Evidence of meeting #116 for Natural Resources in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was buildings.
A recording is available from Parliament.
11:40 a.m.
Liberal
The Chair Liberal James Maloney
Good morning, everybody.
Apologies for the slow start, but we had some votes in the House somewhat unexpectedly.
November 1st, 2018 / 11:40 a.m.
Conservative
11:40 a.m.
Liberal
11:40 a.m.
A voice
At least Ted's still mild-mannered.
11:40 a.m.
Liberal
The Chair Liberal James Maloney
No comment.
Originally our plan was to have your two groups go in the first hour. We had two witnesses scheduled for the second hour. The witness from Loblaw is not going to make it because of a flight cancellation, unfortunately. Canada Green Building Council will join us by video conference shortly, so we'll roll everything into one. We'll hear from all three parties and then go to questions, so the question rounds will be a little longer than would otherwise have been the case.
All four of you have been here before. You know the procedure, so I'm not going to go on at length about how we do it. You each have up to 10 minutes to make your presentation.
Based on my conversation, Tonja, I'm going to let you go first.
11:40 a.m.
Tonja Leach Executive Director, Quality Urban Energy Systems of Tomorrow
Thanks very much.
It's a pleasure to be here with you today.
My name is Tonja Leach and I'm the executive director of QUEST.
For those of you who don't know us, we're a neutral, non-partisan, business-friendly non-profit service organization, and we have a vision that's local. In fact, it's about as local as it can get. While large energy infrastructure projects still steal the headlines, the really exciting story is unfolding on “main streets” across Canada.
The efforts of communities—local governments, their utilities and energy service providers, builders and developers—are yielding stronger local economies, lower energy costs for citizens and corporations, improved resiliency and security, and, almost as a happy accident, cleaner air, land and water. I am of course talking about smart energy communities, a concept that grounds QUEST and is the ideal end state of our work.
Recognizing that we all likely have a different understanding of what makes up a smart energy community, let me give you our description. A smart energy community seamlessly integrates local, renewable and conventional energy sources to efficiently, cleanly and affordably meet its energy needs. It's a coveted, highly livable place to live, work, learn and play.
We envision that eventually all the requirements of daily life, all of the services that energy provides and the things that make neighbourhoods function—transportation; building heating, cooling and hot water; lighting; wireless data networks; resource recovery operations—will be working together in an invisible symphony.
Let's bring this to the context of energy efficiency and the topic of your study.
We know that many of the measures put in place by federal and provincial governments to enhance energy efficiency have to date yielded great results compared with those from the 1990-2015 period, when demand for energy grew by an average of 1.2% per year. End-use energy demand has slowed, and according to the National Energy Board, it's predicted to continue to do so in the business-as-usual scenario, averaging growth of 0.3% per year. Reasons for this include slower economic and population growth than we have seen historically; improving energy efficiency; the impact of the pan-Canadian approach for pricing carbon; and other policies, programs and regulations.
The energy efficiency industry was estimated to have produced $54 billion in 2013, or approximately 3% of Canada's GDP, and it has likely only increased since that time. Additionally, energy efficiency measures save Canadian households and businesses around $38 billion annually. This, in turn, frees up capital that is spent elsewhere, further enhancing growth and jobs in the Canadian economy. Energy efficiency measures also feature strong returns on investment, often higher than 10% and sometimes even at 20% to 30%. It's estimated that this multiplier effect can result in a sevenfold generation in GDP for every dollar spent on energy efficiency and create between 30 and 57 jobs for every million.
What is the role of communities? While the economics of energy efficiency are very positive, the results to date have largely been a result of building, technology or appliance-scale efficiency advancements, and there's still much more opportunity to capitalize on. Communities influence over half of energy use and greenhouse gas emissions in Canada—nearly 250 megatons of carbon dioxide—primarily in residential, commercial and personal transportation sectors.
If we look at them independently, the energy waste from these sectors is 25%, 29%, and 75% respectively, and herein lies the opportunity. An opportunity exists for increased system-wide energy efficiencies, by focusing not only on each of the sectors independently but also on the integration and planning at the community level.
Thousands of Canadian communities are struggling with a complex combination of priorities—think affordability, poor air quality, gridlock and shuttered storefronts. These issues are the unfortunate legacy of outdated planning, design and building practices. Those who laid the groundwork for our cities and towns typically did so in an ad hoc, piecemeal manner, and under the assumption that energy would be forever cheap, abundant and free of consequences.
Today residents of these cities and towns pay more for energy than they need to, to heat and cool homes and businesses, and to get them where they need to go.
On average, community per capita spending on energy ranges from $3,000 to $4,000, equivalent to $1 billion per year in total for an average-size Canadian community.
Add to this complex challenge the fact that, while we have good documentation on energy production, our documentation on energy use is fragmented and incomplete, and the data systems we do have cannot talk to each other. So in addition to struggling with a complex set of priorities and legacy systems contributing to energy waste, communities also don't have the information, tools or resources needed to make educated and effective decisions on how to solve our community-scale energy efficiency challenges.
Take this analysis from the city of London, Ontario, which has a population of 370,000 people. The community spent $1.6 billion on energy in 2014—on gasoline, natural gas, electricity, diesel, etc. Of this amount, only 12% stayed in the local economy and 59% stayed in the province. While developing their community energy plan and undertaking an economic analysis, London calculated that for every dollar of reduction in energy use they would keep $14 million in the local economy, resulting in a compounded energy cost avoidance of $250 million per year by 2018.
The opportunity to keep energy dollars local and circulating within the local economy can be enhanced through the use of conservation and local generation such as district energy or combined heat and power. This can also help utility-demand reduction, smart load integration, renewable content, and cost avoidance.
This profile will of course vary widely between communities, but it's clear that the opportunity to keep energy dollars local and circulating within the local economy can be enhanced through a systems approach to community-scale energy efficiency.
We know there's a significant opportunity to reduce greenhouse gas emissions and boost local economies through the integration of local, renewable and conventional energy sources to efficiently, cleanly, and affordably meet energy needs. We also know that there is a shortage of research to fully quantify the potential.
In 2009, QUEST conducted a study to assess the potential of integrated systems in meeting climate change targets. The results suggested that by doing things like integrating community energy systems, updating land use policy, improving transit, and opening up opportunities for energy through policy changes, we could reduce direct and indirect urban emissions by approximately 40% to 50% in the long run.
Subsequent studies, such as our “Community Energy Planning: Getting to Implementation in Canada!” research, have shown that smart energy communities have a multitude of direct economic benefits such as cost savings and jobs, and indirect benefits such as reduced congestion, improved air quality, improved community health, and increased social interaction as a result of active transportation.
So what is the federal role in all of this?
We would like to see continued support for existing agencies such as those in Yukon, B.C., Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Newfoundland, New Brunswick, and Nova Scotia. The country is well covered by energy efficiency agencies, but there's more that many of them can do. We could also use some federal support to establish and realize the full potential of those programs.
While QUEST has undertaken research to build understanding of the potential for smart energy communities to stimulate the economy and reduce greenhouse gas emissions, and NRCan recently undertook some further research on that, I believe that more research with newer modelling that includes all sectors would be extremely beneficial, not just for understanding the potential but also to enable us to measure our success.
We need to focus on supportive policy that enables smart energy communities but doesn't prescribe the integration of systems. Every community is different and requires a unique suite of solutions to maximize their efficiency. Therefore, policy needs to enable while appreciating the differences in opportunities.
Last, support for accessible energy data via the establishment of a pan-Canadian energy information agency or similar data trust would be very well received by our network across Canada, and I think it would be useful to a multitude of utilities and communities.
Thank you.
11:50 a.m.
Francis Bradley Chief Operating Officer, Canadian Electricity Association
Thank you, Mr. Chair.
Thank you to the members of the committee for inviting CEA to appear before you this afternoon.
I am Francis Bradley, the chief operating officer of CEA.
I am joined this morning by my colleague Sarah Nolan, and I am also delighted to be appearing along with my colleagues from QUEST. CEA was one of the organizations that created QUEST close to a dozen years ago, and I have been a participant in it since its founding.
I first want to take a moment to talk about our association. The Canadian Electricity Association, or CEA, is the national voice and forum for the Canadian electricity sector. Our membership is comprised of generation, transmission and distribution companies from across Canada, as well as manufacturers, technology companies and consulting firms representing the full spectrum of electricity suppliers.
A safe, secure, reliable, sustainable and competitively priced electricity supply is essential to Canada’s prosperity. Providing Canadians with the means to use electricity efficiently is necessary to maximize the potential of the Canadian electricity system, to minimize environmental impacts and to reduce electricity costs. Our members are committed to improving energy efficiency. We believe it is critical to reaching climate change targets as clear benefits for the economy and that it helps reduce Canadians' electricity bills.
Research by CEA has shown that the vast majority of consumers expect their electric utility to provide energy efficiency programs and information. Customers continue to look to their electric utility to help them manage their electricity consumption and their bills. Canadian electric utilities have been delivering energy efficiency programs for three decades. From 2014 to 2017, CEA member electric utilities saved almost 14,000 gigawatt hours of energy through external energy conservation programs. These energy efficiency programs have also resulted in avoiding greenhouse gas emissions equivalent to 7.4 megatonnes of CO2 across Canada. To put this in perspective, this is comparable to taking two million vehicles off the road.
As you know, governments play a crucial role in creating policy, implementing product regulation, developing industry standards and building codes, and providing incentives to help manage demand. It is critical that governments support energy efficiency. As an example, through the Ontario energy manager program, Toronto Hydro has been able to fund 20 energy managers who cover a wide range of business types, lead awareness programs and identify opportunities for energy conservation improvement. For these businesses, energy conservation has become a part of their general practice.
CEA offers three recommendations to the committee which the government should consider implementing. The first is to partner with electric utilities to achieve maximum results from energy efficiency initiatives. Utilities have the expertise, program design, delivery capability, and customer and supplier relationships that are needed when implementing energy efficiency programs.
SaskPower has partnered with local retailers to offer point-of-purchase discounts on a variety of energy efficiency lighting products, ENERGY STAR technologies and smart technologies. The program is offered in approximately 300 retail locations across 125 communities in the province. The program also features in-store education with representatives at locations across the province.
Utilities have consumption data and an understanding of local conditions of energy demand, as well as pre-existing brand recognition and well-established long-standing relationships with the customers.
Utilities have a unique ability to respond to demand and manage it.
Second, the federal government should prioritize demand-side opportunities such as energy efficiency as a cost-effective option to meet climate change goals. A balanced approach to energy policy that includes a balanced emphasis on and attention to supply and demand is needed. An emphasis on only supply-side options overlooks benefits that accrue from demand-side programs, which, in an era of rising costs, can reduce energy input costs for businesses and help consumers better manage their energy consumption and, consequently, their bill.
In British Columbia, FortisBC’s gas programs began over 20 years ago, and its electricity programs have been offered for almost 30 years. Between 1989 and 2017, FortisBC invested almost $76 million in energy efficiency programs for its more than 172,000 electricity customers. This is expected to grow to almost $84 million in 2018, and it has saved enough electricity to power nearly 50,000 homes.
Finally, encouraging energy efficiency and conservation demand management is good for the utility business and the economy. Investments in energy efficiency can help bridge and/or pace needed electricity infrastructure investments. Economic benefits accrue locally, regionally, provincially and nationally from energy efficiency programs. Direct, induced and indirect benefits include customer savings, improved competitiveness for industry and businesses, jobs and economic growth.
Improvements in energy efficiency are a long-term and sustained benefit to the economy as energy savings are generated every year over the lifespan of a product.
As an example, one utility estimates that their spend of $730 million on conservation demand management between 2005 and 2020 will result in $2.5 billion in economic spinoffs and customer savings.
In closing, there are many benefits that energy efficiency delivers to Canadians: reduced energy expenditures, employment opportunities, increased economic competitiveness, improved energy security, and a cleaner environment through the reduction of GHG and air emissions across Canada.
Energy efficiency is sustainable. It can be a more cost-effective means to meeting electricity demand than traditional or renewable supply options. Increased energy efficiency is a major strategic objective of the electricity sector, and it is imperative for Canada's future prosperity.
Noon
Liberal
The Chair Liberal James Maloney
Thanks very much, Mr. Bradley.
I understand that we have Mr. Mueller and that he is almost connected.
Why don't we suspend for a minute to let him get the technical stuff sorted out?
12:02 p.m.
Liberal
The Chair Liberal James Maloney
Welcome back, everybody.
Mr. Mueller, you have the floor for up to 10 minutes to deliver your remarks, and then I'm going to open the floor to questions from around this table to all three panels.
The floor is yours.
12:02 p.m.
Thomas Mueller President and Chief Executive Officer, Canada Green Building Council
Thank you.
I'm going to cover five areas when it comes to energy efficiency and economic benefits: voluntary standards, zero-carbon innovation, building retrofit, capacity building of the workforce, and then a few recommendations at the end.
At the Canada Green Building Council, we believe that green buildings can help achieve Canada's greenhouse gas emission reduction commitments, and significantly improve the energy efficiency of the building sector in the Canadian economy.
Over the last up to 15 years, voluntary standards have driven energy efficiency in the building sector. You can see that voluntary systems such as the LEED rating system had significant penetration rates in the building sector; up to 30% in the institutional sector, and 22% in the commercial sector. Overall, there are currently 1.2 billion square feet of LEED projects in Canada, but 3,700 projects have been certified.
Those 3,700 projects save 12,900,000 megawatt hours of energy through energy efficiency measures. That's enough to power 435,000 homes in Canada for a year. So you can see that voluntary programs have already had a significant impact on the building sector, on energy efficiency in the building sector.
You can also see how voluntary programs also have an impact on how buildings perform at a per-square-foot level. The example here is that the average Canadian office building uses about 350 kilowatt hours per square metre per year. The average LEED building uses about 162, and there are some other buildings, which you see here, that have significantly lower and better energy performance than conventional buildings, which have been brought about through voluntary programs, like LEED and others, in the Canadian marketplace.
Not only do they improve the energy efficiency; they also create jobs and contribute to economic growth. You can see that in 2014 Canada's green building industry contributed $23 billion to the GDP, and almost 300,000 direct jobs, for people employed in constructing these buildings in Canada in 2014.
One very interesting fact is not only that the green building industry employed 297,000—or 300,000—full-time workers but also that this represents more than forestry, oil and gas, and the mining industry combined. Green building construction and renovation is a significant energy efficiency opportunity as well as an economic opportunity.
On slide 5, you can see how these jobs are distributed in Canada by sector, with construction and trades making up the largest proportion, followed by materials and manufacturing, and then professional services.
But energy efficiency measures also result in net savings. The life cycle savings from LEED-certified green buildings in Canada are significant. This is based on a number.... At the time the report was prepared, we had 2,275 certified projects in Canada, representing 24,000,000 square metres. These buildings, on an annual basis, save about half a billion dollars in energy costs. If you aggregate that over the life cycle, estimated at 33 years, it goes up to $6.8 billion dollars in energy savings that have been achieved through readily available energy efficiencies, technologies, equipment and practices.
The next innovation is what we call the zero-carbon building. Zero carbon is the new performance benchmark. In order to get a zero-carbon building, high levels of energy efficiency are required. As you saw in the previous slide, we can drive energy efficiency to very high levels, and then supply the rest of the energy in those buildings through renewable clean energy sources, such as hydro in certain areas of Canada, but also through onsite and offsite renewable energy resources. Canada is actually a global leader in this space.
It builds on the learning curve the industry has gone through with regard to LEED, and we can actually do this right now with the technology, the know-how and equipment available. This is the next phase of innovation, and it will yield significant benefits not only with carbon but also in terms of energy benefits if this is rolled out across the building sector in Canada.
I would like now to go to the second half of my presentation, just finishing off and focusing your attention on building retrofits. Fifty per cent of the building stock that exists today will still be in use by 2050, and there are significant energy savings available from this building stock, between 20% and 40%. These savings can be realized through a number of very accepted industry practices like building commissioning and recommissioning, along with the retrofits of about 60% of larger buildings in Canada.
The council has done a lot of work in this space with various federal and provincial government departments, and the focus here is really the idea of the retrofit economy; to establish a retrofit economy in Canada that would support large-scale retrofitting of larger buildings. If we retrofit about 100,000 buildings in Canada over the next 10 to 20 years, at the end of that process, we'll not only save 21 million tonnes of carbon in associated energy use, but we would save $6.2 billion in energy costs every year by the end of the process.
The federal government, including the Canadian Infrastructure Bank, plays a very important role in leveraging investment for retrofits for commercial, institutional and multi-residential buildings and can leverage funds from the private sector. The federal government also needs to play a role in building confidence in deep retrofit by providing and supporting standardized frameworks that support retrofit performance outcomes. What I mean is that, after the retrofit, we want the buildings to perform in a way that realizes the energy efficiency benefits.
There are of course, as always, a number of barriers in order to realize these benefits. You can see that there are barriers to a strong retrofit economy, but there are also solutions as shown with the investor confidence project, which represents a standardized process to assess retrofit projects and performance outcomes across the country.
The other barrier we have is really capacity. We have enough capacity already in Canada to get this started, with both LEED and zero-carbon buildings with retrofit, but we need to train our workforce to deliver at this scale. There are also new technologies and services that are not well understood, which require new skill development. We also need to scale up: we need a larger trained workforce to deliver the results. We are currently doing some work around the skills gap in Canada, and particularly in Ontario. The skills gap is a real risk for scaling up energy efficiency. For Canada to succeed in this space, the federal government must invest in a changing workforce that designs, constructs and maintains buildings, or in this case, also retrofits buildings across the country.
Our recommendations for this committee are as follows.
Continue to support existing voluntary industry standards. This could be in government-owned and -leased buildings. After all, the federal government is the largest building owner in Canada.
Support and de-risk new voluntary standards like zero carbon through incentives and through research and development, but also in the procurement of government buildings. Again, it's another opportunity for the government to lead in this space.
Create a retrofit economy by either investing in or incentivizing large building retrofits, and at the same time support the training of the construction workforce. This is a really critical link in not only realizing the energy efficiency benefits but also realizing the economic benefits. We would also encourage the government to develop a multi-year retrofit strategy for government-owned buildings. In some cases it might also be possible to encourage the private sector to retrofit buildings to meet government standards.
Thank you for your time. I'll stop here. I'm looking forward to your questions.
12:10 p.m.
Liberal
12:10 p.m.
Liberal
Nick Whalen Liberal St. John's East, NL
Thank you very much, Mr. Chair.
I guess I'll start with you, Ms. Leach, with QUEST.
In terms of new builds or small local towns that might issue building permits with respect to a home renovation, should there be some type of a disclosure requirement as part of that process to ensure that homeowners or renovators have at least considered building or applying the latest technologies in their building and in renovating their homes?
12:10 p.m.
Executive Director, Quality Urban Energy Systems of Tomorrow
I think there's definitely an opportunity to do so. Whether it should be mandated, I think, would not be something for QUEST to answer. I do think if we look to the U.K., for instance—and this is perhaps more on the retrofit side than on the new-build side—we see they have a requirement whereby they actually have to document what the efficiency of that building is before it is sold. It actually incents this position when new homeowners actually know the status of that building. It also helps to encourage the retrofit economy to take place.
There are lots of great examples outside of Canada that we could draw on.
12:15 p.m.
Liberal
Nick Whalen Liberal St. John's East, NL
Are there any examples, maybe from the U.K., about what the benefits were in making that system mandatory versus leaving it as voluntary? Do you have examples of other jurisdictions where such a disclosure is encouraged but is not required so we can get a comparative on how good or bad the U.K. system is at encouraging good behaviour?
12:15 p.m.
Executive Director, Quality Urban Energy Systems of Tomorrow
I don't have those details at my fingertips today. I could certainly do a little digging and try to find those answers for you. Potentially some of the other people here today may be able to answer that question.
12:15 p.m.
Liberal
Nick Whalen Liberal St. John's East, NL
Mr. Mueller, do you have a comment on other jurisdictions in which disclosure versus voluntary requirements of what you plan to do from an energy-efficiency standpoint has been shown to have a better or worse net impact on the efficiency of new builds?
12:15 p.m.
President and Chief Executive Officer, Canada Green Building Council
I would say generally that we observed that they actually do label homes in Europe in some of the economies like the U.K. and Germany. Buildings are labelled at the point of sale. This has a significant impact on the energy improvements made to homes and the standard they are built to.
We also see that on a building scale. Energy benchmarking and disclosure have been adopted by a number of jurisdictions in North America. Cities like New York, Chicago, Seattle, San Francisco and so on have adopted it on a mandatory scale for building owners who have to report on buildings over a certain size.
As you know, the Ontario government has adopted it as well, provincially, starting I think at 250,000 square feet and stepping it down every year—to 100,000 square feet, and I think the lowest level is 50,000, if I recall. We believe that mandatory benchmarking disclosure programs are really important to move the industry forward. I'm saying this because the large buildings, the large commercial owners and so on, are already doing it, but in order to bring about change, we need the other 90% of the buildings. They need to be engaged in a standard performance and disclose their performance, and then that will help them and policy-makers to target their investments to make improvements to the energy-efficiency area.
12:15 p.m.
Liberal
Nick Whalen Liberal St. John's East, NL
Thank you very much.
Mr. Bradley, you used a phrase a little earlier. It's a bit of a pet peeve of mine, taking cars off the road. I think we all want to see people transition to low-carbon vehicles, but nobody really expects that there are going to be, in any statistical way, fewer miles travelled by people in a country like Canada or significant change in the number of cars on the road.
Can you explain why it's important to reduce electricity demand in the housing sector, in the built infrastructure, so that electricity can be available for use in vehicles?
12:15 p.m.
Chief Operating Officer, Canadian Electricity Association
Absolutely, and thank you for that.
We tend to use shorthand to try to explain sometimes what some of these efficiencies translate to. Perhaps that's one of the ones we might want to suggest be used a little differently.
As you point out, this is something that is clearly evolving. We're certainly looking at greater energy efficiency because there's going to be a requirement for electricity in so many other applications. If we are going to meet some of the commitments we've made with respect to reducing greenhouse gas emissions and climate change, that's in fact going to result in much greater demand for electricity as opposed to lesser demand so that we'll be able to aggressively decarbonize by moving forward on electrification of transportation, heating, ventilation, air conditioning, industrial processes and so on.
Part of that calculus is the electricity that we're using today and that we will use tomorrow. We want to use it as efficiently as possible because the requirement for it is only going to increase into the future.
12:15 p.m.
Liberal
Nick Whalen Liberal St. John's East, NL
My last question I'm going to open up to all three groups. I struggle to try to figure out from a policy perspective whether we should have a system that incents good behaviour in home analysis or built infrastructure analysis and energy efficiency audits through tax incentives, and then also energy retrofits in homes and the built infrastructure through some types of tax rebate associated with that capital investment, or whether we should just have these regulatory constraints that require people to do these things with new activity.
I'm wondering if any of you has information on the net effect, on which system is better or worse than the other, and on whether or not we have some statistical information that might allow us to make an evidence-based decision regarding how much each of these measures would contribute. There might be a bit of a Venn diagram there, an overlapping of the benefits. What's your general sense on the best way to go: voluntary, mandatory, regulation, or tax-based incentives to encourage the good behaviour?
I'll start with you, Mr. Mueller.
12:20 p.m.
Liberal
12:20 p.m.
President and Chief Executive Officer, Canada Green Building Council
I think it has to be a combination. On homeowners and homes, I think you need to increase regulation consistently so that homes are being built to higher levels of performance. I think it's really important in the residential sectors.
In the private sector, I think you're better off with tax rebates, with financial-type incentives, because they're looking for return on their investment, whereas the homeowner looks for other things. It's a combination, depending on the sector you're targeting.
12:20 p.m.
Chief Operating Officer, Canadian Electricity Association
I would agree entirely. Both types of tools are going to be needed and for different things. Clearly, there's a very significant role that standards and regulations can play on the one hand, but we also know that in some circumstances incentives are also very effective.
I don't want to keep harking back to our climate change commitments, but let me hark back to our climate change commitments just for a moment. If we're going to start meeting those things, it's going to have to be all of the above to be able to get us to move effectively in that direction.
