Natural Resources Committee on March 12th, 2009

[Dr. Karen Farbridge]

I think the integrated urban energy system fits well in a country like Canada. It's a set of tools, methods, and energy sources, so it's a tool box that you can pick from. It very much depends on the size of your community, the location of your community, and its geography. We don't have enough sun as compared to Okotoks, so we couldn't use solar in the same kind of way. It really is a vision that all communities, regardless of geography, could fit into, and all communities could fit a plan. The strategies I showed for Guelph will look very different in different provinces, in different parts of the country, because of geography, climate, etc. From a vision point of view, it's a flexible model, a template that can be used by other communities.

Regarding the second part, the funding of it, I have to say the federal government really did start this in Guelph. I participated in a community energy planning mission to the Netherlands that was in part funded by NRCan. I know that some of the communities here participated in that as well. That was a great example of seeding an idea across the country and seeing it take roots in the country. Speaking to what people have said about raising awareness and providing opportunities for people to come together to share this information, the research and development that need to go into these technologies so that they can actually move them—not just the research and development but the commercialization of them, the actual implementation of them on the ground—represent a key role and key place where the federal government could really be helpful.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Thank you.

My question is for Mr. Pander from the City of Vancouver.

The buildings that make up your Southeast False Creek project are all low-rise structures. Is that merely the way you have designed them or would it be hard to apply the same energy savings programs to high-rises?

[Sean Pander]

No. The fact that we didn't choose to go with what we call the Vancouver model, which when you look at the north shore of False Creek is the podium development with a point tower, was a decision made by the council at the time to actually create a more distinct neighbourhood without the same look. The density is very comparable. In terms of the number of units per acre, we've gone with more of a Berlin model, in which we have more 8-, 10-, and 12-storey buildings on the site instead of the high-rises. The heat load density, the amount of heat for customers, and therefore the sales concentrated in that area are the same. So the model will work.

The higher density you go, the more effective the economy is for these types of systems. In this example again, skyscrapers would work fine. We are actually doing some research now to look at converting the central heat system to a renewable source and to look at the viability of starting to hook up some of the existing downtown modes. Southeast False Creek, again, has quite a high density. East Fraserlands has slightly lower density, but the economics still worked out there.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Thank you.

Mr. Dolan, in your presentation, you stated that people are paying an additional $136,000. What do you mean by that?

In the section entitled “Role of the Federal Government“, you mention tax credits. Would these be tax credits intended for businesses or for individual taxpayers? What exactly do you mean here?

[Brendan Dolan]

The $136,000 on a per-home basis was the total capital cost of developing the solar energy system. That cost was primarily funded through all the funding partners, primarily NRCan. If people had had to spend their own money, they would have had to pay $136,000 more for that home. They didn't because the project was primarily funded by the government in order to ensure there were no risks. Customers wouldn't have bought the houses if they had to pay that much more on something that wasn't yet proven.

I'm not sure if tax credits is the right terminology. I really believe that these technologies need to be tested before they become commercially viable. In order to do that, they need to be kick-started through some types of incentives. That funding is where we see that government levels can help these projects get off the ground, be proven, and then become commercially viable once the risks and obstacles and challenges are overcome.

[The Chair, Conservative, Leon Benoit]

You have thirty seconds.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

I haven't had the opportunity yet to speak to Mr. James. I want to get to all of the witnesses.

Regarding financing methods, you mentioned a multiple partnership structure. Are you talking about public-private partnerships? What is the relationship between these different partners? How does financing work when multiple partners are involved?

[Jamie James]

I think you're referring to the prêt vert. We have something we call the green loan, which we developed first for our single-building projects in Calgary and in Ottawa. For this we assign a debt to the condominium or strata corporation of the buildings, and they pay a certain amount of money back to the lender over time. It's fully privately financed. We funded the very first loans ourselves, out of our pocket, and then we syndicated that and sold it to another private lender.

In Toronto, we've been doing this with the Toronto Atmospheric Fund. We have $1.5 million committed by them to lend to Tridel, a large high-rise developer in Toronto, and based on that model, Tridel has about $10 million worth of green financing on its various projects.

In Montreal, it is happening on Nuns' Island.

With the exception of the participation of the Toronto Atmospheric Fund, which is there to try to stimulate the market on this, these are going to be private-to-private transactions, and we're working closely with several construction finance lenders to see if we can make this an institutional approach to incremental cost financing.

Does that answer your question?

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Yes, thank you.

[The Chair, Conservative, Leon Benoit]

Merci, Madame Brunelle.

We go now to Mr. Cullen for up to seven minutes. Go ahead, please.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Chair.

I agree with Mr. Regan in terms of where this topic could go. I said earlier to some community members we had in front of us that we need to move you folks from being the exception to being the rule. That is, I think, something we need to engage in as a committee. We're looking at some of the best examples across the country of how to do this. I almost want to drag in front of us the communities that are at the other end of the scale and find out what's going on with them and what's stopping them.

I'm picking up on a few comments that were made today about the vision component. I suspect, whether it was Victoria, Okotoks, Vancouver, or Guelph, that there was some political vision involved with this, that there was some mandate given to the political leadership by the voters, or an assumed mandate, that these risks would be taken over time. You're talking about a 10- or 15-year payback or realization with people who are elected for three years and who then reach the re-election point again and again. Maybe the federal government has to slide into that place.

I want to focus in a little bit. There was a comment, and I'm trying to recall who it was from. It might have been on the Victoria side. There was a comment that having to pay for the energy and assume the carbon costs of that energy--you folks had made some commitments to Victoria--made you become more efficient, become more diligent, in the actual structures that you built. Would Canada having a price for carbon, for greenhouse gas emissions, facilitate some of the discussion that we're having here?

[Jamie James]

I think to the extent that carbon today is an unpriced externality, if we could assign a value to it, that would give the private sector another tool to add incremental financing to projects like this and would have, I think, quite a significant impact.

Jonathan also has some thoughts on that, which he perhaps would want to share.

[Jonathan Westeinde]

I think that's a very important aspect in the sense that our reasons, for example, for going forward were politically driven at a municipal level, but were also altruistic in the sense of what our company is looking to have stand out. In the normal development infrastructure industry, there's no reason to do this because there's no competitive landscape, at the moment, that's sort of encouraging or setting a playing field for this to happen. When there's a price to carbon, there's a clear mandate to sourcing of both energy conservation and energy sources from renewables, as you'd see in the EU and places like that. That basically creates a level playing field and a competitive landscape that then people will react to, which is very important.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I'll go to Mr. Pander for just for a second.

You mentioned something around the use of the building codes to ratchet up or down, depending on your reference, the types of structures that you folks are going to be building, not just here but across the city. We're engaged in the national scene. In my experience here, the National Building Code is very rarely referenced. It's not used. Cities go about it their own way, and provinces go about it their own way.

If we're looking at the national impact of having better buildings for future generations, could you tell me how critical the code was in the case of Vancouver, for you folks, in getting done what you wanted to get done? I know it caused a lot of hue and cry initially from the builders in Vancouver when the code was reassessed and re-delivered, but how critical is the tool?

[Sean Pander]

On codification, whether you're doing it in local government or provincial government, or if there are federal tools, it is really important but it's not the first step. The first step is really fostering the leadership. We can invest extra in our own facilities because we recover those costs. It's actually a good investment of taxpayers' money, because you know you're going to own city hall or Parliament or whatever for a long time.

There is a role for that leadership, but on the codification, once you've built the industry capacity to.... Can the architects design it? Can the suppliers get CSA approval on the machine? Can the trades seal it tight enough? Before you codify, you have to build that capacity, and there are tools to do that. The code is really important, so that it's not a one-off example here or there.

What we struggle with a little bit in Vancouver is that we're actually a relatively small municipality. We're in a big metro area, but we have under 600,000 people. We actually push the provincial building code. In our code, we referenced other codes. The codes that we referenced are not sufficient to the targets that we're trying to reach.

People often reference ASHRAE, which is badly flawed. ASHRAE 90.1 specifies performance of mechanical heating, ventilating, and air-conditioning systems. It's not very good. As for an update, I know there's some work under way, but the model national energy code for buildings is way out of date.

On your question about carbon pricing, I think the pricing of carbon in B.C. now is forcing us to change how we do our own civic facilities. I think there are other examples, though. The Borough of Merton, outside London, applied something called the Merton rule. In the building code for that borough, as a way of driving innovation, they made a minimum requirement for local renewable energy. Because that's expensive, what that did was force everyone to reduce their energy demands. They didn't want to have to build a big solar panel system or whatever, so it got the building community to be very innovative to reduce the loads--

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

It gets back to that consideration of how, once the rules are in place, it forces a rethink of your building design.

[Sean Pander]

Exactly.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Your Worship, with respect to not so much the politics but the attractiveness of a community that goes through the process that Guelph has gone through, I don't want to assume this, but I assume that Guelph highlights what Guelph is going through to people who are considering moving or living in different places. How much a part of your mix is it when you talk about your city to other cities, to other communities, and to your own citizens? Is it prevalent? Is it something at the back, a policy wonk kind of thing, or is it front and centre in terms of your promotion?

[Dr. Karen Farbridge]

No, it's very much front and centre in quality of life. It's tied into a larger sustainability program that includes water, waste, and waste water, etc. It's a very key part of our community. The fact that in 2004 we were able to call up a group of organizations, say that we needed a community energy plan, and they all said they would be there--that spoke to that community support for it.

We also see it as completely tied to our local growth strategy. It's very hard to talk to people about intensification and density, but when you start talking to them about how that can leverage some of these energy goals, you start getting people interested in a discussion around urban development and urban intensification. We found it very useful in that regard, and then from a competitive point of view as well.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Cullen.

We'll go now to the government side, and Mr. Anderson, for up to seven minutes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, Mr. Chair.

We talked a little earlier about the longevity of projects. I don't know if you said it, but somebody said that there's a 25-year life cycle in projects and that it's at least 12 years before there's any start to the recovery of the costs.

Have you done any work on the lifespan of the various technologies in your projects? I guess this question is more for the folks who are well along in projects. Solar panels, I'm told, have to be replaced after a certain number of years. What is the lifespan of the technologies you're using in your projects?

[Jamie James]

For Dockside, the Nexterra plant can be serviced very effectively on-site. We're not looking at as long a payback as for a solar technology or one of the more expensive renewables. The initial modelling, when we made our decision, was that we'd probably be somewhere close to just under 10 years, and the equipment should last at least 20 or 25 years, and then it can have major service overhauls without necessarily being replaced

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

You're using gasification of hot water then? Is that correct?

[Jamie James]

That's right.

[Jonathan Westeinde]

I would just quickly add that the risk element is the guesswork involved at this point, because there are very few systems to point to that have actually lasted the length of the projected life cycle so that you know you can count on them, as you could with a boiler or other standard equipment.