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.