Evidence of meeting #47 for Natural Resources in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was grid.
A recording is available from Parliament.
3:30 p.m.
Conservative
The Chair Conservative Lee Richardson
As usual, we'll start right on time.
Welcome to the 47th meeting of the Standing Committee on Natural Resources.
Today, in our continuing study of greening of electricity consumption in Canada—energy savings and energy efficiency—we will hear from Net-Zero Energy Home Coalition and from Canada Mortgage and Housing Corporation.
With a couple of exceptions, I think we're all in place, so we will begin.
Have you discussed among yourselves who might lead off?
3:30 p.m.
Gordon Shields Executive Director, Net-Zero Energy Home Coalition
I thought we'd defer to the department to lead off the committee, but I'm happy to go ahead. It's up to you.
3:30 p.m.
Conservative
The Chair Conservative Lee Richardson
Maybe while we're hoping we might get a couple more Liberal colleagues to join us, I'll introduce the people who are here.
From Net-Zero Energy Home Coalition, we have Gordon Shields, the executive director; Andrew Cole, supervisor of energy conservation with Hydro Ottawa; and our old friend, Simon Knight, who of course is the president of Climate Change Central. Welcome again to the committee, Simon; it's good to see you. And from Canada Mortgage and Housing Corporation, Douglas Stewart, the vice-president of politics and planning.
If you're ready to begin—
3:30 p.m.
Executive Director, Net-Zero Energy Home Coalition
I think we've decided how we're going to proceed.
3:30 p.m.
Conservative
The Chair Conservative Lee Richardson
All right.
We'll start with Gordon Shields on behalf of Net-Zero Energy Home Coalition.
3:30 p.m.
Executive Director, Net-Zero Energy Home Coalition
Thank you very much, Mr. Chair and ladies and gentlemen.
I am delighted to be here with you today.
Our coalition was founded approximately three years ago, in 2004.
We've been around since 2004, approximately, and have continued, to date, for about three years. It's an eclectic mix of companies and representation, ladies and gentlemen.
What we're here today to try to share with you, in the context of your study, is the concept of net-zero energy homes. There is a tremendous amount of opportunity that exists here in the country to grow the on-site generation sources we have at our disposal today and to expand the opportunities for conservation and sustainable housing longer term.
As to how that fits in with green electricity, I'll just elaborate a bit further with some slides. There appear to be many; I brought a lot of images along as illustrations so people could see what exists currently in Canada in some other contexts with respect to hydro utility, load usage, and so on.
The coalition, as I said, started back in 2004. It is an eclectic mix of people who believe in the opportunity to advance on-site renewable energy generation, recognizing that energy efficiency is the most important stepping stone to achieving greater deployment of on-site green technologies.
If you look at our vision right now, we are trying to aim at 2030 as a timeline for net-zero energy homes to find themselves as part of mainstream deployment in the country. We look at that timeline because we are suggesting transformational change in the marketplace. If we begin now—and that is the urgency, to begin now—we are looking at opportunities to actually see mainstream deployment of these kinds of homes.
The reason we are reflecting that target is because it's a target shared by other nations, such as the United States, right now. We are looking at the time now and the importance of acting sooner rather than later in an effort to accelerate introduction of this kind of housing, and indeed the kinds of technologies required to find ourselves where we want to be in 2030.
A net-zero energy home is a concept that's not new. We didn't reinvent the wheel by any stretch. Rather, it was an opportunity to bring forward a concept of a house that produces and consumes the same amount of energy over a given year. It is simple in nature. In principle, it is a house that is grid-tied. The electricity is generated on site and it's also consumed from a utility. Any excess energy that's produced on site is returned back to the grid.
A complete net-zero energy home—you're talking about heating, cooling, and the electrical loads together—is completely feasible. Indeed, it is not only happening in countries around the world. There are examples emerging here in Canada as well.
One important thing to remember, ladies and gentlemen, as you look at green electricity is the importance of optimization in the building envelope. The fact is that on-site green energy technologies are challenged by cost barriers, to date, and will remain so for a while. However, if we leverage energy efficiency effectively, looking at the building envelope, you can address the cost-effectiveness of on-site generation more effectively, and indeed more quickly, once you get the building envelope right.
The fact is that when you look at energy efficiency in a net-zero energy home, we're talking about a home that has a minimum R-2000 rating. For many of you who know about energy efficiency in the housing market today, R-2000 is a recognized brand with EnerGuide ratings of around 80 to 85—which is the high end, but 80 is a minimum—as an opportunity to reach net-zero energy.
We have a tremendous number of builders already who actually build these styles of homes. You have Energy Star homes as well. The simple premise now is that if you can have builders who are doing Energy Star and R-2000 homes, the next step, once you get the building envelope properly designed, is on-site generation of electricity or thermal-based energy.
Just looking at another slide, when I talk about optimization of the home, there are a number of steps to be followed. This includes orientation of the house and the passive solar designs involved in that. The importance of passive solar designs shouldn't be underestimated. The fact is that if you design the house properly, optimizing the accommodation of passive solar and solar domestic hot water systems, you can actually reduce the energy requirements, the energy-load demand, on the home for space heating, and indeed for the purpose of cooling a house, by up to 40%, 50%, or 60%.
Once you look at the envelope and the house as a system when you're addressing issues of home optimization, the house will naturally gravitate to the next step, which is the on-site generation of electricity.
Regarding the housing stock, in one of the images I provided for the committee, we have a number of brands—Energy Star and R-2000. Now there's EQuilibrium, about which CMHC will elaborate a bit. This gives you a perspective on what the housing stock today provides as energy efficiency.
As I said earlier in my remarks, where you can get a base energy efficient home of about 80% to 85%, the next step is on-site generation, such as solar photovoltaics, solar domestic hot water, or geoexchange systems. We're not that far from it right now. We're very close to actually being in the position to encourage builders to take that next step. They are looking for that next market niche. We have so many builders doing Energy Star and R-2000 homes. This next opportunity is what we're trying to help facilitate in the building market right now.
One of the slides following this one is a general schematic of all the net-zero energy options, as we refer to them, for integrating into such a home: solar hot water, to PV thermal systems, to the importance of conservation, to active solar heat pumps. There is a variety of choices.
We have to remember that where we are to date in this country and in other countries is on a path toward net-zero energy homes. It's not an overnight path. The choices we're looking at on this schematic are what are going to be offered builders: the opportunity to produce electricity and thermal-based energy at the residential level.
One image that I provide here is solar application. It sort of quickly breaks down for everybody the components of how solar would be applied in the home. We can revisit that if you wish, and we can elaborate a bit more on the context of solar energy and its application. I provided that and a geothermal image to give some context of how the systems work.
I believe you've heard from the GeoExchange Coalition and the Canadian Solar Industries Association already. Both of them are members of the coalition. We are actively working at getting their insight into how these homes can be applied more widely, using these kinds of technologies that are conventional in nature and not future technologies.
Why have we looked at net-zero energy homes, or why does the coalition exist? I talked to this a bit earlier. It's about a group of companies and forward-looking people who are trying to advocate on-site generation. But at the end of the day, the home and the car are the two most widely used tools for consumers and taxpayers. That's where we spend all our time and energy.
If we can turn the home into an energy producer, rather than just an energy consumer, we'll find ourselves on a path to greater sustainability of communities and a longer-term policy or paradigm shift in the way we produce and consume energy in this country. Europe, Japan, Asia, and countries across the world are applying similar paradigm shifts, and I think it's time to catch up.
At the end of the day, we're looking at roughly 200,000 new homes a year that consume on average 25 kilowatt hours a day. If you look at that consumption, roughly speaking, you have almost 1,800 megawatts of demand every year on our existing energy infrastructure.
Ontario is challenged by its energy infrastructure right now. Other provinces are challenged, for a variety of reasons, with their existing energy infrastructure. Whether that's related to climate change or other air emission issues, the fact is that we have to adjust. We are trying to adjust, but there are challenges. A lot of this resides in the way consumers use and consume their energy at the home level.
From an environmental point of view—and I know this is not the objective the committee is studying—from an impact point of view on emission reductions, 10 megatonnes in greenhouse gases per year are associated with the housing infrastructure we have today. So with 200,000 new homes per year added to that environmental footprint, we're drawing a megatonne a year from our credit card for the environment. We have to find a way to change things.
I mentioned to everybody earlier that there are other countries proceeding along this line, from the Netherlands to Japan. Now, just looking at the U.S., next door, you look at some of the drivers that are pushing the United States now, which is pursuing a net-zero energy home strategy, which we'd like to see here in Canada. These are some of the drivers, from price increases of natural gas, at 42%, to electricity at 17%.
This is an energy security issue in the United States. It's an energy security issue here in Canada. But when you look at what they're achieving to date, we're asking ourselves, why can't we catch up? We have conventional sources, and we have the capability with home-building technology and capacity. It's a question of nurturing it.
I've provided you with a couple of slides of homes where you actually have zero-energy home communities now. As I said to you earlier, this is not rocket science; this is something that's happening. And it's a question of whether Canada is going to be able to catch up.
On a few slides I've provided a perspective on the peak load demand and the peak shaving that these kinds of homes have as a benefit to the utilities and to our energy infrastructure.
One of the slides here follows the pictures of the U.S. examples. We have one indicating a peak hour in the winter and one that is a peak hour in the summertime. During the peak hour in winter, and equally so in the summer, you can look quickly and just note in the legend beside the images I've provided here that the net-zero energy homes on both occasions, at different times in the day, are providing a net benefit to the energy grid in itself.
In the United States, electricity is used widely for both space heating and cooling, as well as for general energy loads, plug loads, if you will. So there's a higher demand for electrical consumption. Here in Canada, whether we're talking about a net-zero thermal home or a net-zero electrical home, the fact is that you could have similar benefits in peak load reductions with net-zero energy homes across the country, despite the varying climatic conditions.
Being as brief as I can here, recognizing that I only have a few minutes left, I just wanted to touch on the Canadian content. On one of the slides here you'll see electrical demand on Canadian utilities. I just provide that from Milton Hydro, which was interesting. This isn't during the blackout period. If you look at the red zone, which is all consumers, and the grey zone, which is the commercial-industrial, oftentimes we blame industry for being the huge consumers on the electricity grid. In fact, during the blackout you'll notice the peaks in red. That was the consumer who was pulling demand on the grid at a point in time when there was a severe shortage of energy.
Milton Hydro joined our coalition to try to flatten out those peaks, hoping that we could find a resolution to their challenges around peak load shaving. And it's for that reason utilities today are challenged by issues such as this and where a net-zero energy home can help fill an important component in addressing infrastructural load, demand load, as well as maybe even different business models for the future.
In Alberta right now, Avalon Master Builder, of which I have a few images, and also the Riverdale net-zero energy home in Edmonton, Alberta, are examples of net-zero energy homes that are happening, albeit in western Canada. There are homes in Ontario as well as part of the CMHC EQuilibrium demonstration initiative.
The fact is that we have the capacity, and these homes are going up, or are starting to go up, sooner rather than later. But they are one-offs. They aren't fast enough; they aren't part of the mainstream builder community opportunities that we're looking forward to seeing. And the Net-Zero Energy Home Coalition is about advocating and pushing for the wider deployment and dissemination of these types of homes.
Marshall Homes is just another example I'll leave you with. This is a typical home builder, a medium-scale builder, where geoexchange systems are being installed. I think you might have received some information from the Canadian GeoExchange Coalition on this, but I just can't help but reiterate the fact that this is a builder who, without incentive at this stage of the game, has gone ahead and installed these systems into his homes. That's not to say that incentives aren't important at this stage of the game, but there are builders with capacity and interest. The market is changing. We just need support at the right levels of government—federal, provincial, and municipal--to help accelerate this into the mainstream marketplace.
In conclusion, I just wanted to leave this with the committee. There is a slide with a set of suggestions for a framework to support net-zero energy home deployment.
The fact is that we have a need for optimization. We have capacity, as I said, but we need more R and D. There's a demand for builder experience, and we need to support builders, albeit at the provincial jurisdiction, on some of the issues around codes and labour and skills and training. The fact is that I think federal, provincial, and municipal bodies can all cooperate to help accelerate the builder community's interest and capacity to support these kinds of homes.
There's a definite need of financing for on-site generation, and that can't go underestimated here. There is a policy gap at the federal level right now for on-site generation. There is nothing to support on-site generation in the new residential marketplace. We have been advocating for that for a long time, and others have as well.
There is for the retrofit marketplace, but if we can begin to look more closely at the opportunities that exist for the new residential marketplace, we'll be able to achieve what other countries are achieving; that is, they're not going to be drawing on their credit card, their environmental credit card, every day, every year, with an increasing environmental footprint from the residential marketplace. If we're able to help support on-site generation in the new residential marketplace, that's an important step forward, and it's also remembering that we're not trying to change labels or actually remove what we already know, and that is established brands such as R-2000 and Energy Star. We should be leveraging those opportunities. Builders already know how to do these homes. We're not trying to change what they've already gotten accustomed to now, but we are trying to leverage their knowledge and say we can take it a step farther, and if you want to help, here are the opportunities, and let the market decide how best to accelerate the on-site generation sources.
Finally, one last item. This is what we proposed in the past, and we hope the committee members will revisit this as an issue for consideration, and that is the deployment strategy. One simple tool we often suggest is the use of the GST abatement. It's a tax instrument, but I think it's a simple use. Right now in new residential construction, 2.5% of the GST is off a new home. Our assumption is that if you can take 2.5% off right now for new residential purchases, you could scale up the use of GST abatement according to a home's energy efficiency or use of on-site generation. So if it's not 2.5%, it may be 3.5%, depending on the amount of energy that is provided on site or the energy efficiency level of the home that's in excess of what the standard is.
So that, as a consideration, combined with any PST abatement or other tax instrument, I think would be of enormous benefit to what we're trying to pursue, a net-zero energy home deployment by 2030.
Thank you very much, and I look forward to your questions.
3:50 p.m.
Conservative
The Chair Conservative Lee Richardson
Thank you, Gordon.
It's a good start.
Now we're going to go to Doug Stewart, who is not in fact the vice-president of politics but the vice-president of policy and planning with Canada Mortgage and Housing Corporation.
Doug.
3:50 p.m.
Douglas Stewart Vice-President, Policy and Planning, Canada Mortgage and Housing Corporation
Thank you very much, Mr. Chairman, for inviting us to appear before you today.
I understand that at previous meetings my colleagues from Natural Resources Canada provided you with an overview of electricity supply and consumption in Canada, some of the responsibilities of the federal and provincial governments, and some of the federal government support programs for meeting the challenges of the electricity sector in Canada.
I would like to focus my time today on some of the complementary support that Canada Mortgage and Housing Corporation offers to promote sustainable housing and communities in Canada. I'd like to start by giving you a brief overview of CMHC, its mandate, and areas of activity.
We are a crown corporation, and we were created as Central Mortgage and Housing Corporation back in 1946. We stayed as Central Mortgage and Housing Corporation until the late seventies. We were created in 1946 to deal with the severe housing shortage that was faced by the returning veterans at the time and to put in place a modern housing system. Over the years we've been proud to play the role of Canada's national housing agency.
Currently we are active in four main areas. The first is housing finance. Through our mortgage insurance and securitization function, CMHC helps to ensure that Canadians have access to mortgage financing at the lowest possible cost, no matter where they live in Canada.
The second area of activity is housing assistance to low-income Canadians. On behalf of the federal government, CMHC provides, mainly in partnership with the provinces, assistance to low-income Canadians who can't afford housing on their own.
The third area is housing research. Through the provision of information to governments, industry, and consumers, CMHC helps to make housing markets work more efficiently and encourages the production of high-quality, affordable housing.
The fourth is export promotion. CMHC assists the Canadian housing industry in selling its products and services abroad.
While my comments today will focus on CMHC support for energy conservation through research and information transfer, all four areas of activity contribute. For example, borrowers using CMHC mortgage loan insurance can obtain a 10% rebate on their insurance premium when they buy or build an energy efficient home or make energy-saving renovations to an existing home.
Through CMHC's residential rehabilitation assistance program, commonly known as RRAP, we help low-income households repair dwellings to minimum health and safety levels. At the same time, these repairs can include renovations and retrofits to improve energy performance of the house.
On the export side, CMHC, in partnership with NRCan, has helped Canadian energy efficient housing technology be exported to other countries. A good example is the Super E Home project in Great Britain.
Let me turn to our research and information transfer role. We offer a range of publications on sustainable housing and communities on topics such as energy retrofits, passive solar techniques and design, household water efficiency, energy use in off-grid housing, and new models of sustainable community design. This information helps the housing industry, governments, consumers, and others make informed housing decisions.
Perhaps the most effective means of information transfer has been the demonstration project. Over the years we have done a number of them, and our experience shows that when consumers can actually see or touch innovation they are far more likely to understand it. The logic is that consumers who are more aware and comfortable with an innovation are more likely to demand it in the marketplace.
I'd like to say a few words about two demonstration projects aimed at advancing energy efficiency in housing—one that was extremely successful and one that is just under way and holds great promise.
The first, our healthy housing demonstration, began about 15 years ago and brought together much of the research work we're doing in the area of resource sustainability in housing. CMHC's healthy housing initiative was truly innovative, as it balanced occupant health, energy efficiency, resource efficiency, environmental responsibility, and affordability. Through CMHC's healthy housing design competition, we demonstrated to the public and the housing industry that it was possible to build housing that is healthy both for its inhabitants and the environment. For example, the Toronto Healthy House was designed to be self-sufficient and included features such as solar panels, high-efficiency windows, water-efficient fixtures, potable water from rainfall, and waste water treatment on site.
CMHC is now building on the healthy housing principles through a second major initiative. EQuilibrium, launched in the fall of 2005, will demonstrate the next generation of environmentally sustainable healthy housing.
At this point, I'd like to acknowledge the impetus given to this project at its outset by Gordon Shields and the Net-Zero Energy Home Coalition. They were truly instrumental in helping us to get this initiative off the ground.
This initiative brings together the private and public sectors to design and produce highly energy efficient housing that provides healthy indoor living for its inhabitants, produces as much power as it consumes on a yearly basis, and reduces the environmental impacts on land, water, and air. EQuilibrium homes—EQ homes—incorporate commercially available integrated on-site renewable energy systems to provide their own supply of clean green power and deliver electricity back to the grid.
This past February, the Human Resources and Social Development minister, the minister also responsible for CMHC, the Honourable Monte Solberg, announced the 12 winning EQuilibrium teams. Each winning team will receive financial assistance from CMHC to offset costs, such as project documentation, performance testing, and publicly demonstrating the homes. CMHC is working with the winning teams to provide technical and promotional support and will monitor and report on the performance of the houses. The demonstration homes will be open to Canadians to view in 2008. Through EQuilibrium, Canadian consumers will be more aware of the choices that are available today in the marketplace. At the same time, it will show how homeowners can benefit from lower energy bills.
The folders that we have distributed contain information on the EQ initiative. We've also included a bibliography of some of the research reports and publications that CMHC offers. I'd also invite you to visit our website or our Canadian housing information centre, which is the largest housing library in Canada. It's located here in Ottawa at our national office.
I'd like to thank you again for inviting us to speak today. We'll be happy to take your questions.
3:55 p.m.
Conservative
The Chair Conservative Lee Richardson
Thank you very much, Mr. Stewart. I'm sure we'll have lots of questions.
I never get a chance to ask any, so I'm going to do it right now. Some of this came up during our recent visit to an electrical generation.... That was this business of putting electricity back on the grid. People who have some generation at their home or in their community, if they have a surplus at some point, are able to put it back on the grid. It was my impression when we were visiting Churchill Falls that they told us they can't store electricity, so they only put so much electricity on the grid that will meet immediate demand. So how do you work this in? How do you have a number of small producers of electricity able to put it on the grid? Where does it go? And if everybody were on such a plan, who would be using the surplus that you put on the grid?
4 p.m.
Andrew Cole Supervisor, Energy Conservation, Net-Zero Energy Home Coalition
You're absolutely right that traditional electricity can't be stored. You can charge batteries with direct current electricity, but that's more for off-the-grid homes. That way they can be self-contained. The idea of enhancing the grid by diversifying your source of generation is that you actually have a stronger grid by having generation throughout different parts of the grid.
Traditionally, we've put things in large centralized plants and then distribute out, with the inherent line losses, etc. The idea that we could ever see so many net-zero homes that would oversupply the grid is probably a far-reaching problem that we'll never get to, because as we add these homes, we add many other energy-consuming industries to take up the slack. So there will always be a lag, I believe.
From a utility standpoint, there are many questions about ensuring the safety of the grid, so if there is a problem in the grid you would ensure that producers aren't feeding the grid while someone is actually up the pole trying to fix the grid—that sort of thing. Those are more logistical questions, but that's quite doable with building in the logic with the interconnects to the grid.
4 p.m.
Conservative
The Chair Conservative Lee Richardson
Great. We're learning more every day.
We'll begin with Mr. St. Amand.
4 p.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
Thank you, Mr. Chair. Thank you, gentlemen, for your presentations.
Mr. Stewart, you mentioned a 10% reduction in insurance premiums. Did I hear that correctly?
4 p.m.
Vice-President, Policy and Planning, Canada Mortgage and Housing Corporation
Yes.
4 p.m.
Vice-President, Policy and Planning, Canada Mortgage and Housing Corporation
If you were a purchaser of a new energy efficient home, you could document the energy efficiency of that home. There are a number of ways to do that. First of all, if it is a certified R-2000 home, you would qualify. Second, if it is a home built under a number of provincial programs that are similar to R-2000, it would also qualify. You could take advantage of NRCan's EnerGuide rating system and have a rating done of the home. If the home was rated at an EnerGuide of 77 or more, you would qualify for a reduction in the insurance premium.
4 p.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
Do you mean the private premium or—? What insurance are you talking about?
4 p.m.
Vice-President, Policy and Planning, Canada Mortgage and Housing Corporation
This is mortgage insurance for a home buyer who is trying to borrow more than 80% of the cost of the house.
4 p.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
You mean CMHC, that insurance component, but there's no movement among private insurers or private carriers to reduce premiums.
4 p.m.
Vice-President, Policy and Planning, Canada Mortgage and Housing Corporation
Oh, sorry. There isn't, for general house insurance--not that I know of.
4 p.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
Mr. Shields, what's a bit frustrating, I suppose, for you, and I think collectively for all of us, as I understand your presentation, is that the technology exists as we speak—the technology, that is, for NZE homes exists as we speak.
4 p.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
It's a question of providing incentives to home owners, builders, and society at large in order to fully implement that technology.