Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No. 33 - Evidence - October 19, 2017
OTTAWA, Thursday, October 19, 2017
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:02 a.m. to study the effects of transitioning to a low carbon economy.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Good morning, colleagues, and welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I’m honoured to serve as chair of this committee, and I’m a senator from British Columbia. I wish to welcome all those with us in the room and viewers across the country who may be watching on television or online. As a reminder to those watching, these committee hearings are open to the public and also available online on the new Senate website at sencanada.ca. All other committee-related business can also be found online, including past reports, bills studied and lists of witnesses.
I would now ask senators around the table to introduce themselves, and I will begin by introducing the deputy chair, Senator Paul Massicotte, from Quebec.
Senator Massicotte: Good morning.
Senator Galvez: Senator Galvez from Quebec.
Senator MacDonald: Michael MacDonald from Nova Scotia.
Senator Wetston: Howard Wetston from Ontario.
Senator Dean: Tony Dean, Ontario.
Senator Seidman: Judith Seidman, Montreal, Quebec.
Senator Patterson: Dennis Patterson, Nunavut.
The Chair: I would also like to introduce our staff, beginning with the clerk to my left, Maxime Fortin, and our Library of Parliament analysts, Marc LeBlanc and Sam Banks on my right.
Colleagues, in March 2016, the Senate mandated our committee to embark on an in-depth study on the effects, challenges and costs of transitioning to a lower carbon economy. The Government of Canada has pledged to reduce our greenhouse gas emissions by 30 per cent below 2005 levels by 2030. This is a big undertaking.
Our committee has taken a sector-by-sector approach to this study. We will study five sectors of the Canadian economy that are responsible for over 80 per cent of all greenhouse gas emissions. Those are electricity, transportation, oil and gas, emission-intensive trade-exposed industries and buildings.
Our first interim report on the electricity sector was released March 7, and our second one on transportation sector was released on June 22.
Today, for the fifty-third meeting on our current study, I’m pleased to welcome from the National Research Council Canada, Michel Dumoulin, Acting Vice-President, Engineering; and Philip Rizcallah, Director, Research and Development and Construction. Thank you very much, gentlemen, for joining us. We look forward to your presentations, and then we’ll go to questions and answers. The floor is yours.
Michel Dumoulin, Acting Vice-President, Engineering, National Research Council Canada: Thank you. I’m pleased to be here. I do indeed have an opening statement. Before I jump into this, I’d like to mention in all fairness that although I’m a 27-year veteran at NRC, I had different roles and functions in different areas. It’s my third week in the current role. I’ll be more than pleased to discuss NRC, our mandate and general operations, but we are fortunate to have deep expertise at NRC, and I’m fortunate to have my colleague Philip Rizcallah with me this morning. He is our leading expert in terms of the construction model codes and all that space.
With this, I am the Acting Vice-President of Engineering at the National Research Council of Canada. As I mentioned, I’m joined here by Philip Rizcallah, the Director of Research and Development at NRC Construction. We are pleased to have this opportunity to speak with you today.
We would like to highlight the NRC’s contributions to help the Government of Canada achieve its targets for both a low-carbon economy and reduced greenhouse gas emissions.
[Translation]
I would like to provide you with an idea of the scale and scope of the work of the NRC; we are a national organization with some 3,700 highly skilled and innovative researchers and staff located across the country.
[English]
Our work covers a broad range of scientific and engineering disciplines, the outcomes of which have changed the lives of Canadians and people around the globe.
The NRC has been the Government of Canada’s premier research and development organization for more than a century. We have acquired a reputation for excellence with breakthrough inventions such as radar, the pacemaker, the black box, canola, the Canadarm, a vaccine against meningitis, as well as the first biofuelled jet flight in the world. Moreover, we are always proud to mention the late Dr. Gerhard Herzberg, who earned a Nobel Prize for his work in molecular spectroscopy while at NRC.
Each year, NRC works closely with industry, conducting research and development work with over 1,000 businesses. We also provide technical advice to some 11,000 small- and medium-sized companies, and we collaborate with over 200 research hospitals, universities, colleges, federal departments and international partners.
We are aligned with federal government priorities, and we focus on three core areas: delivery to business innovation, support for federal mandates, and advancing science and innovation through research.
Relevant to our discussion today, NRC is the coordinator and the custodian of Canada’s national model codes, including the building code and the energy code, to facilitate uptake in the marketplace of model codes and new technologies. We also support standards development for the construction industry, and best practices and tools, as well as pilots and techno-economic assessments.
To support this mandate, the NRC operates a number of facilities and centres. The Canadian Centre for Housing Technology is one of these centres. This centre appears as a real-life community of homes and is jointly operated by us, Natural Resources Canada and the Canada Mortgage and Housing Corporation. The facility was designed to provide manufacturers and product developers with a real-world test environment for assessing innovative technologies prior to full test trials in occupied homes.
Another facility, the Canadian Construction Materials Centre, works closely with manufacturers and suppliers to the construction industry. The centre tests an industry’s products to determine if they perform to specification and whether they demonstrate they can meet building, energy and fire code requirements.
Speaking of codes, these evolved based on experience and product innovation. Currently, we initiate major updates to the codes using an extensive consensus-based process with involvement from all sectors of the construction community and the public on a five-year cycle. This approach provides a reasonable compromise between stability, flexibility and economic considerations.
[Translation]
This engagement ensures that the best available knowledge drives meaningful change. Changes that allow construction professionals the confidence to innovate safely, reduce risks, and keep compliance costs low. They keep these costs lower by establishing uniform, trusted regulations that keep pace with changes in the industry.
[English]
This brings me to the NRC’s contribution to the Pan-Canadian Framework on Clean Growth and Climate Change. As part of the framework, NRC, in close collaboration with Natural Resources Canada, is working with industry to help produce the needed technology at the right cost.
One goal, in accordance with the framework, is the implementation by the provinces and territories of increasingly stringent energy codes. These codes are specifically related to new construction starting in 2020, with the long-term goal of adopting net-zero energy ready model codes by 2030. Furthermore, work to develop a model code or guideline for existing construction is to be completed by 2022.
The NRC will play two major and distinct roles to achieve the goals of the framework.
First, the NRC will conduct, monitor research and assemble the body of knowledge which is required to develop the best technical and policy solutions for energy and building codes. We will provide this information to the Canadian Commission on Building and Fire Codes. This group is an independent committee of volunteers established to provide direction and oversight on the development of the national model construction codes.
The commission will take this information and consider it for possible inclusion in revisions to the model codes. We at the NRC will make the information widely available to the public and industry to support Canada-wide adoption and increase industry uptake.
Second, the NRC will work closely with the Canadian Commission on Building and Fire Codes and its technical committees to meet the timelines outlined in the Pan-Canadian Framework. We will do this by determining research and resources needed to expedite the process of code development.
Initially, the provinces and territories will be able to declare when they want to adopt specific performance levels with a gradual increase in performance toward adoption of a net-zero energy ready code by 2030. Industry will then be able to prepare and accelerate adoption.
To ensure that code quality, transparency and fairness are maintained, NRC will continue to work closely with all stakeholders to achieve the goals of the Pan-Canadian Framework through the codes development process.
In addition to these long-term impacts, of course, there are numerous short-term results from creating a low-carbon economy. We will feel these positive impacts immediately as we help the industry to innovate in terms of wealth and job creation.
[Translation]
In the course of achieving these impacts, NRC will lead the way in collaborative research and development with other departments. We will be validating hypotheses, developing new knowledge, and providing validated answers and solutions. This R&D will be invaluable for industry in responding to new business opportunities created by the upcoming low carbon reality.
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Reducing the carbon footprint of our buildings will support Canada in achieving its commitment under the Paris Agreement. This is a very immediate and practical goal. The work we do at NRC to address the challenges of today will inevitably result in long-term solutions and innovations for Canada and the world.
In closing, it is the NRC’s breadth of expertise, our unique scientific infrastructure and our national scope — all combined — that enable us to bring players together from Canada and abroad.
Going forward, we are equally well positioned to convene the right stakeholders to work collectively to deliver innovation. This will make a difference to Canadians now and in decades to come.
Thank you for your interest in NRC. Now we’re ready to answer any questions.
The Chair: Thank you very much.
[Translation]
Senator Massicotte: Thank you for being here with us this morning. We are happy to have you with us. You have a very impressive history. Thank you on behalf of all Canadian men and women.
In your presentation, you express the hope and confidence that we will reach our objectives by 2030. A code for existing buildings is supposed to be in place by 2022, or in four or five years. Some experts tell us that we are lagging too far behind, and that the objectives are too ambitious. What is the current status of things? Why do you think we will reach our objectives by 2030, although there are still many things to do, and there is always quite a delay before knowledge is put into practice in our economy?
[English]
Mr. Dumoulin: Thank you for the very good question.
[Translation]
I am going to ask my colleague Philip to give you some specific examples that underpin the collective confidence we have in Canada’s reaching its objectives. I would like to emphasize that the NRC plays the role of a neutral, unbiased advisor. Our mission is to conduct research and development and develop knowledge that will allow us to reach objectives, and to provide unbiased, neutral opinions so that the industry and all stakeholders make decisions and act accordingly. The actions will be led mostly by other departments that will inject funds and put programs in place. Our role is to provide advice to other departments and to industry, so that the best decisions will be made in light of the objectives that are set.
Senator Massicotte: In other words, you are not responsible for anything. Why are you confident that we will reach our objectives? Do you have information, or a report? What is your status with regard to this energy innovation program, and so on?
[English]
Philip Rizcallah, Director, Research and Development, Construction, National Research Council Canada: We are responsible for a lot. Actually, we have the Canadian Commission on Building and Fire Codes, which is an independent body. They’re non-government employees in a volunteer body that sets the direction for the building codes. At NRC, we provide technical, administrative and financial support to these committees. So I would say we have some of the brightest minds in the world working with these committees to help guide them and provide them with the support and research needed to make decisions. Are we confident that we will have changes developed by the 2030 deadline? I’m confident that we’ll have changes developed by that time.
The way the codes are developed right now, we work with a group of stakeholders in industry and the codes are a living document. They constantly evolve and improve so that by 2022 we will have solutions in the code. They won’t be the final solutions, but there will be solutions in the code.
As we continue to update the codes, we’ll have more improved solutions; as we begin to test and demonstrate solutions and technology, we will be able to include that in the codes, so we are confident.
Senator Massicotte: As you know, there is always a significant delay from the time we know the answer in theory to the time that it becomes commonplace among our consumers and citizens.
Talking about high-rises, you made reference in your presentation to how a good proportion of new construction is high-rise construction; new and existing. I understand the code is principally concerned as it is now with single-family homes, and yet a significant number of thousands of units have been and are going to be constructed.
How do we deal with that and where are we at in that respect? When you look at the buildings being built, there is still a high percentage of glazing and of inefficient space. How do we respond to that, and where are we at to correct the problem?
Mr. Rizcallah: That’s good question. First, a point of correction: The committees are actually working not only on houses but also on buildings. There’s the National Building Code and there’s the National Energy Code for Buildings. The National Energy Code for Buildings deals with high-rise buildings. The committees are developing and updating those codes with a timeline of completion by 2022 or 2023.
Similarly, they’re working on the National Building Code which deals with the actual houses — the residential homes — with the same timeline. It is the same committee, possibly of different groups, that is developing the changes and they’re just as ambitious with the buildings as they are with the houses themselves.
Senator Seidman: Thank you very much for being here today. I’d like to pick up where we left off with your colleagues from Natural Resources Canada with respect to a question that arose during their presentation here on September 19.
You referred to existing work to develop an energy-ready model code. During the presentation we had from NRC, officials presented a deck indicating that Natural Resources Canada and the National Research Council are developing a range of minimum standards for buildings, including these model energy codes for existing buildings, which will encompass new minimum energy performance requirements at major building life cycle events, meaning renovations, sale, change of occupancy.
You referred to them in your presentation. Are these new energy performance requirements on track for 2022, and could you provide us with any greater detail on the planned requirements, specifically on these building life cycle events?
Mr. Dumoulin: Thank you for the question. I’m not privy to the specific examples. Phil, are you aware of these specifics?
Mr. Rizcallah: I’m not aware of the specific examples. I can tell you we are on track and we are working with Natural Resources Canada in the development of these codes. I think what you’re asking is whether there are any specific examples of changes that we can expect to see, whether it’s houses or buildings. So we can expect to see improvements in insulation, R values, buildings. We can expect to see improvements with lighting, heat sources perhaps, maybe even alternative fuel sources and power sources for the homes. But, again, that’s all going to be subject to what the technical committees come up with in terms of solutions.
Without getting too technical, the way we develop the codes, the way the National Research Council aids the committees in developing their codes, is that they allow both a performance-based and objective-based approach, prescriptive approach. On the prescriptive, it says you shall put six inches of insulation in your wall. On the performance-based, it says you shall meet this insulation value, and you can design it any way you wish, as long as you meet that method. The solution for the performance-based could be anything. That’s why we have NRC and that’s why we have demonstration labs to validate that they’re actually going to perform as expected.
The prescriptive is simple. You have to put in a two-by-six and insulation, do it this way and you’ll get this value. I can’t tell what the numbers will be. That’s technical and something the committees will develop in the codes.
Senator Seidman: Will this apply to single family homes, for example?
Mr. Rizcallah: Absolutely. It will apply to single family homes, duplexes, apartment buildings, all the way through.
Senator Seidman: We’re getting to my concern, which is a person wants to sell their home. There’s going to be a change of occupancy, say a senior, for example, moving to a retirement residence. Will they have to then make these renovations to comply with these new codes before the new occupant? Is there some condition in the sale, and how would it be enforced? It’s challenging to understand this.
Mr. Rizcallah: It’s a good question. To be clear, when the National Research Council develops these codes with the commission, the codes are intended to be used for new construction or major renovations. The way they’re actually administered is up to the province and territory. They set the requirements, saying that you shall use this version of the code, you shall apply it in this case and you shall retrofit in this case. The National Research Council doesn’t set any of those criteria because that will change not only by province but by city or municipality throughout the country.
In some jurisdictions — I’m not saying this is going to happen — they may say you have 10 years to comply with this requirement in the code in your existing property. Others will say if you’re undergoing a major renovation, which could be a roof replacement, you shall replace it to this standard. Generally, the way it works right now is that if you’re doing a replacement on a building, you replace it to the code that it was built to. That’s what you can do. But they may say you have to replace it to this higher level. Whether or not they come back and say you shall automatically update your building tomorrow because this new code is out, I’d be surprised if that’s what ends up happening.
Senator Seidman: Well, no. It says life cycles here, in what was presented to us. It says that the new minimum energy performance requirements would be at major building life cycle events, meaning renovation, sale, change of occupancy. But you’re saying this would be municipally or provincially regulated and enforced?
Mr. Rizcallah: That’s correct.
Senator Griffin: Thanks for your presentation.
I want to ask a couple of questions about your High-performance Buildings program. How many participants have taken part in that program, and which provinces?
Mr. Dumoulin: I’m glad you asked this question. The High-performance Buildings program is one of our key research and development programs. At NRC, it’s part of our DNA to assemble and convene partners across the industry. We deploy these long-term research and development programs with clear outcomes to start with.
This particular program is led by Trevor Nightingale, who is not with us this morning. I don’t know, Phil, if you can speak to the specifics of this program?
Mr. Rizcallah: To be clear, the question was how many departments and groups have participated with the High-performance Buildings program?
Senator Griffin: That’s correct, and which provinces.
Mr. Rizcallah: I can’t answer the question for which provinces. I can answer for some of the provinces. I know at NRC, the HPB has worked closely with the province of New Brunswick, the hydro group. We’ve worked with Royal Bank of Canada, for example, and they’re located throughout. It’s a national organization. And we’ve worked with several federal departments, Natural Resources Canada, the Department of National Defence, Infrastructure Canada, several other groups. But I can’t tell you without Trevor being here. We could get that information to you if you wish.
Senator Griffin: Okay; great. I’m from Prince Edward Island. On our landscape, we have these wonderful heritage houses, farm houses, the L-shaped house. Some of them are pretty drafty if people haven’t been retrofitting them all along. If somebody owns a farm and is perhaps getting elderly, they want to sell the farm, but yet it would cost hundreds of thousands of dollars potentially to bring the farm or the house up to code.
In some cases, I could see that the simplest thing for them to do, or they would feel the simplest thing for them to do would be to destroy the house, knock it down. Whenever you’re taking carbon costs into account, are you taking into account the costs that would be associated with building a new, fresh building rather than retrofitting the existing building?
Mr. Dumoulin: Thank you for the excellent question.
Mr. Rizcallah: That’s all part of the equation. You consider whether or not tearing down the building is more economical and better from a carbon footprint standpoint versus renovating that building.
I want to get back to a statement you made. I don’t believe it will be a case that the code comes in, you automatically have to take your historic building or 100-year-old building and update it to the latest edition of the code. We have several examples. For the last 75 years, we’ve been updating our code and I don’t know of any example where a province has come back and said the code now says you have to install sprinklers in your building, for example, so you shall sprinkler your building. It doesn’t happen that way.
I don’t want to put fear in people’s minds that this is going to be the intent. Usually the provinces are very astute to the needs of their constituents and they will listen, consult, come up with a timeline and time frame that works within their area, and for various classes of buildings. You’re not going to require heritage buildings to meet the same requirements that you would a regular building. But chances are if it’s an easy fix, a replacement of windows, they will ask you to replace with better improved windows. A roof, you will replace with improved roofing. That’s what I can tell you on that.
Senator Patterson: Maybe we should let Senator Galvez ask a written question.
The Chair: She has given me the signal that she’s ready.
Senator Galvez: I’m well placed to appreciate the work that you do, because I’m a researcher and I am in civil engineering.
However, the environmental commissioner has put out a report saying that things are not progressing, and she has listed a lot of reasons for that. For example, she said that you have a number of ministries that should be working together, Environment and Climate Change Canada, Public Safety Canada, you, Infrastructure Canada and Natural Resources Canada. We are here, each one of them, and everybody has progressed to a certain point.
You mentioned that you are the coordinators. So with this coordination, why are different institutions progressing at different paces? They don’t seem to be coordinated.
Another question: Energy is a low-hanging fruit because everybody pays for energy. We count energy. We have metres everywhere. But we don’t count water. We don’t count waste.
Your codes are all focused on energy. When are we going to get to water, waste material, recycling, sustainability and life cycle?
Mr. Dumoulin: Thank you for the excellent questions. Let me address the first question. Speaking of our role as coordinator and the need for additional coordination across different agencies and ministries.
I can tell you there’s a significant coordination. When I mentioned in my opening statement that NRC acts as coordinator, that was specifically for the codes for supporting the commission. I am sure you know that there are many actions within each ministry. Several actions will lead to us achieve our targets, and we all have different roles.
NRC is not the overall coordinator for everything that goes on throughout Canada. We have different roles, and we don’t dictate what happens. Our fundamental role, if you go back to our mandate, is to provide knowledge and technology first, and then use those as advice for evidence-based decision-making. Different bodies are required to make decisions. We don’t dictate what industry does. We don’t do this in any of the sectors in which we operate. So it’s more coordination.
Speaking of coordination specifically, it’s for the codes.
Senator Galvez: Who holds meetings on the codes?
Mr. Dumoulin: It really depends on the actions. I cannot speak to the specifics actually — not at this point. To be honest, I don’t know. I can get back to you, if you wish.
The second question was dealing with water, if I understood the question. When can we expect to have the same treatment regarding water and the issues around water as we do with energy? Again, I don’t know personally. I cannot speak to this.
Mr. Rizcallah: As was indicated earlier, we are the custodians of the National Building Code as well as the national plumbing code. With regard to your specific example of water, in the last cycle five years ago, we introduced a number of water-saving measures in the code — reductions for urinals, toilets, sinks, shower heads, et cetera. We are continuing to work on that. We are looking at reuse of grey water, wastewater and black water as well this year. We are evolving on that front, but that is not part of the energy code project; it’s part of our regular plumbing and building code updates.
Senator Patterson: Thank you for the presentation. I would like to refer to your point about working with provinces and territories to develop an increasingly stringent energy code.
The Senate Aboriginal Peoples Committee did a study of housing in the North, with an emphasis on social housing. That happened this past year, and we found that the model building codes developed through the National Research Council Canada are tailored to national standards and conditions but don’t take into account the unique circumstances of the North.
Witnesses told us that houses designed and constructed according to southern practices may not be appropriate in the North. For example, an experienced architect told us that building codes require the installation of heat-recovery ventilators because homes are built so airtight that these ventilators tend to block and freeze from snow accumulation and condensation in northern climates.
So we recommended that the National Research Council Canada work with the provinces, territories and other stakeholders to develop model building codes tailored to the conditions and limitations of the North. That was a specific recommendation of the committee, and we are awaiting a government response.
I wonder if you have any comments on that particular recommendation and the need to take into consideration the unique climate in the Far North.
Mr. Dumoulin: Absolutely. I’d be glad to. Thank you for the question.
This is an increasingly important question. There are many issues in the North. We are involved in discussions regarding the Arctic and all the implications. You might be aware of the fact that many agencies and ministries are involved in starting to develop an Arctic science framework and strategy. We are involved in the starting phase of that project.
Specifically to your question regarding developing codes that are adapted to these regions, initiatives are in the starting phase. Phil was recently in conversation on the topic, so I will let him jump in.
Mr. Rizcallah: We agree with your assessment that the National Building Code may not be suitable in all areas north of 60, especially in the housing market. In the last few months we’ve been working with Infrastructure Canada, National Resources Canada and Indigenous and Northern Affairs Canada as well as Canada Mortgage and Housing Corporation to put together a consortium of funding partners to develop an adaptable illustrative guide — I like to call it a simplified building code — for the North.
So when I say “simplified,” it’s not a dumbed-down code; I like to use the word “adaptable.” It’s a code you can actually adapt for the circumstances. If you are remote, and you don’t have access to a HRV, for example, you are not going to design your home airtight. You will design your home differently in that location.
We hope to start this project within the next year. We have the partners together. We have the expertise within NRC to develop this code.
I’ve also had actually meetings with the Ontario First Nations group and they are very interested in a similar type of code for their group. Before we proceeded working with this specific provincial body, we wanted to get buy-in from a national scope. Now we’re getting more of that. We hope to develop an illustrated adaptable housing guide for First Nations’ use.
We can’t dictate whether it will be enforced or used, but we’ll develop it for them and it will be there if they choose to use that document.
Senator Patterson: That sounds promising.
The Chair: I’m just going to say something, further to that question, because I think it’s an excellent question. This just didn’t start; the government didn’t just start building houses in the North. This has been going on for decades.
When you say you’re developing or working with some other department and just starting to look at it now, what went wrong before? I’m at a loss; the Arctic didn’t just appear.
Mr. Rizcallah: No.
The Chair: These houses have been built by government for people up there, and we’re just now putting together a group to say we’re going to study what the problems are and how we’re going to fix it?
Please, help me a little bit.
Mr. Rizcallah: I wouldn’t say that we just started. We’ve had the Part 9 of the National Building Code, which deals with houses, that can be used, but the complexities of using that code and using it properly are another issue.
You can have the best code in the world but if you don’t have the expertise on the other end, the follow-up or the inspection mechanism in place to make sure it’s being built according to that code, you’re going to run into problems with mould, heating and structural deficiencies. Right now, the code is designed so that it can be used in the North with some difficulty, but it could be used there.
What we want to do right now, with an illustrated guide, is prepare something that’s a little easier to actually use in the North. I don’t want to get into the discussion about enforcement, adoption and inspection because it’s not our mandate.
The Chair: I’m not asking you to. I get what you’re saying. It’s some other government department that wasn’t doing something that they should have been doing. I find that disturbing because of all the problems that we do have with mould and houses that are falling apart in the North, and they didn’t start just yesterday. They’ve been there for a long time.
Senator Dean: Thank you for being here, for the work you do and for the breakthroughs that your organization has achieved in the past.
I want to step beyond codes at this point. You’re a globally renowned research organization. Can you tell us a bit about the kind of out-of-the-box, blue sky thinking that is being done at the NRC, either within the boundaries or in collaboration with others, about the next generation? I’m talking about the stuff that we’re not talking and thinking about now, beyond the light bulbs, the 2-by-6s and the insulation.
Ten or 15 years from now, what are you going to be talking about with the people who follow us? We have the privilege and opportunity to have you here and I think it’s a question that should be asked.
Mr. Dumoulin: Thank you for the very interesting question. Yes, we would like to think out of the box. We have a bunch of people at NRC who really like to do that. We have, as I mentioned earlier, a breadth and depth of expertise. We have a wide range of people and we have quite a good collection of out-of-the-box thinkers.
If I may — and Phil, if you want to jump in, please do — in terms of out-of-the-box thinking for construction and buildings, we need to be thinking about smart cities, intelligent cities and cities of future. These are the buzzword expressions that are floating around, and what that really means in practice is we’re starting to work on integration of artificial intelligence, sensors, remote sensing and automation. We are starting to consider integrating into buildings automation that you might see actually in industry and in manufacturing operations.
Aging in place, for example, will depend to a large extent in sensing movement within the home, detecting if something went wrong for an older person and activating alarms; that sort of thing. You also need to be thinking about the integration of transportation within cities because there is more and more urbanization and transportation issues are clearly grave.
So the first mile and last mile of integration consists of how you consider urbanization and the deployment of our cities so that they’re well integrated while making sure that you have commerce and living spaces. It requires thinking about new models of urbanization. But really, if I wanted to cut it down to a sentence, it would be integrating information technology and software with the physical world.
Senator Wetston: Thank you for coming today.
Following up on Senator Dean’s question, research and investment in research is one of the keys to economic prosperity. I’m quite familiar with the extent of research and investment in the private sector. I’m a little less aware of the amount of research and investment in the public sector but, of course, well aware of the work that you, academics and universities are doing.
I have a number of short questions. Where does the NRC rank globally in terms of research and investment in research?
Mr. Dumoulin: Thank you for the question. Are you talking about amounts of money, inputs or outputs or activities?
Senator Wetston: My second question is: What is the extent of your research in this particular area of important activity?
Mr. Dumoulin: The global research budget at NRC is about one billion dollars per year. Of course, you need to break it down into several portions. About $300 million, give or take, go toIRAP, the Industrial Research Assistance Program. Roughly speaking, if I can break it down to the investments in research and development activities — the labs, in other words — you’re probably talking $275 million.Breaking it down to construction, we’re talking probably $50 million or $60 million.
Senator Wetston: Where do you think that ranks from the point of view of other government research institutes? There are many very well-known ones. Do you have a sense of where that is? I’m trying to understand whether we’re investing enough in the research in this area.
Mr. Dumoulin: Yes, I would say we are investing enough in government research because we use the money efficiently. We have to come up with Canadian-made solutions for our limited budgets. Of course, if we compare ourselves to Germany, the U.S. or China, we are dwarfed by these economies in many different dimensions, and that goes to research and development as well.
Our budgets are scaled to our size, and that’s why we need to come up with innovative, creative solutions.
With regard to Senator Massicotte’s earlier question regarding why we should be optimistic in reaching our targets, I’m personally optimistic, though not specifically with regard to the codes. I’ve not been in that business long enough, but I’ve been long enough in the overall innovation business to be confident that we will reach solutions because we have a vibrant community of SMEs and innovators who will come up with them.
We have a number of entrepreneurs across Canada who are seeing the signals, be they in construction and in other areas, who will jump at the opportunity to bring breakthrough innovations to the market.
That’s what we need to do in Canada because we don’t have the budgets that they have in Germany, China and the U.S. So we have to make sure that we align the supply chain and have all the small- and medium-sized companies at the table understanding the needs of the big guys so that they can jump at the opportunity and be creative in coming up with Canadian-made solutions.
Senator Wetston: Has your budget been increased to ensure the amount of research required is actually taking place? As I indicated in my preamble to the question, there is a fair amount of activity or work that’s been done in studying the extent of corporate investment in research. That has not been as extensive as other countries, I’m told, which has resulted in less productivity than we would have hoped for in our economy. So government institutions that are doing very important research, like the NRC, must have the budgets to be able to support the work on the industrial side. I think you mentioned the IRAP.
Has it been increased? I realize it’s a bit of a value judgment when you say, I think it’s enough. But relative to other economies, we have a very skilled amount of research, so the relative comparison is important from the point of view of whether NRC is being given the type of support necessary to support research in Canada. It’s a bit of a long question.
Mr. Dumoulin: It is a long and very interesting question, and we could spend a lot of time debating these issues.
Our mandate at NRC is to execute research and development and support government decisions, and what you’re alluding to is more of a policy question.
We can look at the numbers, and, of course, we know them. If I want to be a bit simplistic, if you look at the statistics of investment per GDP globally, for example, we in Canada are doing well compared to other nations.
Where we’re failing is industry investments in R&D. We’re lower than the G7 countries.
A lot of people, much smarter than I am have been scratching their heads to find ways to increase industry investments. I think it speaks to the structure of our industry. As I mentioned, we have of small- and medium-sized companies, and that is why we need to develop solutions that are adapted to Canada, where we don’t need to invest that much money but create the right environment for innovation.
Senator Dean: I have,perhaps, a simpler question: You work with 1,000 business organizations on research; do you charge back?
Mr. Dumoulin: A simple answer to your question is yes, we do.
Senator MacDonald: In your presentation, you mentioned that reducing the carbon footprint in our buildings will support Canada in achieving its commitment under the Paris Agreement for a 30 per cent GHG reduction by 2030 relative to the 2005 levels. You said it’s a very immediate and practical goal. I understand the immediacy of the goal. I’m not particularly convinced of how practical it is.
For example, last December, Canada’s first ministers released the pan-Canadian framework on clean growth and climate change, but Saskatchewan and Manitoba did not accept or adopt the framework.
When you try to put a plan like this in place, how does it affect your goals when certain provinces won’t adopt the framework?
Mr. Dumoulin: It’s a very interesting question. I must say it’s beyond our capacity to deal with these issues. It’s really at the policy and politics level. As I mentioned, our role is to develop knowledge, do research and make sure that the knowledge is there to make evidence-based decisions. I cannot answer that question, honestly.
Senator MacDonald: In the same vein, net-zero energy ready buildings, which is the goal for 2030, seems to be a really high threshold. What are the biggest obstacles to getting there in terms of refitting buildings or new buildings? What are the biggest challenges?
Mr. Dumoulin: I expect Phil to jump in at some point with specific examples.
What I can say in my limited experience in this area is that there are examples of buildings achieving this. The technology, in some specific cases, is around. There have been demonstrations of net-zero energy buildings.In other words, buildings have produced all the energy they require.
Mr. Rizcallah: You asked a question: What do we do when we don’t have consensus amongst all the provinces for the development? We continue to do the research. Because you have two provinces, there’s still the rest of the country in favour of moving forward toward this goal.
We developed the technology, research and the validation to allow them to reach this goal. The way we hoped that we’ll meet Manitoba and Saskatchewan’s needs is that we are going with a tiered approach. They may not necessarily be comfortable going to a net-zero immediately, a net-zero ready home. We can go in with phase 1 being a 25 per cent improvement and phase 2 is a 35 per cent improvement, phase 3 is another 12 per cent improvement and phase 4 gets you to net-zero. Manitoba and Saskatchewan sit on our committees, all these provinces, and they provide input at a technical level, as well as policy levels.
If they’re not comfortable getting to net-zero, they may choose to go to tier 2 and say, “We’re going to the 35 per cent improvement right now. We can afford that as a province, our constituents are happy with that.” And then at least they’re moving in the same direction as every province in the country. They are following the same trends to get 35 per cent. Then they may, in 2035 — I’m not putting words in their mouths — go to the net-zero later on.
That’s how we meet those challenges.
Senator MacDonald: I’m assuming the reservations are based on cost. Can you give us an example of a cost that would be specific to Saskatchewan and Manitoba that may not be specific to other areas of the country?
Mr. Rizcallah: I’m not sure if the reservations are exactly because of cost. There could be other reasons why they’re not going forward. They have other challenges. They have other priorities in those jurisdictions. Sometimes that plays a role in whether or not they want to adopt and put all their eggs in one basket and move toward net-zero. Job creation or other economic factors may be directing their decisions at that time.
I’m not sure if it’s cost. I can’t tell you what the cost would be to go to net-zero buildings. We have ballpark figures of what we believe it will be for a home to go to net-zero today, but I can guarantee you in five years that could be cut in half or reduced significantly as you start getting economies of scale.
The Chair: I’m going to ask a couple of questions and then Senator Galvez has one to ask.
We’ve talked a lot about codes. You say work to develop a model code or guideline for existing construction will be completed by 2022. Then you go on to say by 2022-23, a revised model code for new construction will be published with several performance tiers, the highest being net-zero energy.
I don’t know if those two are the same thing. Are there two different levels, one for existing construction and one for new construction? Would I be correct in assuming that?
Also, could you provide us, through the clerk — you don’t have to do it today — a description of what “net-zero energy ready”means.
You say you have some costs in mind about what that would be for new construction, and we’ve had some people present about some of the costs for new construction, but I’d like to see if it aligns with yours, if you could give us that.
To cut it in half, how much uptake would have to take place across Canada to cut that cost in half?
You can either answer now or send it through the clerk to everyone. Would that be okay?
Mr. Dumoulin: Absolutely.
Mr. Rizcallah: I can answer some it right now and provide information as well.
In answer to your first question, there are two codes. One of them is a code for new construction. That’s the existing code that we have right now that NRC publishes and the provinces adopt.
The one dealing with renovation would be a brand new code. We call it “code/guide” because it’s only a code when somebody adopts and enforces it into regulation. We’re going to call it a guide and provinces and territories can choose to use it as they wish, but the first edition of that guide will be coming out in 2022.
With regard to the net-zero ready definition, the committees haven’t fine-tuned that definition yet. NRC is not defining net-zero ready yet. The technical committees will define what they mean by net-zero ready. Does that include a component of carbon neutrality, does that include the type of fuels that you’re using? That will be defined by the committee. That doesn’t keep them from working toward the ultimate goal of having a home or a building that basically uses as much energy as it puts out.
It doesn’t use more energy than it actually puts out. That definition is coming, so I won’t be able to provide with you that definition because I don’t want to speak on behalf of a technical committee. We allow that process to be independent of the federal government. We allow the members of the committee, who are representing Canadians, to make that decision on what they want net-zero to be.
With regard to the cost, I can throw a number out but I don’t want to be held to it because it could change depending on the province. With a typical home, we could estimate it would be about a $35,000 increase on that construction. But we’ve also heard numbers half of that already. We’ve heard numbers half that amount, $17,000 or $15,000 to improve and to build that home to meet those net-zero ready type requirements.
Again, it depends on where you’re situated. It depends on the builder, the knowledge base of that builder and how innovative you are in building that property.
Senator Massicotte: On that range of $17,500 to $35,000, what’s the size of the home and what’s the cost of the home excluding those renovations?
Mr. Rizcallah: I can’t answer that question. I have to go back and look —
Senator Massicotte: Could you provide that?
Mr. Rizcallah: I can provide that to you.
Senator Massicotte: It would help us very much in some of our deliberations.
Senator Galvez: You mentioned that you have several goals, the one for new houses, the one for renovation, the guidelines, but there are other codes, including bridge codes, and then you have the energy efficiency guidelines, too.
You said that you develope this knowledge, but then you leave everybody to do whatever they wanted. The provinces can adopt it or not adopt it, or adopt this version or that version.
If you had the power to influence, what would you recommend? How should the process be so that most people will go with your recommendations.
Mr. Dumoulin: At NRC, we believe that the process is working efficiently and well. You need to look at the code as a result of a compromise among all the industry stakeholders, taking into consideration the safety of occupants, cost, the evolution and industry uptake.
You need to keep in mind that there’s a very broad diversity of players. You have the very large construction companies. You also have the small entrepreneurs, and they need time to adapt to new technology. They need time to train their employees when changes happen.
The process is a compromise. It’s working well.
You also need to keep in mind that if you have breakthrough innovations and small companies come up with a new product, there are ways to get that product to market faster without waiting for the code to be updated in five years’ time. There are also ways to actually develop a guide and show to regulators that this will work.
Do you want to add anything, Phil?
Mr. Rizcallah: I will be a little harder on this one. If we were to make a recommendation, I would say it’s in the best interests of Canada as a whole that everybody references the same and latest edition of the code at the same time. That helps on a number of fronts. One of them is economic mobility: You’re not having a trade in Manitoba have to learn a whole new set of codes to work in Saskatchewan. It also helps with innovation. It helps industry to be competitive, because they’re not creating three different products in various provinces across the country.
We also understand there are challenges within the provinces and territories in adopting these codes in a timely manner. Ideally that would be the goal. When we develop our codes, we work very closely with the provinces and territories. That’s why we’re not building the best code, because not everybody would accept the best code. Minimum acceptable code is what we develop, one that all the provinces are happy with.
The Chair: Thank you, gentlemen, very much for being here and for your presentations and responses to our questions. You are very well regarded, and we appreciate the work you folks do. Keep up the good work. Have a good day.
For the second segment of our meeting, I am pleased to welcome from the Canada Green Building Council, Thomas Mueller, President and Chief Executive Officer.
Sir, we look forward to your presentation. We’ll have some questions after. The floor is yours.
Thomas Mueller, President and Chief Executive Officer, Canada Green Building Council: Thank you very much for the invitation, Mr. Chairman. I really appreciate being here to share with you the Canada Green Building Council’s perspective on how the building sector can contribute in working toward a low-carbon economy.
I prepared a deck for you, so I just want to hone in on a couple of slides to make a few points for discussion.
First of all, I’d like to say that the building sector is really a key element in moving toward a low-carbon economy. When we look at the building sector, not just in Canada, but globally, 30 per cent of greenhouse gas emissions are associated with the building sector. In some cities, for example, with good public transportation systems and density, like the city of Vancouver, greenhouse gas emissions from the building sector can be as high as 54 per cent. This is a significant opportunity for reduction. I wanted to share some of our ideas on how we could move toward achieving that.
Going on to slide 3, the opportunities are quite significant, not only for greenhouse gas emission reduction but also in terms of creating jobs and creating tax revenue. Slide 3 is based on a study we completed in 2016, and it’s based on 2014 numbers. You can see that the green building industry in Canada at the time contributed about $23 billion to GDP, and there were almost 300,000 full-time direct jobs in the green building industry. Actually, it’s significantly higher than forestry, mining, and oil and gas construction combined in Canada. I’m not sure these are new jobs; I’m just saying these are jobs in the industry. I’m confident in saying they require additional skills and knowledge in building to deliver high-quality, high-performance buildings.
The question we asked ourselves a couple of years ago was: How can we take the building sector to a 30 per cent reduction in greenhouse gas emissions by 2030? This is really the key challenge.
Moving on to slide 5, one of the really important considerations is that we need to shift our focus from energy to carbon. We mean that when we talk about greenhouse gas emissions and carbon reduction, in the building sector and elsewhere, we still continue to talk about energy. But when it comes to buildings, when you design buildings with energy in mind versus with carbon in mind, you get quite different outcomes. This slide tries to illustrate that. If you have an identical building in Quebec, and you operate one of the buildings purely with energy from hydro power, which is abundant in Quebec, versus the same building with the same level of energy efficiency heated with natural gas, the one with natural gas has a carbon footprint that is 36 times higher than the one using hydro power.
So you can see how the system we use in designing a building will make a big difference in how the building will perform at the end when it comes to carbon reduction.
With this in mind, the next evolution in Canada is really zero-carbon buildings. Moving to slide 7, the Canada Green Building Council released its zero-carbon building standard in June of this year. We consider this to be the new performance benchmark for buildings in Canada. It’s a Canada-made solution, and it really uses carbon as the key metric to achieve performance in buildings, combined with energy efficiency measures, specifically those that speak to what’s important in Canada. We have an extreme climate, from hot and humid to cold and dry. That speaks to designing buildings with envelopes to reduce the demand on energy altogether, combined with renewable energy sources. These can be both on-site and off-site renewable energy sources.
We launched the standard in June. We already have 16 pilot projects across the country, from the private, public and institutional sectors. The building types range from infrastructure projects to 60-storey office buildings on Bay Street in downtown Toronto.
The industry, building on the success of the LEED certification program the council has been delivering in Canada for the last 10 or 15 years, has about 1.1 billion square feet. Building on that experience in rebuilding that sector, the industry is confident that they can now deliver on zero-carbon buildings. In fact, in the federal government’s PSPC department, real property is actually one project currently in the program.
In October, we will open up the program for registration and certification, so it’s not just a standard. We will also be providing verification and certification services to that standard across Canada.
It is a made-in-Canada solution and it’s really also an opportunity for innovation in that sector that continues to drive job creation and economic growth in the country.
In quickly referring to slide 8, with that strategy we think we can achieve a 17 per cent reduction from the building sector, or 7.5 million tonnes over 2005 levels. This would be possible if, between now and 2030, we built every building over 25,000 square feet to zero carbon. That is the estimated savings.
It’s a very important part of the agenda, but an equally important part is that of building retrofits. We cannot reach our climate change targets from the building sector without considering and investing in retrofit. By building retrofit, I do not mean homes. We are talking about larger buildings over 25,000 square feet, where it becomes more economical to achieve a good return on investment.
Moving on to slide 12, many of my remarks are really about this building retrofit, because it is one of the most cost-effective ways to cut emissions. This has been proven. This is a slide from the International Panel on Climate Change, the IPCC, and studies by UNEP and the International Energy Agency suggest that this is one of the most affordable ways to cut emissions of buildings.
We modelled that a 51 per cent reduction is possible through four strategies that are highlighted in slide 13. Recommissioning deep retrofits is a core concept, as well as, again, renewable energy and fuel switching.
More energy efficient buildings are the core concept here. Canada, by and large, still has a very inefficient building stock, but that also means we have a great opportunity for improvements at a very low cost and investment.
On slide 14, you will see that the goal we’ve been discussing with the federal and several provincial governments to establish a retrofit economy in Canada that provides the reduction of greenhouse gas emissions. We have modelled how we would contribute to GDP, save energy costs of about $6.2 billion and create employment and tax revenue for governments across the country.
This is the scenario if we actually retrofitted 100,000 buildings over the next 13 years. These would be the benefits that we would accrue from that activity.
Finishing off on slide 16, it is very important that we focus our efforts across the country. The council released a report two weeks ago that is a retrofit road map that shows the way we can target our activities across the country. It’s really dependent, again, on the mix of energy sources that they use across the country.
In regions with high-carbon grids like Alberta and Saskatchewan, the opportunities for retrofit are significant, as are the use of renewables to get off of fossil fuels. In more moderate and low-carbon grid areas, we also have the opportunity for retrofit and recommissioning, in particular, and that’s actually across the country.
You retrofit the buildings when they come up. There’s a huge number of buildings that are in that part of their life cycle where they are ready for retrofit, and we need to not just have what we call shallow retrofits, but deep retrofits to bring 20 to 40 per cent reductions. We need to target our efforts when it comes to renewable energy and fuel switching depending on the region and on how clean or carbon-intense the electricity grid is in those regions.
In terms of our recommendations to the Government of Canada through the committee, the federal government has a huge role to play. It’s one of the largest building owners in the country, if not the largest, and you can lead with your own building stock in various ways, from building new buildings, retrofitting existing buildings to a zero-carbon standard, upgrading the existing green building policy of the federal government from LEED Gold to Platinum and also expanding that to existing buildings.
The government could also do an assessment and come up with a retrofit strategy for the government’s building stock, including an assessment of where could you best target your efforts to move toward a low-carbon building stock over the next 13 years.
In terms of the private sector, we recommend similar activities. Any federal funding that goes to either institutional or commercial buildings should have requirements around zero carbon. We recommend that programs like the Low-Carbon Economy Fund, the Canada Infrastructure Bank and the National Housing Strategy also attach requirements around low or zero carbon or retrofit targets for existing projects.
The procurement and policy power of the federal government should not be underestimated. This is a great tool to bring about change in the marketplace. I’ll cast my thoughts back to 2004 or 2005, when the previous Liberal government brought in the LEED Gold policy. That had a huge value for the private sector because the government was essentially de-risking green building construction for the private sector, and look where the private sector is now: there are billions of dollars in investments of pension fund and equity money going into green building construction across the country, in any centre in Canada. The government does an important role both for its own building stock but also for the institutional, commercial sector and non-government building stock.
I’ll end it here, and I look forward to your questions. Thank you very much.
The Chair: Thank you very much, sir. We’ll go to questions.
Senator Massicotte: Thank you for being with us this morning.
Just to delve into the practicalities of some of your recommendations, are you recommending that we should target a net-zero use of energy in any building in excess of 15,000 square feet?
Mr. Mueller: It’s 25,000 square feet.
Senator Massicotte: Explain to me how you get there. You can make the assumption that it’s a logical, rational and good investment, but I suspect I could find many good examples where that’s not automatically the case. Are you suggesting a subsidy? How do you get the mechanics there?
Mr. Mueller: Just for clarification, we’re not recommending that these buildings should go to zero carbon. There are about 100,000 buildings over 25,000 square feet in Canada, and we’re recommending that these buildings have a 20 to 40 per cent reduction in energy use. That’s what we’re recommending.
Senator Massicotte: How do you get there?
Mr. Mueller: There are three barriers. One is access to capital. The second is high transaction costs, because right now the retrofit is done building-by-building. And a third one is that investors don’t know about the performance outcome of buildings. Once it’s retrofitted, will it deliver the results and return on the investment that we put into buildings?
We have a program we’re currently piloting in Ontario, called the Investor Confidence Project, which is an assurance tool that will assure that the building will deliver on its retrofit promise or potential. We have covered that.
Where the government has a very important role is on the investment side. The government could consider using the infrastructure bank and infrastructure money as a loan guarantee for building retrofits.
With the assurance piece, the capital and the backstop of the loan guarantee, the private sector is very interested and ready to invest pension fund money in real estate and in building retrofit. Just a few days ago, it came out that Canadian pension funds so far have invested $188 billion in real estate around the world and they will increase that out of the $1.5 trillion available in pension funds because it provides a really great return on investments.
Pension funds are not like private equity. They have a little more patience, look for consistent returns. We’ve seen it in LEED buildings, both new and existing. A lot of pension fund money has gone into that. We also think there’s a readiness to invest in bundled retrofits. It’s not one by one. It’s bundles of maybe $20 million, $30 million, $50 million offerings.
Senator Massicotte: I can appreciate some institutions and pension funds, and you can package them, but are you suggesting you would force private enterprise to sell it to those pension funds? In my experience with pension funds, and I’ve dealt with them quite a bit, they know how to count. They’re looking for return on investment because they represent pensioners.
I’m trying to be practical. Let’s take an industrial building. I suspect that 80 per cent of large volume manufacturing or storage buildings are at least 15 to 20 years old, probably more. The average cost is $2 or $3 a square foot for these buildings. If you save 30 or 40 per cent, now you’re at 80 cents a square foot, but I suspect your cost of renovation is much more than $10 or $20 a square foot. A 1 per cent return is not very good, especially when you consider the risks.
I know you can quote a lot of numbers, people are investing in a lot of stuff, but one by one they make sense, and I’m not sure how this makes sense without a government subsidy. I’m sorry to make it complicated by being practical.
Mr. Mueller: I think industrial buildings are probably the worst example because they’re not a very profitable business to begin with. But there are lots of other buildings, like universities and colleges — retail has done very little — where you could actually get a better return.
I’m not saying that government incentives or subsidies are not a good idea, but we’re currently looking at the different policy options and different models that would provide the best path forward. We’re not saying we have figured it out yet, but we know that there are returns on investment on building retrofit.
Building classes by age, by location, by type, vary greatly. You cannot have a one-size-fits-all kind of investment. It does vary depending on location. We think 20 to 40 per cent retrofit is possible and it will create the returns. The thing we’re currently trying to figure out, and where the government can be helpful, is what’s the best investment model? Is it supposed to be the infrastructure bank with the backstop and pension fund investment? Is it the subsidy that the government offers or provincial government offers, and then it’s paid back over time from the energy savings? There are different models on how to go about doing it.
Class B office buildings don’t have the same access to capital. This was identified over and over again as a barrier. How can we unlock that to get them to move forward when the building is ready? They will not invest in retrofit if the building is not in that cycle where it has to be retrofitted, so we have to hit that as well.
Senator Massicotte: The only caution I would give you is that 90 per cent of all building owners are either pension funds, public companies or very wealthy families. They do have significant access to capital. I think it would be an error to make an assumption to say they don’t know how to count, which is number three of your three assumptions. They do know how to count, they will do retrofit and they would have done retrofit if they thought it made sense.
As you know, nearly all of the costs are passed on to the tenants. So it’s not an issue of capital. It’s an issue of whether I can make reasonable returns from it. To make the presumption that they don’t know how to count and don’t know the calculation would lead you to some mistakes in the rest of your hypothesis.
Mr. Mueller: We don’t have the solution yet because no jurisdiction other than Europe has really tackled the issue of building retrofit. So I’m not saying we have all the answers. We’re trying to figure out what is the best model for Canada to move this forward.
We’re going to have a round table in December with some of the key federal departments where we’re going to bring forward a few policy options to figure out what the best model is. We’re saying that without the retrofit of larger buildings — and it doesn’t even have to be all the 100,000; it can be narrowed down to about 50,000 or 60,000 — we’re not going to reach our climate change goals. Because when you look at the climate change curve, it continues to go up. It’s not bending down.
The challenge we have is how we’re going to bend that curve downward. We find that retrofit is one of the key solutions and we need find a way forward with that. It’s a very good comment. Thank you for that.
Senator Galvez: Thank you very much for your presentation. I have two questions.
Where does your organization fit within the government plan? I don’t know where it fits.
Second, do you plan to include, apart from energy, other aspects that can also reduce your carbon, like water, waste, recycling of material and life cycle analysis?
Mr. Mueller: The Canada Green Building Council is a national, non-profit organization. We are industry led. So our board and our membership is made up predominantly of a cross-section of the industry. It includes developers, owners and investors, professionals, manufacturers. We also have some government members as well. So it’s really a cross-section, and our board is as well. Our board chair is from Oxford Properties.
The commercial real estate sector has a strong involvement with the council. They have a significant investment in green building in Canada. The Government of Canada has a LEED gold policy. LEED is a rating system that we brought into Canada in the early 2000s and have reduced quite successfully. We have about 1.1 billion square feet in the LEED program right now. It has been adopted by the federal government, by PSPC and by other government departments, provincial, and cities as well across the country. We currently work with the government to expand that to higher levels, to platinum and also to expand it to existing buildings, where there is a good fit. It doesn’t fit for every building and every location.
We’re making some progress with the Department of National Defence on that. That’s how we fit in the government. LEED is a global system, a global standard that has been used in 160 countries. That answers your second question. The zero-carbon standard has been developed to show leadership and innovation, becoming more focused on how we can achieve carbon reduction from the sector. But your question is a good one because I think we also need to balance that with other environmental issues, and particularly with health issues. You can build the most energy-efficient building but what does that do to indoor environmental quality, to human health and so on.
The LEED system is a good balance between those different areas. Over the last 15 years, the buildings have been designed holistically, so they are water efficient, energy efficient, careful about the materials being selected, both in terms of their environmental footprint as well as their impact on indoor environmental quality. It’s also how we develop buildings, the sites. So there’s a whole implicit target on increasing the resiliency of buildings in a phase of environmental flooding, storms, those types of things.
It’s a holistic standard and we continue to deliver that across the country. But we wanted to bring a stronger focus to carbon and how we can go to a low-carbon economy.
Senator Patterson: Thank you for the presentation, sir.
You talked about making efforts across the country and that you have pilot projects across the country. I’m from a very cold, dark, energy retrogressive region of the country, Nunavut. We’re, sadly, totally dependent on diesel.
Mr. Mueller: I’m aware of that, yes.
Senator Patterson: It’s not even the cleanest fossil fuel; for heat and electricity, it’s diesel. We’re kind of the poster child of energy regression, although I think we contribute about half a per cent of greenhouse gases in Canada, despite being the largest region of the country.
Forgive me; my focus is on this sometimes forgotten part of Canada.
I noted that your membership spans 12 provinces and territories —page 11 — and I understand your membership would be voluntary. I’m assuming that the thirteenth provincial-territorial jurisdiction that is not a member would be Nunavut.
Mr. Mueller: I don’t know. It could be. I would have to look. But we do have projects — and I would say definitely projects in the NWT. There have been green buildings built in the Northwest Territories.
Senator Patterson: There is a federal LEED project in Yellowknife.
I’m wondering whether any of the 16 pilot projects you mentioned would be in a region like the region I represent in the Senate where there are no alternative energy sources. Zero carbon sounds are great, but I’m trying to get my head around how that could happen in my region where we don’t have — and I’m not proud of this — any kind of alternate energy yet. That’s my question.
Mr. Mueller: That’s a good question. I’m aware that you have the challenge of having to use diesel and the discussions on the issues and how that could be replaced with a cleaner fossil fuel — maybe switching to natural gas or those types of fuels.
The zero-carbon standard is intended to help the industry to get to a zero-carbon position. Some can get there right away; others will take longer. This is a program that’s targeted to, in some instances, helping buildings to get there over time to improve their performance.
In a region like yours, with diesel, a fossil fuel, when you look at our map, you have a significant carbon footprint. You are also generating electricity with diesel.
Senator Patterson: Yes, 100 per cent. All of the 25 communities.
Mr. Mueller: To get to more zero carbon, you need to look at buildings — and also with your climate — that are highly insulated. There are examples around the world. I am from the Alpine region in Europe, from Southern Germany and Austria. They have great examples of buildings that are highly insulated. They’re on very cold mountains.
For you that is the strategy because it’s going to take a while for to you get off fossil fuels and find an alternative energy source.
Senator Patterson: Our communities are so small that we don’t have economies of scale.
Mr. Mueller: It means increasing the insulation and the efficiency of the building, keeping the envelope very tight. Any energy they need to put in the building, particularly for heating, diminishes things greatly. That technology is like 80 or 90 per cent in terms of the building envelope.
You will still use electricity. During the hours where you have sunshine — you have periods where you have no sunshine and it’s just darkness — you can actually use solar. Those kinds of technology make a lot of sense. Maybe even geothermal; ground-source heat would make a lot of sense.
The other option, which is not something that’s really developed yet, is really good energy storage. They could store energy for the darker times when solar doesn’t generate electricity.
These are the options you have right now.
Will it take you to zero carbon? Probably not at this point. But we’re trying to communicate that there are some projects in some regions, like in British Columbia, Quebec and Manitoba, where they have a clean energy source from electricity, that would enable you to get there relatively easily. Other regions have to work harder, but we all have to strive in that direction.
For you, having buildings with better envelopes that are highly efficient makes a lot of sense. Actually, the costs for better building envelopes — from the studies that I have seen — are actually quite reasonable. There’s not a lot of additional costs to improve the performance of the envelope, but you need also good ventilation. There needs to be good heat-recovery ventilation. This is a concept that is very clear: better envelope, good recovery insulation, good glazing and those types of things. You could really have a very efficient building that will reduce the carbon footprint of your building right away, particularly with that energy source. Then you have to switch the energy source over time where you can and how you can.
Senator Patterson: I would appreciate it if you would perhaps look into whether Nunavut is a member of the Canada Green Building Council. If not, given your encouraging statements about focusing your efforts across the country, we are the largest jurisdiction in Canada. Consider perhaps whether you might be willing to reach out to the Nunavut Housing Corporation or the Government of Nunavut to see whether we might benefit from your experience, expertise and advice.
Mr. Mueller: Sure. We would love to do that.
Senator Wetston: Thank you for coming today. You talk about a retrofit economy in Canada. With the previous witnesses we’ve had and other witnesses from government — I have a note here, and it probably is something that you’re aware of — approximately 75 per cent of the buildings that will be in existence in 2030 will have already been built.
Mr. Mueller: Yes.
Senator Wetston: As such, a retrofit policy or approach is obviously necessary to achieve these targets.
Can you share two things with me? One is a very general question. I’ve had some experience with European building materials. I won’t get into the reasons why, but I’ve had some experience with them. Can you inform the committee as to why Europe is so much ahead of Canada when it comes to building materials that have less carbon intensity as well as building materials that improve the environmental quality of homes and buildings? Do you agree with that statement, first, that Europe, particularly Germany —
Mr. Mueller: I agree with that. I go to Europe every year to see where the innovation is going with regard to building energy performance. That includes the materials.
Europe is ahead, but I would not say all of Europe. Southern Europe, not so much. As soon as you get south of the Alps, the farther south you go, things change quite dramatically.I don’t know why that is. It’s just a fact.
Overall, Europe, particularly for places like the Netherlands, Austria, Germany, Sweden and even eastern Europe the economy has always they don’t have their own energy sources. If you get your natural gas from Russia, you have a totally different perspective than if you get your natural gas at home. We are energy rich.
They have to be more efficient and get the biggest value for any unit of money or energy. It’s just their thinking
It’s also a highly populated region of the world. There are 400 million people living in Europe. It’s very dense, and they just have — I can’t explain it any other way — a mindset of everything has to be more efficient. You can talk to 70-year-old women on the street, and they’re quite informed about environmental issues. Why is that? It’s the nature of a culture of conservation and consideration.
Europe is ahead in terms of the energy performance of buildings quite significantlywhen you look at our standards. They actually have in Europe a retrofit economy. In Germany, you have a retrofit economy. Every year the federal government in Germany invests about 6 billion euros into the retrofit economy to build that up, because they have the benefit of less dependence. Everything is more efficient and more effective.
On the building materials, they are looking both at the carbon footprint of the materials as well as the toxicity of the materials. Years ago, they introduced programs like environmental product declarations, called EPDs, that actually disclose the environmental footprint of different building materials, and we introduced that in Canada about three years ago through our LEED program.
In the LEED program now you have the opportunity to get environmental product declarations, and different industries in Canada actually had those done. The cement and wood industries, and many others, have had them done. There are now hundreds, if not thousands, that better understand how to bring transparency to what goes into building materials. It’s not to point fingers, but we need to better understand what goes into building materials.
Europe has had this for at least 15 years, and maybe 20, so they have built this knowledge after a certain length of time of how they can make better choices when they make products and then, when they put these products into buildings and other places, how they can then build buildings with a low environmental footprint, not just from operations but from a materials point of view. Then, they can also reduce the impact to the environment during extraction, manufacturing and so on.
In Canada and North America, this is in its early days, but in Europe it is more advanced.
Senator Wetston: Most of my experience was with indoor air quality and materials that are quite toxic, like formaldehyde, MDFs and others.
Mr. Mueller: I actually gave a talk at Harvard just two weeks ago. They have a whole body of research on building and it is quite shocking: They have measured the impact of building materials on the indoor air and they found that the indoor air is actually as or more polluted than the outdoor air that we breathe.
Senator Wetston: This was a Harvard study?
Mr. Mueller: Yes, and the researcher is Joe Allen. If you give me your card, I can give you the information, if you like.
That is actually quite frightening. In the LEED program, we have worked on reducing impacts on indoor environmental and air quality. We spend 90 per cent of our time indoors, so the indoor air is going to matter a great deal. That’s all I’m going to say.
Senator Wetston: My thought about that is if we’re going to improve buildings in terms of energy efficiency and reduction of carbon standpoint, you may as well improve it from a health perspective as well.
When I mentioned the number of buildings that would have been built by 2030, I’m not sure if the 75 per cent number is accurate. I’m quite sure it’s close to what we might rely on. In the concept that you’re developing, how do you go from concept to implementation in this retrofit economy?
I know you’ve talked about it in general but do you have any specific thoughts about what will be absolutely necessary to achieve that goal?
Mr. Mueller: We already talked about the investment piece, and we do hear very positive things about that, but it’s not an easy answer. In North America, this is new territory and Canada can really lead in this space.
There’s a whole value chain in buildings and it starts with the fact that in Canada, we don’t have good information on actual building performance. We simply don’t collect that data. So within the federal government, Natural Resources Canada introduced Energy Star a number of years back, where we started to collect information on buildings, and it was a very positive step because when we did energy assessments, we needed to use U.S. data to assess our own buildings. Now we have a better data set, but the government needs to continue to invest in that.
So that’s one part, but how do you get data? You get the best data if you make energy benchmarking and reporting on buildings, energy and products mandatory, similar to what Ontario has done. They now have a mandatory regulation on benchmarking. Cities across North America and the U.S. such as New York, Seattle, Chicago and Boston all have mandatory programs like that. When you build the data set, you actually understand buildings, you understand how different building classes perform and how you need to invest. That’s a very important part.
We developed and shared a national framework on how this could happen in Canada and we continue to advocate for that. British Columbia is considering, as well, introducing a mandatory program. When you know what your investment is, then you get to know which types of buildings at what age you need to target.
That’s where the government has a role, through theInfrastructure Bank, incentives or utility-supplied incentives to invest in those buildings. We need to work out what the best investment model is, because we don’t know yet. I have a hard time seeing that Canada would spend $6 billion every year on incentivizing retrofit. We need to find a more private sector model on how this could work because it is available, but what would make somebody invest to get the return?
The third part is that you need to have benchmarking once improvement has been made; you need to label the building. There needs to be public disclosure on how the building performs, because that transparency will help a great deal.
In retrofit, we have a program called the Investor Confidence Project, where you have to make sure that there’s rigour in the system. When you invest in the building and you say you’re going to get a 25 per cent improvement in energy performance and reduce energy bills and carbon, you want to know you’re going to get that outcome: that the building is verified, the work is being done and the building is operating at that level. That’s where we have the Investor Confidence Project to introduce that rigour into the system.
It’s a value chain that we need to create and the government has an important role to play in terms of policy and regulation.
The Chair: I’m going to ask a couple of questions and then I will go to the second round.
Further to Senator Wetston’s questions about why Europe has done a lot more, and it is well-known that they have, part of it is the cost of their energy. If you’re going to pay 42 cents a kilowatt hour for electricity compared to 8 cents in Canada, are you going to be a little bit more efficient than you would be in Canada? Certainly, you would be.
Those things drive it too. You can’t just raise utility costs to force people to do those kinds of things. At least, that’s one of the reasons that I’ve found.
Mr. Mueller: I think you’re absolutely right. That’s the main reason: Money talks.
The Chair: Money talks. It’s not just Germany; Denmark and all of those countries have the same issue.
The other thing is that you said you would provide Senator Wetston with some information. Would you please provide it to the clerk so that all of us will get it?
Mr. Mueller: Absolutely, I would be happy to do that.
The Chair: It was an excellent question.
Do you have a description of a net zero energy house?
Mr. Mueller: Yes, we do.
The Chair: Could you provide that to the clerk also?
Mr. Mueller: We have the standard and it describes it in great detail. I didn’t want to give you a big package. We have the standard, and it describes exactly what the standard looks like.
The Chair: I appreciate that.
I come from northern British Columbia. Fully 50 per cent of houses in Canada use natural gas for heat. It is one of the cleanest fossil fuels that we know now.
Mr. Mueller: It’s a good replacement for coal or diesel, absolutely.
The Chair: We haven’t used coal, but there are some places that use diesel because that’s all they can use, such as where Senator Patterson is from, remote communities that don’t have access to a natural gas or the hydro grid. We’ll use diesel fuel, and that’s just a problem that we have and I don’t know how we would deal with it.
To actually reduce our carbon footprint, do you think that we can get away from 50 per cent of the homes using natural gas? As new homes are being built, many of them are heated with natural gas. I don’t think that trend is going down; I think it’s actually increasing.
How do we actually do that?
Mr. Mueller: I didn’t want to give the wrong impression. I don’t think we need to get totally out of fossil fuels to reach our goals in the building sector. Honestly, I don’t think we do. Not by 2030; but by 2050 there’s a different goal of an 80 per cent reduction, but by 2030 we don’t have to do that.
What really matters is scale. In the LEED program, 1.1 billion sounds like a big number when you look at the overall number of buildings. We have 240,000 buildings in Canada and about 7,000 in our program, so you can see the magnitude of that. Scale matters.
The point I tried to make is that it doesn’t matter how many zero-carbon buildings you build. Even if you build everything at zero carbon, you can’t build your way out of it. You have to look at the retrofit both of buildings and also in homes.
I live in Vancouver, British Columbia, and even in Vancouver the homes are so inefficient that there are easy wins to be made. In new home construction, first, you have to — and you have to do it in every building — reduce the demand for energy. It doesn’t matter if you use fossil fuel energy or renewable energy because you cannot replace the same demand that we have with fossil fuels with renewable energy. It doesn’t work. You have efficiency as a core concept.
With the standards for building, I’m sure you’re aware that B.C. has moved now to the five-step code. Vancouver is at step 3 now, and I hope that many municipalities move to that. It’s a combination of energy efficiency and significantly better building envelopes in Canada. So not double glazed, but triple glazed, heat recovery ventilation. That seems to be emerging as the most cost-effective and cheapest way to reduce energy demand in buildings.
Some say can you get up to 80, 90 per cent. I think it will take some time to get there. That would be European standards. Even if we get to 30 or 40 per cent, scale matters. In new buildings, we need energy improvements, through envelope, heat recovery ventilation, better boilers, more efficient boilers, more efficient lighting. I think in B.C., when it comes to carbon, efficient lighting is actually not that important because you already have a clean source of energy, but it’s the energy bill that matters too.
Those strategies will get you there. We are not involved in existing homes and the reason is that we think that government and the utilities need to be involved in that because they have a direct connection to the homeowner.
Simply replacing a furnace in a home when it’s still leaking like a sieve doesn’t make a lot of sense either. It’s not like it hasn’t been described, what could be done better, but that’s where you have homeowners that need to be incentivized. I like a model where the homeowner makes improvements and they’re paid back, like on-build financing or a PACE program. Then they take it more seriously. And have a model where they get great reduction in energy. It always goes back to the building envelope and then the equipment. It’s not the other way around, the equipment and then the envelope. That doesn’t make a lot of sense.
First the building envelope and the insulation, and then the equipment. That’s how you get there. That would be the lowest cost option.
The Chair: I have one quick question. You talked about efficient boilers. Is there anything more efficient in today’s market than a 98 per cent efficient boiler?
Mr. Mueller: Not that I know of, no.
Senator Galvez: We know that in Europe and in other countries the efficiencies are higher, and we think that it’s because of the price of energy. What about the role of building codes? The codes in Sweden and Finland, the Scandinavians countries are stricter and they are holistic. Are you aware of the state of Canadian building codes? What is your opinion? Can they do more, or are they doing enough?
Mr. Mueller: It depends on which jurisdiction you’re in. Let me say that building codes are really important to raise the overall performance of old and new buildings in Canada. I understand the federal government is planning to do a retrofit code, as well as a net-zero code —I don’t know the exact dates. On the books, I think it’s 2019 for the retrofit code, 2021 or 2022 for the net-zero code, and it varies by the provinces as well.
I think we need to raise the overall standard. The building codes are an important instrument but I’m not 100 per cent sure they will get us there. The reason is that it takes a long time to achieve a certain threshold that everybody agrees to. It’s on a five-year cycle. So these cycles are too long. Then building codes are back loaded, which means if the federal government does a national energy code for buildings, then once it’s done, the provinces still have to adopt it. How long does it take? It can take a year, five years, 10 years. So it’s back loaded.
That also means that once the code is in place then any building that applies after that will be built to that code. If you take a school, from the planning to the approval to the completion, it might be three years. It’s back loaded so that the codes are important but when you think about the urgency around climate change now, by 2030, the 30 per cent reduction going back to bending the curve, the codes are an element but I don’t believe that they are the solution.
When you see it on the building side, the private sector has to step forward, which they have done because there’s a good business model. It helps with the return on investment, with their operating costs, the corporate and social responsibility policy, with environmental and social governance, benchmarks, sustainability. So the private sector, I think, plays as critical role in scaling that up.
We need the codes as well. And we need rating tools that help ensure that we target and implement superior performance in buildings. We need all three things because the codes alone will not solve this problem. They are an important element but not the only element.
The Chair: Thank you for your presentation and your answers to the questions. They were well received. If you could provide the information that you’re going to through the clerk, each one of us on the committee will get it.
Thank you very much, sir.
(The committee adjourned.)