Government Operations Committee on April 16th, 2013

[Dean Karakasis]

You may find that the bigger challenge is in writing that specification for all government buildings all across the country, but it's not impossible. We go back to challenging federal government employees to be as knowledgeable as they can be as buyers. In that case, now they become buyers, not property managers, to be able to put those definitions in place.

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

Thank you. I think my time is over.

[The Chair, NDP, Pat Martin]

You're well over time, John. Thank you, nicely done.

The last speaker for this round of questioning, for the Conservatives, Mr. Dan Albas.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you Mr. Chair.

I want to thank all of our witnesses for coming here today.

Mr. Chair, sometimes I think we need to keep in mind certain things. First of all, when we hear the word “leadership”, it's a fair word to use, and I appreciate Mr. McCallum's mentioning leadership and asking what we would say should be done, but I have noticed that it is sometimes human nature, Mr. Chair, to forget what has gone on.

We've discussed the federal building initiative, which provides on average 15% to 20% in savings for every building that has been done. My colleague Mr. Trottier has pointed out that there seem to be fewer returns over time, because some of the low-hanging fruit, if you will, Mr. Chair, has gone away.

I've taken the time to visit NRCan's research development for building products. While it may not be as flashy as spending large amounts of money, which some opposition members might want to see in this area, what it does is it allows individual companies to bring forward new and innovative products, which they test here in Ottawa. They have two houses side by side. They will put an energy-efficient water heater in one side and then put a standard one in the other; then they'll test the two under very similar circumstances.

Rather than say that the federal government has not been taking leadership, I would argue that it's probably because we have such great and innovative building products that we get such great energy efficiency. Whereas Mr. Karakasis says that most new buildings are as energy efficient as can be, it's almost as though you would have to try in order not to be energy efficient, mainly because of the buildings.

There has also been some discussion regarding the waste disposal for particular items. Mr. Chair, I want to point out, as a former city councillor, that in the City of Penticton we work with our regional partners on landfills. One of the major challenges is that if you put greater regulation in place for getting waste to the landfill, construction materials, etc., you will actually create illegal dumping: you are adding to the costs of a retrofit. The whole point is that every time you retrofit, you get a better and more energy-efficient project in its stead.

Second, Mr. Chair, one of the issues when the materials go to landfills, whether they be private or publicly owned, is that the landfill owners feel rather pressed to allow individual groups, whether volunteer civic society groups or actual for-profit businesses, to collect and recycle those materials. Again there's not a want to see those things; it's legal protection and jurisdiction.

I am actually going to get to some questions today, Mr. Chair. I know that you and I can get into these discussions, and they get pretty heavy, but I'd like to speak to the gentleman from Alberta, Mr. Staszenski.

Mr. Staszenski, you mentioned that when a lease.... By the way, I appreciate your pointing out that leases are typically closed contracts: you can't just open them up. But there is a capacity for you to say to your landlord, if you want to improve their facilities, that you will pay for the extra costs and they will get a better building out of it when you're done with it.

You mentioned a 40% premium on some of these energy efficiency guarantees. Is that correct, sir?

[Brian Staszenski]

Well, that's the historical premium. They've had to come down because of competition. But when you do an energy performance contract, you're buying insurance, and they put a premium on the retrofit. That's why it's more expensive.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Okay. What would you say the premium is currently? Your testimony was that it was 40%.

[Brian Staszenski]

No, I said 20% to 40%, and it depends which ESCO or energy service company you're working with,.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Okay. I'll take that point to Mr. Cane.

Mr. Cane, you've done some of these energy audits. In your experience, is 20% to 40% accurate as a premium?

[Doug Cane]

I think that's reasonable, yes.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Okay. So there is an extra cost to it.

Mr. Chair, I also want to refer to Mr. Cane's comments earlier about the Province of Ontario looking to basically regulate common sense by saying that when you open something, you have to put something better in. I want to raise the point that if you make a law such as that, what will end up happening is that people will say that if they rip off a wall, they're going to have to fix more than just the one problem that's in the wall—a leak or whatnot. People may either choose not to do it or they may choose to do it illegally without proper permits. I think sometimes, Mr. Chair, we have to look at these things and ask whether we are actually creating disincentives for energy efficiency.

How much more time do I have, Mr. Chair?

[The Chair, NDP, Pat Martin]

You're actually over time, but what you're saying is so interesting. You're such a contrarian, I think it's important to hear you.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

You know, Mr. Chair, I just appreciate these little conversations you and I have and thank you very much for the time and again to the witnesses here.

Again, it's a very interesting topic. Thank you.

[The Chair, NDP, Pat Martin]

Thank you very much, Mr. Albas. Those are very legitimate points.

That's the end of our first round of questioning. I know Mr. Dalgleish has made extra time to stay with us. Just before we move to the next round, I want to ask him about one point in case he doesn't get time to make it elsewhere.

In some of our private conversations, Laverne, you've indicated to me that in your many years in business you're actually finding more interests and more business outside Canada than you are within Canada.

Would you like to speak on the record briefly about how you're frustrated that our own Canadian market isn't as enthusiastic with its public buildings as some of your customers abroad?

[Laverne Dalgleish]

Yes, we started out originally about 30 years ago and I would say 100% of our business was in Canada at least and a big chunk was in the province of Manitoba. As we moved forward, that changed. We didn't have the same type of momentum and drive. We didn't have the same type of opportunities in Canada.

Right now, as I mentioned earlier, about 70% of our business is on the American side to the point where we had to even up an office in Washington, D.C. because Americans like dealing with Americans.

That has now been taken even past that and we're into discussions with a number of countries, South Korea, Sweden, Mexico, Spain, and some countries in Africa, about how to take the programs over there. We fully see our growth in our personal business either on the American side or in other countries. We haven't projected any growth in Canada over the next 10 years and that's just a personal business decision we've taken.

[The Chair, NDP, Pat Martin]

Okay, I won't go any further with that, but thank you, it's interesting.

Next for the NDP, Mathieu Ravignat.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you, Mr. Chair.

I have just come back from a parliamentary visit to Europe. Energy was among the issues we discussed. I was pretty impressed by the measures the Europeans have implemented to decrease energy consumption within the European Union. I was somewhat envious, as our approach is different here, in Canada.

All of you have done business with the government, in one way or another. The testimonies we have heard over the course of this study have left me with the impression that the approach is inconsistent across departments.

I am wondering whether you feel the same way about the government's commitment in this area.

[Dean Karakasis]

If I may, I don't know if I used the word “commitment” or not. It is piecemeal, but often because the delegation of authority is split between the people who run the buildings and environmental officers who are charged with the responsibility of the environmental programs. I assume they go to more than energy, but I'm speaking in terms of what I deal with.

For our program of BOMA BESt, it's usually an environmental officer who's doing the programming for waste use, water use, energy use, but it's the property manager who understands the building best. I think there's a need to connect those more or use the property manager to play this role as opposed to an environmental person, just because the day-to-day tactics of things that you can do is really something a property manager or a building operator have much more hands on in.

Your environmental person can certainly play a role in marketing in helping the tenants, the physical human beings in the building, to better optimize the infrastructure that's been put in place for recycling, turning off your computer, turning off your power bars, turning off lights if you leave a room if there aren't sensors that do so. They can certainly play a role in that.

I found it piecemeal in that sense.

[Mathieu Ravignat, NDP, Pontiac, QC]

Perhaps the other witnesses would like to comment on this.

[Brian Staszenski]

I can add something.

We do a lot of training and working with all the different people in charge of different parts of the buildings. You have facilities, capital planning, the operations people, and so forth. They deal with their responsibilities in silos, and they don't talk. There's no coordination. We want people that run facilities to think the other way. If I'm doing capital asset planning, I want to talk to the energy efficiency people to see if I can't utilize their solutions and expertise to buy down the costs of doing capital asset planning. You need a team approach versus the silo approach, and that's the problem. If Public Works sets the standard for performance, and they run it across all the different departments, that will help as well.

[Doug Cane]

I'll add something to the comments you've received so far in your question. The work we did in the early 2000s for Public Works, that was done for their technology directorate. I don't even know if it exists any longer. I do know that we always wondered why there wasn't any implementation following some of the work we had done. We later did it for retrofitting existing buildings, too. There was another study done at that time. They're dealing with real estate division, I guess. There is some difficulty there, maybe, taking some of the ideas and putting them into effect.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you very much. That is very thought-provoking.

I would like to go back to Mr. Karakasis to discuss consumption habits and the fact that we do not have a consistent approach in that area.

Do you know what kind of measures the Department of Public Works and Government Services is implementing to change the habits of clients, consumers, public servants and others?

What kind of an approach do you suggest?

[Dean Karakasis]

I won't claim to be an expert on all they things they do. They certainly have campaigns. They have posters up: turn off the lights when you leave the room; don't use water more than you have to. They certainly have that, but I wouldn't be expert in a lot of what they do.

What we advocate is measuring what they do so that they can feed it back to the staff. We know that this doesn't happen. Consumption is not relayed back to end users. If end users don't know what the consumption is, how will they possibly know how to reduce it?

[The Chair, NDP, Pat Martin]

Thank you, Mathieu. That concludes your time.

Next, for the Conservatives, we have Mr. Bernard Trottier.

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

Thank you, Mr. Chair.

I'd like to get some points of view from the witnesses. I really appreciate your testimony. We all recognize there are opportunities for the federal government to save money and provide all kinds of environmental benefits by having more energy-efficient buildings. The challenge is overcoming the hurdle when it comes to capital and cashflow, of making improvements, especially where the federal government is a tenant, which is the majority of cases.

Energy performance contracts have been proposed by a number of witnesses. I'd like you to describe your experience with that. In an existing lease, which could be a long-term lease, public sector or private sector, where the tenant proactively suggests a retrofit, everything is a negotiation on that particular building and the length of the lease. The tenant offers to put money into the building. In exchange, the landlord agrees to reduce lease rates. They work out the cashflow details through the energy performance contract.

I'll start with Edmonton, because you're addressing the committee remotely. Are there successful instances that you've seen in the use of energy performance contracts in a tenant-leaseholder situation?

[Brian Staszenski]

Well, I have a lot of experience in that world, and it's tough. It's tough, if you're the tenant, to engage an ESCO, an energy service company, to do an energy performance contract; that has to be done by the owner. You have to say to the owner that either they upgrade the facilities or you're starting to shop around, but that they can pass on those upgrade costs through the triple net approach, and you will pay for it that way. They have to take the responsibility and make the changes.

In the case where you own the facilities, the best thing Public Works could do is have a revolving fund set up for the use of all the departments to access capital, create savings, and pay that back, interest free or whatever. That would be a great opportunity to create some opportunities in your existing buildings that you own.

There's the other part that I'll add really quickly. With all of the occupants, one of the best ways to catch their attention and get them engaged is to have a very simple shared savings program where they may get 10% of the savings to spend on whatever they want to do on their facility. You create a carrot. It's money: “I'm willing to turn off the lights, okay, and I care about the environment, but hey, I'm also going to get some of the savings.”

There are some ideas.