The numbers on this slide represent not a government analysis but an analysis that was done by highly respected energy researchers and modellers in the economy on behalf of all jurisdictions of Canada, a work group that was looking at demand-side management potential. We didn't give them any instructions to be reserved or timid or aggressive or bold. We simply asked them, to the best of their knowledge, with the best of the information that their models contained and what they expect to see for the future, what the demand potential looks like, and this is what they came up with. So this is not our own projection; this is what somebody out there, totally disinterested, brought back to us. That's point one.
I think what you're having trouble reconciling is the fact that we only see a reduction in demand of half the demand. So it's not taking the demand and reducing it; it's reducing the demand down to half of what it otherwise would have been. You say, “Can't we do better?” The royal architects and others see much more significant reductions possible, and we do too. The federal government has just led an exercise with the provinces to upgrade the model national energy code for buildings by 25%, with the hope, the very strong intent, and the objective that the provinces follow, because it's their jurisdiction, by putting in place building codes that are 25% more efficient than those today. We think that will happen in the very, very near term.
But what's happening is two things. That's building a new building, when you're doing it from the start. Only 2% to 3% of the building stock and the housing stock are new every year, so we have to deal with buildings that are going to have lifespans of 40, 50, or 60 years, and we have to deal with them in 2025. Most of them are already in place today. So then we're talking about retrofit potential, on which, of course, you can do 25% or 35% savings, but it's extremely expensive to do over a large scale of the economy given the number of buildings in Canada. So the study looks at that as well as the fact that it's much easier to do new than when it's existing.
But keep in mind the growth of the economy. If the economy weren't growing at the rate at which it's growing, we wouldn't have an issue. It would be easy to ramp down demand below current levels. There has been a 25% increase in households over the past decade and a half. There are more houses. The population is growing, and the houses are getting bigger as well. There has been a 25% increase in floor space for the commercial/institutional sector. We have a couple of factors working against us when we're trying to reduce demand, so I don't think we're being too timid. I think we're working with some very difficult realities and trying as hard as we can to bring technology and economics to bear to make the reductions that are necessary.