Government Operations Committee on March 5th, 2013

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

Is there not a financial incentive to do something? I don't know why we'd have to push them to do it. I don't know why they're not already doing it.

[Benjamin Shinewald]

Let me answer your first question to the three of us, and then I'll turn it over to John to answer the second question.

On the tax question, it's not our bread and butter of what our members do, but it's an idea that we endorse. That's why we're not a part of the coalition. But we fully endorse REALpac and Mr. Eickmeier's proposal, just for the record.

I'll turn it over to John for the second question.

[John Smiciklas]

In terms of the environmental performance, my understanding is that there are nine departments within the federal government that look after real estate. You have DND. The assessment protocols that we've developed for the vast majority of commercial buildings don't really fit with what they're doing. It's very difficult for them to go through the process.

We certainly would like to work with those other departments, the military facilities, laboratories, etc., and ensure that we can develop an assessment protocol. The idea of an assessment is that at the end, it tells you what you need to do in terms of improving the sustainability of the building. That then provides a baseline that the government can use going forward.

We'd be looking at working with those departments more closely to look at this.

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

Of the 77% of buildings not run by Public Works, those aren't all special-needs buildings, are they? Aren't some of them regular office buildings, if it's 77% of the total?

[John Smiciklas]

My understanding is that there would be some. I'm sure that some of the other ones have taken small parts of their portfolio and gone through the process.

We'd have to take a look at that.

[The Chair, NDP, Pat Martin]

Next, for the Conservatives, Mr. Trottier.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Thank you, Mr. Chair. Thank you, guests, for coming today with very good submissions.

I want to start with Mr. Love and talk about the federal building initiative. You mentioned it's been in place for about 20 years now, and it's been a very good initiative. Some of the numbers you shared with us in your presentation talked about $312 million in leverage funding, and over $43 million in annual energy savings.

As a quick back-of-the-envelope, it's a payback, as a portfolio, of about seven, seven and a half years or so, when these projects pay for themselves.

Obviously, when this initiative was started, as government and as players in the industry you looked at the easiest opportunities first. You'd start with the least-efficient buildings, as that's where the most savings would be had.

I'm looking at a trend between 1994 and 2014 on the graph that you provided, and it's showing that there are diminishing returns. So at the outset of the program in 1994 there were some major energy savings, and now we're looking at more marginal opportunities when it comes to energy savings.

You also mentioned that about a third of the buildings in the federal government's portfolio have been retrofitted already.

I'm just trying to get a sense of the outlook for this program. If a third of the buildings have been retrofitted and these are the major opportunities, I'm thinking that maybe in the next third of the buildings out there that could be retrofitted, we will see diminishing returns.

Seven and a half years, by the way, is a pretty interesting payback. These buildings will be around for more than seven and a half years. Would the government be interested only in projects that pay for themselves in 25 years or 50 years? What does that portfolio look like?

[Peter Love]

That's a good question. I don't have the answer, but I think it would be a very useful piece of work. NRCan may have begun to do this—albeit I haven't seen it—to rank the buildings in Canada, as you say. Presumably, they started with the low-hanging fruit, probably mostly in Ottawa, large central ones. I'm very keen on benchmarking our practice: where we are what the potential is. I think that would be a very useful evaluation. I will find out from NRCan if they have started that.

Interestingly enough, in Ontario, that's the first step they're taking. They retained the private sector to do an analysis of their 5,000 buildings. They wanted to know where they were, where they should start and, in effect, where they should end, because at some point it's just not worth doing that works yard in some small community. By the time you get a crew there, maybe you could do the lighting. Again, there are some things that aren't going to make sense everywhere, but I think there's a huge amount that could be done now and I think we need a strategy for it.

Right now, my understanding is that the FBI, the federal buildings initiative, encourages other departments to understand the project, this energy performance contracting model, and provides facilitators and helps them through it. They're responding when they're asked and try to promote it, but I think we need to drive it a bit more. I think this committee could be engaged in really making sure this becomes more of a priority.

It's not that you're going to do 100%, but you could certainly do more than one-third. I think it's about setting that benchmark on how far you want to go and setting yourself a timeframe—a 10-year payback is pretty reasonable.

An interesting feature of our contracts is that they can also be used for non-energy upgrades, like a roof. Building managers will know that it's going to go but hope that it won't be during his or her time managing it. The performance contract savings could be used to do that non-energy sort of work as well.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Thank you for sharing that.

I want to talk to the Building Owners and Managers Association of Canada and the Real Property Association of Canada. It has to do with standards.

You talked about BOMA BESt and you talked about LEED. Are these competing standards or complementary standards?

Standards are very useful, but what I found in my experience is that little cottage industries end up getting started around standards, whether it's ISO 9000, ISO 14000, or Y2K. The auditors go in and claim that their standard is the best standard and therefore that you must hire them to do your audits, your verification, and so on.

Can you help me understand LEED versus BOMA BESt and how those two work together?

[Benjamin Shinewald]

BOMA BESt is the program that we at BOMA run, of course. It's not for me to describe what LEED is. I'll leave that to the people who run LEED, but I do think it's fair to say, without transgressing, that the programs, in general, are complementary. In some instances, there's probably a little bit of competitiveness as well. They're not perfectly symmetrical in that regard.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

If I could interject, if you're a building operation manager, you won't necessarily want to have more than one group of standards professionals coming in to do verification. It gets expensive at some point. Is there a need to get to one standard that we can point to within Canada?

[Benjamin Shinewald]

It would be BOMA BESt—I'm kidding.

The programs are quite different. LEED has a variety of different modules, and I use that word quite loosely. Their bread and butter has been in new construction. They have other areas as well, including existing buildings. Again, ours has been in existing buildings, and our approach has been that this is the world we live in, not the world we dream to be. How can we manage this building here, which is going through the system this month, in a manner that will generate optimal, or, at the very least, improved energy and environmental performance?

Our program has been designed in Canada by the Canadian industry. It is the only one of its kind in that regard, and we're significantly cheaper. There are consultants you can hire, but we don't have an army of consultants. I'm guessing that thousands of our buildings—a huge number—go through with the building managers doing the work. There certainly are some companies that you could hire, and that's an individual decision.

Perhaps I may have one more quick second. Mr. McCallum asked why the other 77% haven't gone through. It's a compelling case. I'd encourage the committee to use the 23% that are going through right now, that are beginning this month, as a test case. Decide for yourselves. We're confident that the program will pay for itself. Once you see the proof in the pudding down the road, then you can take your decision, or the government can take its decision on the remaining 77% or 70%, whatever it is.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Thank you.

[The Chair, NDP, Pat Martin]

Thank you, Bernard. Your time is up, but if you'd like to, you can add a finishing thought to that.

[John Smiciklas]

I'll just make it very quick. First, as a qualified ISO 9,000, 14,000 auditor, I know a bit about the standards industry.

But the whole point behind BOMA BESt is that it applies to a large segment and the idea is, it sells like the rising tide. You don't look at one or two buildings and make them great examples, but you take a wide variety and a standard developed by the people who own and operate the buildings, and the idea is to get those best practices to as many buildings as possible. If you raise a lot of buildings a little bit, you get a lot more benefit than just one or two trophy projects.

[The Chair, NDP, Pat Martin]

Thank you, Mr. Smiciklas.

Thank you, Bernard.

That concludes our first round of questioning, and we're doing well for time. That was about 35 minutes to go a complete round, and we'll get a second round for committee members, if they wish.

Just before we begin, I'd like to ask witnesses to expand on one item that we touched on, and that is the job creation through the energy conservation component.

Mr. Love, you cited it, and Ms. Duncan was interested in it as well. When I was the head of the carpenters' union in my province, we did a study on the number of person years of employment in energy retrofitting as opposed to the construction of new generating stations. At that time it was three to seven times the person years, so a unit of energy harvested out of the existing system through demand-side management measures, as opposed to supply side, created as much as seven times the person years of employment per dollar.

Have you done any research, or could you validate those figures 20 years later in today's terms?

[Peter Love]

There are both direct and indirect effects. There's direct employment and then, because those people have jobs, their kids go to school, and they buy groceries, so there's indirect employment.

There's also an issue with net employment. What happens is that, if you save energy, you're going to need fewer people producing what you just saved. So there are fewer people at the power plant and fewer people digging coal. Some of the studies look at a net impact, and the one we did in Ontario for the Ontario Power Authority was a net. Typically, the numbers people tend to come up with range from 7,000 to 9,000 jobs per billion direct, and about the same indirect. You can compare that with different industries. The project that was done at Empire State Building looked at the employment impacts of retrofitting it, which was about 7,000 jobs per billion compared to a coal-fired plant which was about 970, less than 1,000. So it was a 7:1 ratio between a coal-fired plant and energy conservation.

[The Chair, NDP, Pat Martin]

That's what I figured.

[Peter Love]

That was documented by the Clinton Foundation, and there's quite a lot of research and reports on that.

As I said, NRCan is just in the process of taking this on in more detail. I would expect a study to be available later this year, so I will share with the committee a presentation I did that summarizes about 10 or 15 recent studies that have looked at this employment impact, and you can send that to your staff, and they can look at it in some detail.

[The Chair, NDP, Pat Martin]

That would be very helpful. Very good. Thank you very much for that, sir.

Denis Blanchette for the NDP.

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

Thank you, Mr. Chair.

I would thank to thank our guests for joining us today. Your comments this morning are very interesting.

I would like to begin with Mr. Eickmeier.

During your speech, you spoke about green leases. Could you give us some more details about what those are?

[Ryan Eickmeier]

Sure. So the green lease was put out many years ago by REALpac. It's the first actual lease in Canada, to our knowledge, that sets targets within the lease agreement with the tenant. So it's not just simply saying that tenants will occupy this space for five years, but that they will meet or exceed certain targets toward energy, water, and waste reduction. So the tenants are held to the confines of those energy reduction and waste targets.

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

Thank you. It's an intriguing concept.

Has your association started offering green leases to the federal government, which may lease some of your buildings? Or are they available only to private renters so far? What is your assessment?

[Ryan Eickmeier]

It is offered to federal tenants. I'm not sure which buildings have utilized it, but it's certainly there for our members to utilize at their leisure.

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

Thank you.

Mr. Rogers, I am interested in your ideas about how to quickly implement savings. That is what you are proposing.

You mentioned some numbers when you were talking about savings, but what I am interested in is the calculations behind those numbers. You spoke about a total of $300 million. Is that based on a test case or did you play with the factors a bit? By factors, I mean things like the cost of electricity in the province, the way energy is produced—hydro or coal-fired plants—or how old the buildings are.

I would like to hear how you got that number. It may help us determine where we could find savings.