Natural Resources Committee on Oct. 30th, 2018

[Kaili Levesque]

I'll start by saying that I won't speak for my colleagues at Environment Canada.

However, under the pan-Canadian framework, the buildings have their own table. It's one of the pillars under the strategy, under mitigation: the building strategy, which we've coined “Build Smart”. It has been endorsed by all provinces and territories through the Energy and Mines Ministers' Conference process. It sets forward the shared commitment to meeting the milestones in the implementation set forward in the pan-Canadian framework.

The desire to have a truly pan-Canadian approach to this, where regional programs are able to reflect the national commitments that were made, is the commitment that was made and was endorsed. While there are some shifting realities, there are still significant investments being made at the provincial level in partnership through programs such as the low-carbon economy fund. To presuppose the outcome of that would be.... I couldn't speak to that at this point in time.

We also are seeing innovative tools being developed at the provincial level—such as Energy Efficiency Alberta, the Crown corporation there—in addition to any programs done through federal programming. They're also launching their own PACE program, which is property assessed clean energy. People are getting money up front to do the retrofit, and it's paid off through energy savings. We're seeing complementary efforts to federal, provincial and territorial programming in real time.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I just want to throw that out there as something that the federal government could just do across Canada and get the results.

On a similar vein, Ms. Ryan, you mentioned programs to make vehicles more energy efficient through.... I assume you're talking about gasoline and diesel-fuelled vehicles. Is there any federal plan to step up the game around zero-emissions vehicles, electric vehicles? I know that there's been some funding put through for infrastructure on charging stations, but right now the problem is that people want to buy electric vehicles and don't have the vehicles to buy. That's because some jurisdictions have these stepped programs demanding that retailers have those vehicles in supply.

I'm just wondering if there's anything that the federal government can do or should be doing to incentivize this—maybe have a stepped program saying 10% by this year, 50% by this year, etc., so that we can move there. This is the kind of bold action that we need to meet those Paris targets.

[Helen Ryan]

That's a good question.

[The Chair, Liberal, James Maloney]

You're going to have to answer very quickly.

[Helen Ryan]

Okay.

As part of the pan-Canadian framework, there is a commitment to working collaboratively with provinces in the development of a zero-emission vehicle strategy. That work has been ongoing and analysis has been done about the importance of moving forward on four elements. The first is the idea of needing the infrastructure to be able to support the vehicles, and my colleague spoke a bit about the work that NRCan is doing with respect to building that infrastructure. Then there's raising public awareness as well, because there are people who want to buy vehicles and there are others who don't have any idea what it means to drive a zero-emission vehicle. It is a slightly different driving experience, so there is the importance of raising public awareness.

The other element that was put forward was the importance of trying to reduce the costs of zero-emission vehicles because they are more expensive to produce and there is less uptake of them. There's a little tension in the market right now about how much is produced and how much is sold.

[The Chair, Liberal, James Maloney]

I'm going to have to interrupt you and cut you off. I'm sorry.

Thanks, Mr. Canning.

Mr. Hehr.

[Kent Hehr, Calgary Centre, Lib.]

Thank you very much, Mr. Chair.

I appreciate the comments of all the people who have come this morning to ensure we are trying to get the best information we can with regard to our move to a more energy-efficient future. We are a government that wants to see the environment and growing the economy as two sides of the same coin.

I was struck by Ms. Levesque's testimony. I may be paraphrasing here, but you felt that by implementing prices on carbon, by doing things more energy efficiently, we are increasing business competitiveness. Is that what I heard from you?

[Kaili Levesque]

No, it's by implementing industrial energy efficiency that we are definitely.... We do it on a voluntary basis though, whereby businesses can conserve. They work to reduce their monthly energy footprint and it impacts the balance sheet in dollars saved, so it does increase the productivity of the energy as an input. It's like any input in a business. You're getting more out of a unit but you're also allowed to keep more in your pocket for the bottom line of the industry.

[Kent Hehr]

In the long run, do you think more carbon reductions are going to be in the interests of businesses going forward? Do you think it will be more competitive to do it that way, rather than simply to leave it as business as usual?

[Kaili Levesque]

I'll also let the innovation angle speak to this. I won't speak to carbon pricing per se, but we do see the significant returns of energy efficiency at the industrial level.

I have a specific example. We found that in one case an investment of $50,000 through a contribution to an energy management system yielded $2 million in energy savings in a business over time, so when you look at a powerful multiplier such as that—and that's the energy management itself—it's not the big innovation pieces, but by supporting innovation in real time we're helping to reduce the immediate expenses while also making available technologies that will support the long term.

If I can use the analogy of seeing where the puck is going and skating toward it, in the short term the energy efficiency shores it up and in the longer term the innovation is the—

[Kent Hehr]

Ultimately you're seeing a move toward energy efficiency and carbon pricing and the like as being where the puck is going.

[Kaili Levesque]

I can't speak for carbon pricing. I can only speak to the energy efficiency side. We consider it the first fuel, so if you can manage what you don't need in advance through energy demand, that allows you to effectively build out your capacity going forward.

[Kent Hehr]

Okay, then maybe I'll ask a similar sort of question. In Alberta and throughout Canada, we've had major oil companies like Cenovus, Suncor, CNRL, Husky, Shell and pipeline companies like TransCanada and Enbridge all call for putting a price on pollution. They believe that's where the puck is heading, and that to be more efficient they need to see this come into play in this country.

Are you working with these organizations to move competitiveness issues forward, on how we're instituting a price on pollution and how it affects our businesses?

[Cynthia Handler]

Maybe I'll just very quickly say that, regarding carbon pollution—the carbon pricing issue aside—we are working with these companies in innovation. There was a budget 2016 program called the oil and gas clean technology program and we now have—I referenced it in my speaking notes—the clean growth program, which we've just launched. In both programs, as well as in work that NRCan does in its CanmetENERGY laboratories, we work to look for innovative opportunities to lower the cost of environmental technology through clean technologies in the context of the oil sands, as well as all of the other natural resource production sectors.

I will pass it over to you guys.

[Judy Meltzer]

I'll just make two quick comments on that topic.

With respect to explicitly pricing carbon pollution, we have seen significant support across different business and industrial sectors. I'd point to the Carbon Pricing Leadership Coalition, which is an international organization that has significant representation from a range of Canadian businesses, including the five big banks, the oil and gas sector, etc.

The other thing I'd point to is a bit more granular. Within the system that we're developing—again for heavy industry, which is what I'm focusing on—the output-based pricing system, we actually monetize the incentive, so clean performers will be able to capitalize and will sell their surplus credits as part of an emissions trading system. There is very clear economic benefit to clean performance, so they can capitalize on that.

More broadly—and maybe Matt will have more to comment on this—there is a very significant global economy for low carbon-intensive goods and services. Facilities, industries and businesses that are well positioned to take advantage of that would see an economic advantage.

Do you want to add to that?

[Matt Jones]

Maybe just very quickly, to wrap up on this point, the idea is to create the incentives or the requirements to move towards more efficient and lower emissions options and in so doing, there are cost savings associated with that. There's also the opportunity to create the solutions that can be exported around the world because the need to reduce emissions doesn't just exist in Canada; it exists elsewhere. There's great demand for solutions and Canadian companies are already starting to and increasingly providing those solutions and seizing economic opportunities associated with that.

[Kent Hehr]

I know that 45 nations and 24 subnational governments have moved towards pricing pollution and moved towards these types of standards. In your view, do you see that number increasing or decreasing in the future?

[Matt Jones]

Maybe I can go very quickly and then turn to Judy.

Thus far, that trend is only pointed in one direction and with some momentum. Certainly putting a price on carbon pollution is an efficient tool. People see the advantages of applying that tool and given the scope of emission reductions that are needed globally, it's hard to envision achieving deep reductions without using all the tools available to us, including putting a price on pollution.

[The Chair, Liberal, James Maloney]

We're going to have to stop there. Sorry, Mr. Hehr. We've run out of time.

To our witnesses, thank you very much. We only have so much time available to us each hour, so we're very grateful for you taking the time to join us today.

We'll suspend, while we get ready for the next panel.

[The Chair, Liberal, James Maloney]

Welcome back, everybody. We're all set to start with our next witnesses. We have the National Research Council of Canada, and Mr. Dumoulin and Mr. Nightingale.

Gentlemen, thank you very much for joining us today.

The process is that you will collectively be given up to 10 minutes to do a presentation and then that will follow with questions from around the table. You can deliver your remarks in French and/or English. There are translation devices there if you need them. I anticipate you will be asked questions in both languages.

On that note, the floor is yours.

[Michel Dumoulin, Vice-President, Engineering, National Research Council of Canada]

Thank you, Mr. Chair.

Thank you for the invitation to appear. My name is Michel Dumoulin, and I am the vice-president of Engineering for the National Research Council of Canada. I am joined today by Trevor Nightingale, the principal research officer with our Construction Research Centre.

We are very pleased to have this opportunity here today to speak with you. We would like to highlight the NRC's recent initiatives and contributions to help the Government of Canada and commercial asset owners achieve increased energy efficiency in buildings specifically, and realize compelling returns while contributing to our commitments to the Paris climate change agreement.

Initially, I would like to provide you with an idea of the scale and scope of the NRC. Our work covers a broad range of scientific and engineering disciplines, the outcomes of which have changed the lives of Canadians and people around the globe. We are a national organization, with some 3,700 highly skilled and innovative researchers and staff located across the country. Our 14 research centres operate out of 22 locations and are mobilized to deliver on 26 targeted research and development programs.

Over the past century, the NRC has produced breakthrough inventions and innovations such as radar, the pacemaker, the black box, canola, the Canadarm and many more. Each year our organization works closely with industry, conducting research and development work with over 1,000 companies as well as numerous research hospitals, universities, colleges, federal departments and international partners.

This brings me to NRC's contribution to the Pan-Canadian Framework for Clean Growth and Climate Change. As we heard in the previous session, this framework includes the Canadian government's vision for action to achieve its climate change objectives. As part of the pan-Canadian framework, the NRC, in close collaboration and partnership with Natural Resources Canada, is working with industry to help produce needed technology at the right cost.

I'd like to highlight three of the NRC's recent successes in turning energy-efficiency technologies into market-ready innovations, enabling commercial building owners to significantly reduce greenhouse gas emissions while also improving their bottom lines.

First, the Royal Bank of Canada partnered with the NRC to accelerate its rollout of green building technologies and achieve the triple bottom line of reduced environmental impact, lower operating costs and improved employee well-being. This work referenced pre-existing datasets from RBC's HR department, real estate group and the facilities manager, compiled from the dataset of close to 71,000 RBC employees and more than 1,600 North American facilities. lt focused on comparing data from 10 larger green-certified buildings with 10 matched conventional buildings. An annual RBC employee opinion survey confirmed that overall green-certified buildings demonstrated higher job satisfaction, value to clients and stakeholders, evaluation of management and corporate engagement. ln addition, we noticed there was a tendency for higher job performance reported in annual manager evaluations of staff.

The second example is a collaborative project between NRC and PSPC to leverage the big data analytics in real time to support increased operational efficiency and maintenance of Canadian federal government buildings.

NRC piloted technologies in 13 PSPC buildings in the national capital region. This two-year pilot realized 15% energy cost savings with a very simple payback of eight to 12 months. The technology also brings collateral or stacked benefits, making the business case even stronger. The technology also improved maintenance efficiency, because the opportunity costs of not fixing the faults were automatically estimated. This project received the 2017 Real Property Institute of Canada Excellence Award for Energy Efficiency of Federal Buildings.

The final example is a deep energy retrofit undertaken by the Ontario Association of Architects to move their 1980s headquarters building from an energy hog to a highly energy efficient building, with a design performance that is zero-carbon and close to net-zero energy. NRC provided support to the integrated design team and leveraged the project as a platform to demonstrate innovative Canadian energy technologies.

After the building is reoccupied in February 2019, NRC will provide measurement and verification of energy and carbon reduction as well as measurements to assess improvements in organizational productivity KPIs similar to those mentioned in the RBC study. This deep energy retrofit will deliver essentially a completely refurbished building.

These examples help illustrate a few key points.

First, individual component replacement strategies can offer significant energy reduction and cost savings.

Second, there is a range in the simple payback that is based on energy cost savings, with deep energy retrofits typically offering lower returns.

Third, there can be stacked or collateral benefits that should be considered when developing the business case for energy retrofit.

NRC continues to work closely with industry and government collaborators such as NRCan to develop, in government labs, new energy technologies and improve the performance of existing technologies.

We use pilots and demonstration projects in both public and private sector buildings to validate the energy performance and accelerate uptake of new and existing energy technologies. Pilots in DND, PSPC, CNL and other federal department buildings are contributing significantly to the GHG emission reduction of federal custodial departments, while the substantial energy cost savings can be invested in new programming.

We are also performing leading-edge research with industry collaborators to quantify the collateral benefits and develop monetization frameworks for organizational productivity gains, which are required to motivate investment in deep energy retrofits and scale deployment of new energy technologies.

In addition to these long-term impacts, the creation of a low-carbon economy would result in positive impacts immediately, as we help the industry innovate in terms of wealth and job creation.

In the course of achieving these impacts, NRC will lead the way in collaborative research and development with other science-based departments. We will be validating hypotheses and claims, developing new knowledge, asking new questions, providing validated answers and solutions, and filling the knowledge gap. This R and D will be invaluable for industry when responding to the new business opportunities created by the upcoming low-carbon reality, and we'll do all this, while ensuring cost-effective solutions are available where and when needed.

Reducing the carbon footprint of our buildings will support Canada in achieving its commitment, under the Paris Agreement, of a 30% GHG emission reduction by 2030. The work we do at the NRC to address the challenges of today inevitably results in the long-term solutions and innovations that Canada and the world have been waiting for.

Thank you for your interest in the NRC. My colleague and I would be pleased to answer any questions at this time.

[The Chair, Liberal, James Maloney]

Thank you very much. You're right on time.

Mr. Tan, you're going to start us off.

[Geng Tan, Liberal, Don Valley North, ON]

Thank you, Chair.

Thank you, gentlemen, for being with us today.

One of the responsibilities of NRC is to fulfill government mandates. We know that using energy more efficiently represents a lowering of the costs and making the most use of our energy resources in Canada.

How does NRC's work in the area of energy efficiency support the government program in this area? You mentioned in your presentation quite often about your close collaboration with NRCan, but not very specifically. What kind of program do you have? What kind of a plan do you have to support government programs?

[Michel Dumoulin]

I'll take the question at a high level first, and then my colleague Trevor will come in with very specific examples of how we do this.

First, let me say that overall at NRC, our mandate is basically that everything we do falls into three categories. Our mandate basically is threefold. First is developing new knowledge, so pushing the boundary, developing new knowledge for Canadians and for Canada to be at the forefront pushing the envelope. Second is business innovation, helping companies. It's working with companies, directly with them and for them, in projects to make sure that the technology transferred is adopted and their technological level is increased. Third is our public policy mandate.

We are addressing the energy questions in all three parts of the mandate, but quite specifically in terms of our public policy mandate, our role is to develop data to support our colleagues in Environment and Climate Change Canada, basically providing evidence, providing data, doing the basic underlying research and development work so that they have good solid evidence to make good policy decisions.

[Geng Tan, Liberal, Don Valley North, ON]

You don't give any advice. You just provide data, or your researchers do, to the government to make a decision.