Emissions Soar in Policy Vacuum Early Adopters Need Support, Laggards Need Edicts
By Barbara Carss
A combination of incentives and regulatory measures form a proposed federal policy pathway for greenhouse gas emission reductions in commercial buildings. Analysts with the National Round Table on the Environment and the Economy (NRTEE) and Sustainable Development Technology Canada (SDTC) recently examined barriers to greater energy efficiency and modelled the possible outcomes from a range of interventions to encourage and compel building owners to adopt new operational practices and implement new technology.
The two organizations are now presenting their findings and recommendations in a series of seminars, including one hosted by the Real Property Association of Canada (REALpac) in Toronto in late January. Attendees from major Canadian real estate companies reflected the industry’s escalating interest in sustainable development and management practices to lower operating costs, remain competitive and fulfill corporate social responsibility obligations.
“In working with the government and NRTEE we have the philosophy of trying to avoid the stick and embrace the carrot,” observed Michael Brooks, REALpac’s Chief Executive Officer. “We see this as a change management exercise we are just beginning.”
Indeed, the NRTEE/SDTC study emphasizes that there is much to be done. Given projected growth, forecasters conclude that greenhouse gas output from the commercial building sector could increase 207% – to 155 megatonnes (Mt) annually – by 2050 if nothing is done to curb current energy consumption levels. This would dramatically surpass an envisioned target of 53 Mt of carbon dioxide (CO2) set out in NRTEE’s 2006 long-term strategy on energy and climate change.
The surveyed sector, which includes both commercial and institutional buildings (but excludes industrial and multi-residential), now accounts for 14% of end-use energy consumption and 13% of carbon emissions across Canada. It saw a 25% increase in energy consumption and 27% growth in CO2 emissions in the 15 years between 1990 and 2005.
Among the seven identified systems and/or building elements that use energy, only lighting has yielded an overall reduction in consumption. Space heating continues to account for the largest proportion of the energy load – at 51% – but the so-called auxiliary load, which encompasses appliances such as computers and printers that are plugged directly into an electrical outlet, has been the fastest growing load.
Yet, there is some counterbalancing cause for optimism as the average energy intensity dropped slightly from 1.69 gigajoules per square metre (GJ/m2) to 1.62 GJ/m2 between 1990 and 2005. Notably, these efficiency gains were primarily accomplished in the final two years of the surveyed period after actually rising to a level of 1.84 GJ/m2 by 2003.
SUITE OF SOLUTIONS
The NRTEE/SDTC collaboration brings together two complementary but, until now, somewhat divergent approaches to climate change issues. SDTC offers support for research and development of innovative sustainable technologies, while NRTEE serves a policy assessment and advisory role. The joint study is a response to perceived market and bureaucratic obstructions to potentially beneficial energy-conserving technologies. “We don’t do policy, but many of the barriers we run into are policy related,” said Rick Whittaker, SDTC’s, Vice President, Investments.
The report focuses on six categories of barriers: 1) perceived technical, financial and/or market risk; 2) information gaps; 3) the dichotomy between purchasers and beneficiaries of energy-saving technology; 4) market/cost disincentives for early adopters; 5) subsidies and price structures that undercut the true cost of energy; and 6) codes, standards and other regulatory requirements that are out of sync with current needs and technical capabilities. It then explores policy initiatives that could help to overcome the barriers.
A number of potential policy instruments are outlined, fitting into the categories of: 1) market-wide price signals; 2) command and control regulations; 3) subsidies; and 4) voluntary actions. Price signals, for example, could take the form of emission pricing, a cap-and-trade system, carbon and/or energy taxes or full-cost energy pricing, while command and control regulations could entail building energy codes, minimum energy performance standards, mandatory energy labelling or mandatory energy performance standards for public buildings.
Suggested subsidies or fiscal incentives include tax incentives, accelerated capital cost allowance rates for energy-efficient equipment, loan guarantees, and funding for research, development, public education and skills training. Policies to promote voluntary actions also focus on education and the development of resources such as a database of best green practices for developers, designers and Building Officials, and building commissioning standards and monitoring.
Analysts assessed the potential value of various policy instruments in four different modelled scenarios. They determined that carbon prices alone could lower emissions to 95 megatonnes by 2050, while a slate of eight complementary policies including energy efficiency standards for building equipment and the National Building Code, fiscal incentives and advocacy would deliver better results even in the absence of carbon pricing, lowering emissions to 86 megatonnes. The eight policies in combination with carbon pricing further reduced projected emissions to 82 megatonnes by 2050.
INEVITABLE BUT NOT IMMEDIATE
The fourth model added the spectre of mandatory regulations – including a rapidly increasing price scale for carbon emissions culminating at $317 per tonne, and compulsory LEED (Leadership in Energy and Environmental Design) certification for all new buildings – and projected emissions dropping 50% below 2007 levels by 2030. “The moral of the story here is that regulations would be required in terms of building performance if we want to achieve the deep reduction targets,” said Annika Tamlyn, the Policy Advisor the NRTEE/SDTC study.
However, the report advises a gradual phase-in of those regulations. “Neither the building industry nor Canadian governments are prepared for a scenario in which all buildings have to be immediately retrofitted. Time is required to ensure that skilled workers, information resources and technologies are available in the required quantities etc.,” it states.
Strategists acknowledged that the industry will need policies that provide some certainty that regulations will be applied consistently and will not be reversed after they’ve made investments to comply. “There is the reality in Canada of multi-jurisdictional [regulation],” noted René Drolet, NRTEE’s Director of Policy and Research. “We also believe there will be a need for policy monitoring and evaluation.”
Seminar attendees seemed open to the study’s proposals. “We’ve reviewed the NRTEE/SDTC report and we are certainly comfortable with the overall recommendations,” reported Andrew McAllan, Senior Vice President, Real Estate Management, with Oxford Properties Group.
McAllan briefly outlined his company’s decision-making process and experiences in achieving LEED for Existing Buildings (EB) certification for a 1980s-era office building in downtown Toronto. Oxford has also been a leader among Canadian companies in setting carbon emission reduction targets, with a goal to cut emissions by 20% in Oxford managed projects by 2012. (See Canadian Property Management, November 2008.)
“It was apparent to us that LEED certification was going to be a major differentiator in the market,” he said. “Notwithstanding the slowdown we are seeing now, green initiatives are not going to cease to be an issue.”
Brooks concurred, maintaining that the Canadian industry has the ability to replicate or move ahead of ambitious targets set in Australia and Europe. “My only fear is that we’re not cutting deep enough, soon enough,” he said.
The complete text of Geared For Change, Energy Efficiency in Canada’s Commercial Building Sector can be found on the National Round Table on the Environment and Economy web site at www.nrtee-trnee.com.