Government Operations Committee on March 19th, 2013

[The Chair, NDP, Pat Martin]

Good morning, ladies and gentlemen.

I call the meeting to order.

Welcome to the 78th meeting of the Standing Committee on Government Operations and Estimates. After having been away for a week, we will carry on with our study on the energy efficiency of government buildings, structures, and public works.

Today we're pleased to welcome witnesses from the industry. We note, though, that the first person on our agenda, Mr. Doug Cane, from Caneta Research Inc., will be unable to be with us today. Unfortunately Mr. Cane was snowed in, in Toronto, and won't be joining us.

But we do have Mr. Dave Seymour with Ameresco Canada Inc., Mr. Thomas Mueller of the Canada Green Building Council, and Mr. Stephen Carpenter with Enermodal Engineering.

We'll leave Mr. Carpenter for the end because there have been some translation issues with his presentation. We may, in fact, be able to get his audiovisual presentation ready towards the latter part of the meeting, so we'll see how that goes.

I think we'll ask Mr. Dave Seymour, from Ameresco, to begin.

You have 5 to 10 minutes, Mr. Seymour, and then we'll open it up to questions from the members. Thank you, sir.

[Dave Seymour, Vice-President, Eastern Region, Ameresco Canada Inc.]

Thank you, Mr. Chair.

Good morning, committee members.

My name is Dave Seymour, from Ameresco Canada. I'm vice-president of our eastern region, based here in Ottawa.

Our company was founded in 1973 in Toronto. Our specialty at that time was energy management engineering. It was innovative at the time and our focus was on existing buildings mostly, but we were also involved in some new construction or new building innovation in those days. Along the way we've been acquired a couple of times, actually. We're now known as Ameresco Canada.

One of our main businesses is energy performance contracting, which you have been introduced to, I believe, in previous briefings. That business involves the creation of energy savings or utility savings, operating savings, which in turn fund the capital cost of the improvement measures that are installed. We'll get into that a little bit more.

I would have to say that this business is evolving over time. We're looking more at comprehensive performance improvements of existing buildings, not just energy. It's the total building performance. Again, you'll see in my comments where I'm going with that.

I will just tell you a little bit more about Ameresco Canada. We've completed approximately $1.3-billion worth of energy and facility renewal projects in Canada. If you add to that our U.S. portion of business, that number increases to about $4 billion in improvements, company-wide. We've saved our Canadian clients over $500 million in cumulative operating savings, with about 250 projects or so completed in a variety of different sectors. The first branch office of our firm in Canada outside Toronto—our head office— is here in Ottawa. I opened that 20 years ago. We've worked on approximately $150 million of projects locally in eastern Ontario and western Quebec, and we now have offices across Canada in most of the major markets.

I'm providing this information not to advertise, but just to give you an idea of the perspective, or our point of view, as a practitioner in energy and building performance.

As I continue with my remarks, I have a few slides that I will be showing you. These are case studies, if you will, of some of our projects that we've completed for federal clients over the last 15 years. These projects have been successful, they're meaningful, and I believe they are indicative of the ample opportunity that still exists for Natural Resources Canada's federal buildings initiative to flourish. And we'll come back to this towards the end of my remarks.

Ameresco is also a founding member of the Energy Services Association of Canada. Peter Love, our association president, appeared before your committee earlier this month to provide some information about energy performance contracting and the federal buildings initiative, and the benefits of those. I don't want to repeat his remarks, but I am here to support his comments and suggest that there is plenty more opportunity for these types of projects. It is a great way to make improvements to the cost-effectiveness of government operations, to reduce the impact on the environment, to create jobs now and in a green sector, as well as to fund some much needed facility renewal or infrastructure improvement within the government workspace. Much of this can be accomplished without needing new federal funds.

In previous briefings, you've heard about the significant utilities' savings potential from energy efficiency projects, the opportunity for greenhouse gas reductions, and the creation of good technical jobs. You are likely hearing more from your facility managers, as they face accumulating deferred maintenance backlogs or infrastructure backlogs. Some other terms you may have heard of are facility renewal, or capital asset renewal requirements, within their building portfolios. These accumulating costs point to a risk in their ongoing operations, and it is a concern for all property owners and managers.

This asset deterioration challenge is a significant one and it's a looming source of debt for all concerned. McGill University has published some information on the size of this infrastructure deficit, which has been estimated to be somewhere in the neighbourhood of $250 billion to $325 billion for the Canadian municipal, provincial, and federal infrastructure combined.

We refer to this challenge as an asset sustainability challenge, but it can also be an opportunity in terms of identifying innovative solutions and sources of funding to address at least some of the cost challenges.

Like business, governments are looking to avoid putting significant funds into their own bricks and mortar, but to invest this money in places that would best serve the citizens of the country and in programs and further development of our priorities as a society.

Of course some capital investment is required to support government operations, but there are other ways to get some of this work done that leverage existing external financial and technical resources. Energy performance contracting and the federal buildings initiative program can be put to work to be one of the solutions that would support government efforts in getting more done with less. As a taxpayer, I want the government to be considering all avenues to get the most benefit out of each and every tax dollar.

With this observation or comment on facility renewal or infrastructure renewal, I've just added one more good reason to consider utilizing the federal buildings initiative for making improvements to many facilities within the federal portfolio.

Treasury Board statistics for the federal real property portfolio as of 2011 indicate there are some 39,000 buildings, leased and owned by the government, having a floor area of 27.6 million square metres. The data also references 73 custodian organizations, so the building portfolio is huge. The portfolio is aging, and it's getting to be a larger source of debt in terms of the outstanding obligation to keep facilities operational and functional. Also, if the number of custodian organizations is correct, there is a significant logistical challenge in getting things organized, approved, and implemented. Facility and asset managers have a challenge.

There have been about 80 FBI, federal buildings initiative, projects completed over the past 20 years, with an invested amount of about $312 million, which save approximately $43 million per year. We know there are many other projects that have been completed by various custodial departments that have some form of energy efficiency improvements included in the scope, which have gone undocumented or were at least not monitored.

However, there are many more opportunities available for consideration. Most of the projects that were done 10 or more years ago are ready for a second look, as these early adopters were likely looking at their projects with a somewhat shorter term view, so there could be good savings potential available. We know that to be a fact with some of the buildings you will see on the slides in front of you.

Now, to summarize the case studies we have shown on the slides and others I will make my way through, they include a number of the projects that we've completed and that my team in Ottawa specifically has been involved in. I'm sure you will recognize many of the national capital region buildings in these pictures. I've not shown all of them, but these are the more recent ones.

These implemented projects have a total investment of about $49 million and resulted in utility savings of about $5.9 million per year. The average performance increase is about 29.9%, with 19,000 metric tonnes of CO2 equivalence of greenhouse gas emission reduction.

We know there are more potential savings to be achieved within a number of these facilities. They may be smaller projects, but they would still be viable projects.

The challenge is not one of applying certain new technologies and getting the energy savings that would come out of them. There's no panacea there. As with so many other challenges we face, we have a human factor challenge. The challenge we face is identifying and assigning the right people, and enabling them with a challenge and clear objectives to make things happen, using programs that already exist. The appropriate technologies will be brought along with this effort.

Thank you to the committee and for listening. I look forward to questions and comments later on.

[The Chair, NDP, Pat Martin]

Thank you very much, Mr. Seymour.

Next we'll go to the Canada Green Building Council, and Mr. Thomas Mueller.

[Thomas Mueller, President and Chief Executive Officer, Canada Green Building Council]

Thank you very much and good morning. Thank you for inviting me to speak.

The Canada Green Building Council is a national non-profit organization of industry leaders that are committed to sustainability and to transforming the building environment along sustainability principles. We have about 1,700 member organizations across Canada. We represent a cross-section of the industry, so we don't represent one particular subsector. The reason for that is that we know that there are many professions and many different knowledge bases and skills involved to produce buildings and maintain them at a very high-performance level.

Over the last 10 years, we have educated about 30,000 professionals, including 12,000 LEED accredited professionals, an accreditation here in Canada of the building rating system called Leadership in Energy and Environmental Design.

I want to give you a bit of an update on that. I've been asked to look at where the Government of Canada is at, compared to private sector development, with regard to green buildings.

The Government of Canada adopted very early on a LEED gold policy for newly constructed office buildings. Our records show that was in 2006. I have been reviewing the policy and looking at the policies that other jurisdictions in Canada have adopted, including the provinces and major cities in Canada.

The green building policy is still consistent with what we have nationally and what we see with green buildings or policy being implemented at this time. The Government of Canada currently has 153 buildings that are registered or certified in our LEED Canada program. That represents about 4% of the total number of buildings that we have in the LEED Canada program, which is just over 4,000 now, or about 600 million square feet. These are both buildings from the real property as well as the custodial departments, and they're not just office buildings. Even though office buildings dominate, we see many other building types as well that are being registered and certified under LEED Canada.

There are 23 buildings that have been certified to various certification levels. About 56% of the federal government projects are actually achieving LEED gold or platinum certification levels, which again is consistent with the larger number of buildings that we certify in Canada. Over 54% are gold and platinum. In terms of achievement level, the federal government is well on par with the industry.

Different rating systems are being used under the LEED program. The only exception is that there are currently very few existing buildings from the federal government that are being registered and certified under our LEED for existing buildings program. We have only four LEED for existing buildings projects that are currently from the federal government that are registered with us.

With that, I want to talk a little bit about the private sector and private sector activity. The commercial real estate sector, particularly the office sector on the commercial side, has developed very rapidly over the last three years in Canada. Large new office buildings are almost exclusively now being designed and built to LEED gold or platinum levels. We have seen a tremendous growth in that area over the last three years.

That sector uses mainly LEED. They are also using the BOMA BESt rating system for existing buildings, which is also referenced in the federal sustainable development strategy, but they're not using Green Globes. That latter is not being used by the private sector because of a lack of support for the infrastructure and lack of stringency and rigour.

The reason the private sector is using LEED and looking for these higher levels of certification is mainly driven by the corporate social responsibility programs, along with a tremendous demand for green office space by large firms like banks, law firms, and so on—and government as well—and pension fund investments. There are criteria attached to pension funds that they need to be invested in green buildings, and the preferred rating system of choice is LEED, both here in Canada as well as in the United States.

Aside from CSR, the reasons for using LEED is that it results in a better performing workforce and less absenteeism, and because it also helps attract top talent from an employer perspective. As for the pension fund investments, they of course are mainly driven by return on investment, because these are teachers' pension funds and public and police pension funds that are being invested in these types of buildings.

This brings me to the existing building side. We know now and understand that buildings contribute about 30% to 35% of carbon emissions in Canada and in North America generally, just from the operation of buildings. If you include the materials, it goes up to about 46% to 48%, so the carbon footprint of the building line is very large. With that we also need to pay attention to the existing buildings and the large stock of existing buildings that we have. In Canada we have about 230,000 existing buildings and about 12 million homes—a significant building stock.

We have started to provide support for that existing building sector through our LEED for existing buildings program, which we introduced in 2009. We currently have almost 60 projects in Canada, all of which are very large. They're growing very fast. They represent about 17 million square metres out of the 61 million square metres of projects we have in our LEED Canada program. They are almost exclusively private sector projects. As I mentioned before, only four projects in that whole group are Government of Canada projects.

The commercial office sector started with BOMA BESt. You will find that many of these projects have some level of certification under BOMA BESt, but now they are graduating to the LEED for existing buildings program because it's more stringent and also has stronger market recognition in terms of the brand.

It's fair to say that at this point the private sector leads the industry in existing buildings for retrofit and better operations and maintenance practices. There is also an emerging trend where once you have a newly certified building, you then apply for LEED for existing buildings to better operate and maintain the building over time and then to really realize the full benefits of the investment and to maintain their asset value. Any building like that obviously represents an investment.

As for the federal sustainable development strategy, I looked at the original strategy and then at the 2012 progress report. There are currently no plans or strategies to register or certify a larger number of existing Government of Canada buildings to LEED for existing buildings. That is currently not evident. But the federal government also has a larger existing building stock. It's not just office buildings, but it's parks buildings and Department of National Defence buildings, with many different building types at different locations, large and small, and so on. These buildings also consume energy. They might not necessarily be suitable for LEED certification, but I think it might be time to consider how energy, water, and solid waste generation in those buildings could be reduced.

Again, in the federal sustainable development strategy there is a commitment in the 2012 report that 80% of existing buildings will be assessed to identify environmental opportunities. I would like to support that commitment in the strategy. I think it's a critical next step to look at how much energy, water, and waste they consume or produce and the opportunities to reduce that kind of environmental impact from small facilities.

That brings me to my final point, which is really about higher performance of buildings. Higher performance of buildings really matters. I believe the federal government needs to view this in a North American, if not global, context. If you go to the European Union, the target for new office buildings right now is 100 kilowatt hours per square metre per year. That's the target for EU countries, and there is an emerging target to actually go to 50 kilowatt hours per square metre per year.

In Canada, based on our own studies, the average for office buildings is about 320 kilowatt hours right now, depending on where you are and in which region. This is normalized for climate, so this is a real number. Some say it's 290; some say it's 350. We say it's about 320.

These buildings are already being built. They are already occupied, and they're operating. These are both new and existing buildings, so the opportunity exists to produce those buildings with the current technology, with the current know-how, and without a significant increase in cost. With a life cycle, there is really no question that these buildings will pay off many-fold.

I think it's really important, regardless of the rating tool—whether it's LEED, or BOMA BESt, or Green Globes—that the expectation be that buildings achieve certain levels of performance, because the tools are only as good as the results they will produce. One thought—and the industry is also moving in this direction—is that, typically, when you design a building you actually model the performance. We have computer programs to model what the building will use at the end of its day, but there's now a tendency, as we know more about the actual performance of buildings, to move towards actual numeric targets for buildings. So we say, “An office building should not be using more than that” and “A school should not be using more than that”, and so on, so we move away from a model performance to an actual performance target. This is something to keep in mind as the industry is moving forward, and we certainly see really strong support for this on the industry side.

In conclusion, I would just like to raise a few points. The Government of Canada should ensure that whatever programs it signs onto under the federal sustainable development strategy or for real property, they be stringent and rigorous to reduce the environmental impact of buildings, whether large or small.

The government should maintain its LEED gold standard policy for newly constructed buildings. I think it's been very successful. It is consistent and well in step with the industry. It could perhaps consider evaluating the opportunities to go to the next level, LEED platinum, over the next three to five years.

There should be more focus on existing buildings' performance and certification, following LEED for existing buildings for larger properties.

The government should benchmark and engage in performance management of the larger federal building portfolio. There are many thousands of buildings, and many need attention. Also, for those buildings that have been certified under any of the rating systems, they should be benchmarked and managed well on an ongoing basis, to maintain continued optimization of building performance. You want to make sure that when investment is being made in buildings, they also pay back every year for the entire life of the building. There is certainly an opportunity to improve the performance of buildings over time.

I'd also recommend and evaluate the potential of using LEED for existing buildings for larger existing projects, or to put the new projects that have already been certified under LEED or another rating system onto a program of LEED for existing buildings, with recertification every five years. We do a recertification every five years to make sure that the building maintains its level of performance over time.

With that, I'll finish. Thank you very much for your attention.

[The Chair, NDP, Pat Martin]

That's great, Mr. Mueller. Thank you very much.

We now have the audiovisual component of Mr. Carpenter's presentation under control, I believe.

Mr. Carpenter, of Enermodal Engineering, the floor is yours.

[Stephen Carpenter, President, Enermodal Engineering]

Thank you very much.

I'm going to rely on David as my technical assistant here with the slides. We'll see how technically savvy he is.

Thank you for inviting me to attend. My name is Stephen Carpenter. I'm with Enermodal Engineering. I've been working in and consulting on energy-efficient buildings for over 30 years now. We're one of Canada's largest consulting engineering firms working exclusively in green and energy-efficient buildings.

Like David, we have a large portfolio of buildings, and I'm going to draw upon the experiences we've had with those. Since the time is short here, I'll run right to the conclusions or the recommendations on how I think this committee should proceed.

I'll start with a little bit of background. I apologize, I'm an engineer, so I only think in numbers. I'm glad Thomas introduced some of them.

The first slide I have up here is just to put everything in context. It shows the average building energy consumption. You will notice that it varies by building type. MURB—what we would probably call apartment buildings—is on the left, and on the far right are hospitals, being the highest energy users. Consistent with what Thomas just said, and using the same units, the average of all of those buildings is somewhere in the range of 300 to 400 kilowatt hours of energy use. That's electricity, gas, oil, whatever—all the energy combined—and then divided by the floor area of the building. You don't have to worry about the units: we'll call it 300 to 400 “apples”, if you prefer.

Looking at the big picture, that's where we are today. I should mention that this is all Natural Resources Canada data.

Next is a very interesting slide. It shows the energy performance of buildings. It shows current energy performance but also date of construction. At the far left are the early buildings, built before 1920, but their current energy use. At the far right it shows current energy use.

Probably the surprising thing for most people on this committee is that there's not a heck of a lot of improvement from 1920 to present. We see a little bit of a drop between the seventies and the eighties. The seventies were the bad guys from an energy point of view. Some of us older people remember the OPEC oil crisis and things like that. We saw some increased awareness in energy. That's when we first started seeing energy codes.

People have talked about the need to get to net zero and so on. If we continue on with the same path we're on, we've actually calculated when we're going to hit net zero: the year 3300. I won't be around for that event. I guess my point is that I think the track we're currently on isn't going to get us where we need to be when we start looking at the issues of energy use. It begs the question, how do we achieve more energy-efficient buildings if the track we're currently on is not getting us there fast enough? I'm pleased to say that I agree with my two previous colleagues that the answer is not new technologies. It's not like we're looking for a silver bullet. It's all about better policies and processes.

I'll take the rest of this presentation to talk about some of those policies and processes that I think would benefit.

First, set mandatory—and I would underline the word “mandatory”—green and energy targets. In other words, for both your new and existing buildings, we want to set targets that must be achieved. It's not an option. I think Thomas made a very nice explanation of what the private sector is doing. For them, it's mandatory. They have to do it.

I agree with Thomas' recommendation to continue to use the LEED gold for new construction, for all the new buildings. I also support Thomas in terms of using LEED EBOM, with EBOM being the existing building target. LEED gold is for existing buildings. Again, the private sector is doing it. I think the federal government would be wise to follow suit.

LEED deals with all attributes of green. I think it's also important that we mandate specific energy intensity targets. There are many aspects to green in terms of recycled materials and indoor air quality and so on, but I think it's just as important that we set specific targets for energy efficiency. Thomas alluded to those.

I've just pulled up, in a matter of a few minutes, some of our numbers and come up with some ideas. If I'm looking at existing office buildings, Thomas mentioned the average new building being about 330. We would think that any new office building should be around 250. That's about a 25% to 30% reduction or whatever the number is.

There is another system—I don't know if you would call it a rating system, but it's a benchmarking tool, I guess—called Energy Star. It came out of the U.S. Department of Energy. We're probably all familiar with it from our computer monitors and so on, which are Energy Star. There is an Energy Star for buildings in the U.S., and it's now being adapted to Canada and will be released shortly.

It's a scale that goes from zero to 100, so zero is the worst energy performance building in the world, or at least in Canada, and 100 would be the best performance building. Again, on the target, I had suggested that for federal government buildings, if it's an existing building you would want it to be in the top 25% to show leadership. That would imply an Energy Star of 75 or greater. I should mention that EBOM has a minimum threshold of 69, so if you want to get into the program, you're pretty much going to be there. In new offices, because you have more ability to incorporate energy efficiency features, I think you can set a more aggressive target, so I've suggested under 200 kilowatt hours or an Energy Star grade of 85.

The next slide is about the performance of LEED buildings. As I indicated in my introductory remarks, we've worked on a large number of LEED buildings, close to 200 now. The red line on the graph is what NRCan says is the average energy use of typical buildings. The green bars are the various LEED projects that we have worked on and where we have actually monitored the energy performance, so those are real energy numbers. With the exception of one or maybe two buildings, all of the LEED buildings are performing better than the average building; the green line is more or less a fit to that. We're talking about a 30% reduction just by incorporating a LEED mandate into your program.

Next—and I appreciated Thomas' earlier comments—I'm talking about how energy use should be under 200. Without pumping my chest too much here, this slide shows our head office in Kitchener, Ontario, recently completed, with a monitored energy use of 68. Again, an average building is running around 330. It's 68, and you can trust me: we're a private sector company and we have shareholders that expect us to have a return on their investment and so on, so this was all done within reasonable financial numbers.

We're an Energy Star 100, which says that we're the top building. We're also a triple LEED platinum. I've also put down there the construction costs. At $250, that's both the base building and all the tenant fit-up space. For those who are familiar with construction costs, that is by no means a scary construction cost number. I was suggesting $200 as a starting point, but I think that we as an industry can certainly do much better.

[The Chair, NDP, Pat Martin]

Thank you very much, Mr. Carpenter. That was very interesting.

We have people waiting to question all three of you.

[Stephen Carpenter]

Is my time up? I just had a couple of slides.... That wasn't my great drum-roll finish.

[Voices]

Oh, oh!

[The Chair, NDP, Pat Martin]

Take as much time as you like.

[Stephen Carpenter]

Okay.

The second one I wanted to bring up was commissioning. Commissioning—or for existing buildings, it's called recommissioning—means going in and making sure the building is operating properly. Just to show you that I'm showing all our shame here and not just plugging all our good stuff, on the graph that's up there, the green line was perfection for our predicted energy performance for the building, and the red line was tolerable. We expected the energy performance of our building to be somewhere between the green and red lines, and the little dots are monthly performance.

We moved in in November of 2009 and then—again the squares are our monitored energy use—you can see for the first five or six months there, we were tracking the red line. Truth be told, we were bad and we didn't get our building fully commissioned before we moved into it, but being the good energy consultants we are, we eventually got around to it, and you can see that by the summer the energy numbers were matching the green, and then further on, you can see we have been nicely matching the green for the last 10 months or so.

The next slide shows the interesting thing on this, that if you take our energy use in November 2009 and compare it to November 2011—same building, same people, nothing had changed, but we commissioned the building—there was a 25% reduction in energy use, just from making sure everything in the building was working properly. The moral here is that buildings are extremely complicated, and you have to invest the time to make sure they're working properly.

The third recommendation really follows from the previous one. You manage what you measure. It's very important to be tracking energy use and, just as I showed on the last graph, track your energy use, compare it to energy predictions that were made, and see how you're doing. If you start to see some deviation, something is probably wrong. Go in and correct it.

The fourth one is about making energy performance part of all contracts. Some of the interesting projects we're working on now are what are called P3 projects, public-private partnerships, and I know the federal government is doing some of those. Some other provinces are doing them with much greater zeal, if you like, but the interesting thing on a public-private partnership is, at least in some of the versions of them, that it goes to the private sector to design, build, and operate the building. And the argument goes, well, private sector, if you're designing, building, and operating it, shouldn't you be responsible for the energy performance of the building? And if you are, shouldn't you then guarantee it?

So there are a number of contracts now where that is in fact the case. As part of your bid to build the project, you say, “Yes, we will build and operate it, and here's our price, and by the way, we're guaranteeing the energy bill will be under this number.” If it's not, basically, the person who designed, built, and operated it has to pony up. That's the pain share.

On the other hand, if the energy use comes in under, because it was operated efficiently or whatever, that's then a gain share. I can tell you from being on the proponent side of actually doing it, it sure focuses the attention of the design, the construction, and the operation team to get a really good performing building. So I think it's a model worth looking at.

Not all firms are created equal. Some firms are very good at energy efficiency, and frankly some of them aren't, so make sure when you're hiring firms, again be it for new buildings or existing buildings, that there's a proven track record of performance. I think there's a real value here in having an independent person, someone whose sole focus is looking at the energy performance of the building. It's not an additional role; it's not like they're the architect or they're the mechanical engineer. They're looking at the energy performance, and that's their sole function. I think there's even an argument to say maybe that person is hired directly by the federal government as a peer review or watchdog—if you wanted to use that—of the work to make sure it's being done properly.

Then my last recommendation is something that has been in Europe for a number of years, which is labelled the energy performance of buildings. The graph you see, the picture, is what is being produced by ASHRAE, the heating and refrigeration engineers. This is what they are proposing. We put energy labels on just about everything else: dishwashers, cars, computers, and so on. We just happen to leave off the largest single energy-using devices that we have, which are buildings. I don't understand that. I think by putting the energy performance label on the building, having it prominently displayed as it is when you buy a new car, when tenants go to rent space in that building, they can see what the energy use is. There's nothing like a game of one-upmanship—my building is a better energy performer than yours—to get people motivated to make more energy-efficient buildings.

So those are my five recommendations, and I thank you for your attention.

[The Chair, NDP, Pat Martin]

Thank you very much, Mr. Carpenter, and my thanks to all three of you for very interesting presentations.

I know that committee members are eager to get started with their questioning. We'll begin with the official opposition and Linda Duncan.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thanks, Mr. Chair. I'd like to echo your thanks.

We were hoping for some recommendations from you and you've done it up front, which is absolutely fabulous for our proceedings.

You triggered my interest in a number of issues as I looked at your materials earlier. I'll throw out two questions to all three of you and let all three of you respond to them.

A number of you mentioned the value of setting targets and prescribing targets. Thank you for the information about the E.U. My understanding is that in Canada they've simply set carbon reduction targets. I haven't seen evidence of kilowatt-per-hour savings of energy. Would it provide a greater incentive or direction to those who purchase and procure federal building space if there was a directive similar to the E.U.'s? This would apply when you're procuring space for the government and signing a lease. I'm particularly looking at leaseholds, because that's most of what happens at the federal level as opposed to building LEED buildings. Do you think that is a measure we need to trigger investment? Could you elaborate a little more on what you know about the Canadian or the U.S. experience?

We had some previous witnesses who spoke about performance contracts. Some of the witnesses said that was the way to go. Wayne Rogers from Luminescence Lighting in Edmonton said that isn't always necessary and it can make it more costly. In some cases, if you are simply recommending after the audit to retrofit something, a person could just agree to do that. I'm curious about your response. The second question is, are energy performance contracts always necessary? If so, when?

[Stephen Carpenter]

As to carbon targets, what I'm aware of, and I could be wrong, is that the carbon target is a global or high-level target. I think you have to take a high-level target down to the individual building. Canada is supposed to reduce so many millions of metric tonnes of carbon, and to a design team that's a difficult concept. So I am supportive of setting a target.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Do you think the target should be on energy use as opposed to reduced carbon?

[Stephen Carpenter]

There's a multi-part answer to that question. First off, in the big picture, energy and carbon are very closely related. So if you do one you're going to get the other one whether you like it or not. The struggle you get into is that some electricity is produced by hydroelectric, which you could argue is close to zero carbon, and some is produced by coal, which has very high carbon. Of course, that varies from region to region. What do you do? That question has befuddled many a person who considered what was a “fair” system.

In the U.S., there is very little hydro, so they take electricity and multiply by three to account for the power-plant efficiency and say that's how they'll adjust for the whole carbon aspect. In Canada, it has been suggested that we should use the number two, which accounts for our having much more hydroelectric, which I think is probably a good Canadian compromise. Some will argue that it should have been the number one, and some will argue it should have been the number three but—

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I want to intervene here because I don't want to encourage you to get into that. Most of your presentations have been about the savings from energy efficiency. My understanding is that the targets in Public Works are carbon-related, not based on cost savings from energy efficiency. Do you think there'd be value if we shifted over to a source-neutral measure like that?

[Stephen Carpenter]

I'm sorry if I went off on a technical tangent.

If you strictly base it as you said on our wanting a carbon reduction, and you're in a region that is all hydroelectric, there could be an argument that you're not getting carbon. By using an energy intensity number, you bypass that whole issue. That's why I would promote just using the energy number. We had suggested kilowatt hours per square metre.

[Thomas Mueller]

That would be consistent with what we are thinking as well. Setting energy intensity targets for buildings is very important. With the new database that NRCan is launching, or with Energy Star, we get a better understanding of what the energy use will be.

But there are also organizations such as ours, or engineering firms, that increasingly keep numbers on where buildings should actually be. There's obviously a range of performance that you will see, which we saw in our benchmarking programs. Sometimes the ratio is 1:6 for the same building type, depending on age or region or operations—there are all kinds of factors playing into it. But there's increasingly data that would allow you to do this.

What it will do for you is that it will really focus the efforts on how you can get to that target, rather than leaving it more open.

However, I think it's really important too not to let the carbon slip from view, because energy use is related to costs, and carbon is related to environmental impact. The challenge is now to reuse carbon and save money at the same time.

[The Chair, NDP, Pat Martin]

Thank you.

That concludes your time, Ms. Duncan.

Next, for the Conservatives, is Bernard Trottier.

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

Thank you, Mr. Chair.

Thank you for coming in this morning. Those were great presentations.

I want to clarify something for Mr. Seymour. You talked about the portfolio of federal government buildings. You talked about 39,000 buildings owned and leased.

One of the challenges with conversions of the existing stock is something we call an agency problem, in which, especially when it's leased.... Many of the examples you gave were of federal government-owned buildings, in which the owner of the building is also paying the operating costs and is responsible for all the tenants' energy consumption.

How can the federal government overcome the challenge when they're occupying, let's say, a certain number of floors in a privately-owned building, so that they are the tenant, and meanwhile the capital improvements would be borne by the building owner? When it comes to such things as energy performance contracting, what are the mechanisms you have to build into it to account for the agency challenge?

[Dave Seymour]

Energy performance contracting in those kinds of situations becomes more complicated—there's no way around it—because now you have yet another contract in place: the lease.

I think you've had a briefing on green leases. By adopting those, by being forthright and specific about what you will accept in a building as you negotiate the lease with the owner—such that “these are the kinds of conditions we expect to be met”—you get into energy density targets. I think it needs to be that specific, because the owner can and in a P3 situation does take ownership of the usage of that energy and of controlling the energy.

You cannot invest in the facility, because you do not own it; the owner of the building owns it. So it has to be done through a lease. It is more complicated, but it can be done.

The other thing is that we have been involved in projects in which the developer or owner of the building uses a performance contract format to make improvements to the building. As a matter of fact, in the cases I'm thinking of specifically, they're actually repositioning or re-marketing the building. There are some success stories out there in which it can and will work. There needs to be an insistence on the part of the government, whether it's Public Works negotiating the lease or whoever, to make sure that the plan goes forward.

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

It sounds as though this may tie in to a different study we did on public-private partnerships, wherein a third party becomes involved and becomes the holder of that lease, if you will.

Is that the mechanism that's generally used; that there is a third party, apart from the lessor and the lessee, who manages the financial aspects?

[Dave Seymour]

Personally, I am not familiar with that. It's something else I could look into, but I'm not familiar with any of those examples.

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

Thank you for giving some financial numbers on the upfront costs versus the annual savings, and looking at it, things are generally a five- to ten-year payback in what you've demonstrated.

Is there a sense—