Sticks and Carrots
While we know these things to be true, sometimes it bears repeating: our buildings represent nearly 12 per cent of the country’s overall carbon pollution, and more than a quarter of energy-related greenhouse gas emissions. This is why low-carbon buildings are both a form of climate mitigation and a wealth creation opportunity, and why governments at all levels in Canada are moving toward requiring new homes and buildings to be constructed to low-carbon, ultra-energy-efficient standards by 2030. But Canada still lacks a comprehensive strategy to achieve the significant reductions in carbon pollution from existing buildings that are necessary to meet our country’s climate targets.
As the Pembina Institute points out in this issue, a suite of policies can support a transition to a low-carbon building stock, especially ones that involve pan-governmental cooperation in the development of stronger building codes and regulations. They also recommend (in another report) the launch and management of a large-scale loan guarantee program to backstop investments in key building retrofit initiatives, and this I feel is especially important, because from what I am hearing the technological evolution in the construction and maintenance of buildings is not being reflected in traditional ROI business cases – clearly an impediment to any goal of reducing energy consumption in the existing building stock.
Which is why I was excited to hear about how the CaGBC, Green Business Certification Inc. (GBCI), and the Advanced Energy Centre at Toronto’s MaRS Discovery District are working together to bring the Investor Confidence Project (ICP) and its Investor Ready Energy Efficiency (IREE) certification to Canada. According to the press release, this global underwriting standard for developing and measuring energy efficiency retrofits is administered by GBCI, and signals to investors that a project has adopted best practices that can help reduce transaction costs and increase savings. The protocols offer investors a consistent roadmap for assessing risk and expected outcomes from deep retrofits.
In the Pan-Canadian Framework, the Canadian federal government recognized the role that retrofitting existing buildings will play in reaching Canada’s targeted emissions reductions: a potential of up to 51 per cent in overall building emissions by 2030. Yet “the biggest barrier for the industry and ownership is access to financing,” says Thomas Mueller, president and CEO of the CaGBC and GBCI Canada. The IREE-certified projects will provide clarity on the long-term performance of energy efficiency technologies and provide the necessary assurance required to create greater access to competitive financing which will be necessary to achieve retrofits on a large scale.
Supported by the Ministry of Energy in Ontario, the Advanced Energy Centre is partnering with CaGBC and GBCI to pilot the ICP methodology for the Canadian market, bringing together a multi-sectoral group that includes owners, government, engineering firms, utilities and financial institutions with the goal of determining how ICP can help facilitate more retrofits in Canada. The pilots will also help inform the accreditation and certification services for Investor Ready Energy Efficiency projects, which will be delivered by GBCI Canada.
The property and construction industry is evolving dramatically as building practices respond to climate change and the need to reduce energy consumption. Yet many building owners and investors still rely on more traditional ROI metrics, a reality that must be addressed if we claim to recognize the need to achieve complete decarbonization of the building sector.