the industry.
We have a strong consultative relationship with NRCan, especially the office of energy efficiency, and with NRC, CanmetENERGY labs, and so on. I want to emphasize that we do have that positive relationship.
I also want to emphasize, however, that the support for climate change needs to be tempered by the need for regulatory harmonization for products coming into Canada and into provincial and territorial markets to keep costs manageable both for industry and consumers. Therefore, we support the work of the regulatory co-operation council and are very interested in the NAFTA renegotiation process and in making sure the recently adopted Canadian Free Trade Agreement can be supported.
I'll leave it on the note that we have a number of other policy priorities and there are a lot of specific policy ideas that come from our industry, but the message I'd like to leave you with is that it's important, from our perspective, to consult early and consult often with industry to achieve effective outcomes.
Thank you for your time.