Natural Resources Committee on Dec. 4th, 2018

[The Chair, Liberal, James Maloney]

Mr. Craig, I understand you're going to deliver remarks.

[Len Horvath]

It's Len Horvath here. David is going to go second.

I'm the past president of the association, and I operate my own consulting and service business. I've spent the last 40 years in the construction industry and the corporate world, looking after buildings and real estate for a major telecommunications company and, in the last 24 years, running my own business focusing on energy efficiency.

I want to pass on what I think are the critical issues the committee should consider, really addressed to the commercial building industry. The challenge I see is that much of the work that's been done focuses on things like building codes and energy codes, such as the national energy code for buildings.

The problem is that none of these codes apply to anything but new building construction or renovation work that might take place in existing buildings. The challenge will be how you take our existing commercial building stock and improve the energy efficiency in that sector. I've identified that the building codes and energy codes are an obstacle, and that there's nothing that really addresses that issue.

Also, in the rental market for the commercial sector, it's pretty standard in Canada to have what's called a triple net lease, whereby the energy costs are simply passed on by owners to tenants as an operating cost charge. Owners don't pay the energy costs directly; they are paid for by the tenants, so the owners don't have a direct motivation to do anything to improve the energy efficiency of their buildings. Tenants, on the other hand, don't own the buildings, so they also don't have any particular motivation to do anything, especially as they near the end of their lease, which in Canada is typically a five-year term, which may be renewable, but it's around that time frame.

What we've found in the work we've done in the last 40 years is that incentives really appeal to the natural human desire to find a good deal. They work—it's been proven by energy utilities across Canada—and there's been significant uptake amongst building owners.

The other issue is, if building owners make an investment—and they can be major investments—how do they get a return on that? The industry has come up with a concept called a green lease. There's language within a green lease that allows the owner to amortize the cost of these changes as an operating cost charge to the tenant over the term of the lease. They're able to pass on that amortized cost, and we've found that that works. Unfortunately, it's not mandatory that leases have green clauses in them, but if it were, it would go a long way to addressing the issue in the industry.

Those are my comments relating to the existing commercial building industry. I'll turn it over to David, who will talk about some of the new innovations that might be considered.

[David Craig, Vice-President Secretary-Treasurer, British Columbia Advanced Conservation and Efficiency Association]

I'll start with the opening slide of the PowerPoint. I want to introduce you to a new technology for buildings for a sustainable future. We'll be looking here at an innovative Canadian technology that's been developed in Moose Jaw, Saskatchewan. It's disruptive to the building industry. It has substantially lower CO2 emissions—in the order of 80%—and significantly lower construction costs, resulting in those lower costs being reinvested in the building technology to produce higher quality, disaster-resilient buildings for approximately the same cost as conventional alternatives.

I know that your committee is interested in the economic development opportunities involved. We have assessed those as being approximately, as we commercialize the technology, 0.3% to 3% of Canada's total GDP growth. That would be between 1% and 10% of the U.S. market. The worldwide market would be 10 times that.

We're looking at Canadian benefits being 0.3% to 3% reduction in buildings emissions against the total building emissions of the sector, and a 1% to 15% impact on productivity improvement relative to GDP growth. We think there are substantial economic benefits to the introduction and commercialization of the technology.

The markets that we've looked at, the global construction industry will grow to a $10-trillion industry. The U.S. market is over $1 trillion, and the Canadian market is over $100 billion, perhaps $170 billion.

The residential sector is progressing at about $5 billion a month. You will see in chart 1 that the multi-family dwellings are coming up from, in millions of dollars, around 3,000 to 4,000. We're looking at the commercial industry being about $2.5 billion per month. That's the Canadian sector.

The GHG emissions in Canada that we're looking at in the building sector are about 12% of total emissions. There are approximately 98 megatons of CO2. In the U.S. it's closer to 39% because of the coal-based energy supply in the U.S.

I want to introduce you to the technology. It's a whole building solution. The whole building solution is based upon a patented material called Buildcrete. It's a proprietary, ultra-lightweight concrete mix with superior insulation of expanded polystyrene foam as the core between the two panels of concrete. It can be used for foundations, floors, walls and roofs. The entire structure is made of the one simple design. The panels come with exterior and interior finishing done in the factory and with windows, doors and selected services pre-installed.

The whole building solution is more thermally efficient. It's airtight for thermal efficiency and reduction of outside odours. There's proven superior sound-dampening, and it's disaster resilient, impervious to fire, water ingression, insect infestation, moisture, mould and mildew—which is particularly important—and is resistant to earthquakes and hurricanes. It makes a much stronger building.

The benefits to builders and developers are quite significant. We've found that the builders and developers we're approaching are eagerly signing up. We expect the technology to be driven by the market, and the builders and developers seem anxious to get there.

[The Chair, Liberal, James Maloney]

Mr. Craig, you're going to have to wrap up in about a minute, please.

[David Craig]

Yes.

We have a list of benefits that the architects find in working with us. The home owners have significant benefits listed there as well. There are benefits to the planet in terms of the reductions of footprint.

In the end, we're looking for government to help us deliver these gains to Canada through introductions that you can help us with to government programs supporting the commercialization and the capital investment in the first new commercial plant anticipated to be here in B.C. We're currently applying to SDTC and looking for any additional help that the committee might be able to provide us.

Thank you for the opportunity to make the presentation.

[The Chair, Liberal, James Maloney]

Thank you very much.

Mr. Whalen, I think you're going to start us off.

[Nick Whalen, Liberal, St. John's East, NL]

Thank you very much. I thought I was going second, but that's great.

It is a very interesting business you have, Mr. and Mrs. Abraham.

In terms of the mentors, I'm just wondering how they get paid.

[Yasmin Abraham]

We hire them with a living wage. In B.C. I think that's $21 an hour. In Alberta it's a little lower, but we continue with the $21 an hour. It's an hourly wage.

[Nick Whalen, Liberal, St. John's East, NL]

They're not paid by commissions out of sales.

[Yasmin Abraham]

No, not at all.

[Nick Whalen, Liberal, St. John's East, NL]

You talked about a four to seven year payback on some of your community projects. What does that translate to in cost per kilowatt hour of savings? Do you use that metric? If not, why not?

[Karim Abraham]

We do. It varies, realistically, because some of the communities we're heading into are very remote. If we were to compare the cost per kilowatt hour of a lighting upgrade in a city to putting insulation into a remote community where you have to take a barge and fly materials in, they're not equitable to compare.

I can provide some of that information later, but it's not a metric that we use to compare our internal programs that are so different in scope. We really focus on, within each community, what the major issues are and what needs to happen and the best business case for that community itself.

[Nick Whalen, Liberal, St. John's East, NL]

If these are impoverished communities and impoverished purchases, what's the financial model that's used currently to help them get that return? Do you agree that they will pay you their bills for the course of the four to seven years, and then after that they would pay their normal bills?

[Karim Abraham]

We act as a broker for funding. We go after municipal, provincial and federal funding. We look for funding from private and public utilities, foundations—there are a lot of different ways that we go out and look for money.

We help the first nation communities apply for that funding on their own. Then those nations hire us to do this work. As we build in long-term community energy management planning into these communities, we start to see results long term. Because they've chosen to hire us, we just act as a broker to go and get different types of funding.

[Nick Whalen, Liberal, St. John's East, NL]

So in addition to whatever government money is available to them, they also get the net asset benefit of having cheaper energy in the future.

[Karim Abraham]

Yes, in a way. Currently, most of these communities are on diesel generators, and the diesel is covered by the federal government or utilities. The savings are actually on both sides. The communities get better housing. That's the big driver—to have more comfortable housing, more healthy housing, and lower their bills so they can move out of energy poverty. It also helps from the supply side where there is less diesel that needs to be brought into these communities.

[Nick Whalen, Liberal, St. John's East, NL]

Okay. I see, from one side, government programs help fund these retrofits, and the government actually saves because they are greatly subsidizing the cost of the fuel at the tail end anyway.

[Karim Abraham]

That's right.

[Nick Whalen, Liberal, St. John's East, NL]

In terms of this material, Mr. Craig, what's the Canadian patent number on that?

[David Craig]

I'm sorry, I don't have that, but I can—

[Nick Whalen, Liberal, St. John's East, NL]

What about the U.S. patent number?

[David Craig]

I don't have the numbers with me, so—

[Nick Whalen, Liberal, St. John's East, NL]

You didn't really describe the material all that well, but if I could take a look at the patent, I could understand what it is.

[The Chair, Liberal, James Maloney]

Would you want to get into that business?

[David Craig]

I'm happy to have that delivered to you.