THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
OTTAWA, Thursday, October 26, 2017
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:04 a.m. to study the effects of transitioning to a low carbon economy.
Senator Richard Neufeld (Chair) in the chair.
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, a senator from British Columbia, and I am honoured to serve as chair of this committee.
I wish to welcome all those who are 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 available online on the new Senate website, 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 the senators around the table to introduce themselves, and I’ll start by introducing the deputy chair, Senator Paul Massicotte.
Senator Massicotte: Good morning.
Senator Richards: David Richards, New Brunswick.
Senator MacDonald: Michael MacDonald, Nova Scotia.
Senator Wetston: Howard Wetston, Ontario.
Senator Griffin: Diane Griffin, Prince Edward Island.
Senator Patterson: Dennis Patterson, Nunavut.
Senator Seidman: Judith Seidman, Quebec.
The Chair: We should all welcome Senator Richards as a new member of the committee. This is his first meeting and he will be taking the place of Senator Dean. We welcome you very much and look forward to your participation, sir.
Hon. Senators: Hear, hear.
The Chair: I would also like to introduce our staff, beginning with the clerk, Maxime Fortin, and our Library of Parliament analysts, Marc LeBlanc and Sam Banks.
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 which are responsible for over 80 per cent of all greenhouse gas emissions. They are electricity, transportation, oil and gas, emission-intensive trade-exposed industries and buildings.
Our first interim report on the electricity sector was released on March 7, and our second one on the transportation sector was released on June 22.
Today, for the fifty-fifth meeting on our current study, I am pleased to welcome, from BOMA Canada, Benjamin L. Shinewald, President and Chief Executive Officer.
Sir, welcome to our committee. We look forward to your remarks. I am sure you have some, and then we’ll go to questions and answers.
Benjamin L. Shinewald, President and Chief Executive Officer, BOMA Canada: Thank you for having me this morning.
I will give my presentation in English, but I can answer questions in French afterwards.
I sent around a deck a few days ago. I don’t know whether or not you have had a chance to see it. I tried to keep it pretty high level.
What I thought I might do this morning is to take a few minutes to give a brief overview of who we are, and then frankly tell a bit of a story that I hope will shape the conversation for us this morning and for you and the important work you’re doing.
Very briefly, the Building Owners and Managers Association, or BOMA Canada, is over 100 years old. BOMA B.C. is about 110 and BOMA Toronto is 100 years old this year. This is a mature industry association in a mature industry.
We are the group, as you might expect, that represents owners, managers and suppliers into those two industries of commercial and to some extent institutional real estate across the country. We have 3,000-plus members and stakeholders well beyond that divided into 11 chapters from coast to coast. In fact, I am seeing BOMA Ottawa here today after this meeting. That is who we are in general.
I know we only have an hour this morning so I thought I might turn, with some opening remarks, to painting a picture of more of the nuts and bolts of what we do and what we’re about insofar as it touches on the work you are in this committee.
It’s a story that I tell often as a metaphor. Instead of looking at buildings for a moment, let’s look at motor vehicles. Most of us probably came here this morning by some form or another of car. If we were to go outside and stand on Wellington Street we might notice, if we were car people, fancier or cooler cars; but the vast majority of cars that would go by would be unremarkable.
A Mercedes, which is expensive and luxurious, might catch the eye of someone who likes that kind of stuff and a Prius, which is a hybrid car, might catch someone’s eye because of the environmental factor. However, the buses, trucks, Mazdas, GMs and so forth would by and large not attract our notice.
Our industry is all of those cars, but the challenge is that the focus of the media, of society, and sometimes of committees like this one, is only on the tiny proportion that are hybrid or electric cars. This is a super important factor in trying to reduce the impact of cars on the environment in this case but not the only way to do so.
My message this morning to you is that I would encourage the committee to resist the temptation to look exclusively at the coolest, trendiest, and newest building standards, because that is a teeny fraction of the challenges we face as a country when it comes to commercial real estate. Every building in the country, on the planet, has an environmental footprint and that includes those that are beautiful and those that are ugly, those that are downtown and those that are suburban, those that are big and those that are small, those that are offices, light industrial, open-air retail, health care facilities and so forth.
In just the same way that all cars have an impact, all buildings do. Only our buildings will last 50 to 75 years, typically, so the impact is even longer.
Where does that lead me to in my conclusions this morning? The answer is not in just establishing high standards for new construction, which is the thinnest edge of the wedge, but also in thinking about the massive existing stock of elegant, spectacular heritage buildings, including the one we’re sitting in, which is still an office place or a workplace.
How do we make this building and the thousands of others more sustainable? We do it through two ways in particular. We do it through retrofits but we also do it through day-to-day operations.
You operate a building in the exact same way, with the exact same principles, as you operate a motor vehicle. You get behind the wheel of a hybrid car. You drive down the street with the air conditioning on and the windows down. Your tires aren’t fully inflated. You haven’t changed the filters recently. You’re stopping and starting with a heavy foot more than you should. These same principles apply to how professionals manage commercial buildings today.
There are basic core principles captured in a program we’ve created called BOMA BEST that help building operators. Buildings are technology-driven collection organisms. They are not just static structures with people who sweep the floors and mind the front desk. There are ways that those people can raise the performance of those buildings in the same way as I drive my ordinary non-descript car, which is not hybrid, with perfectly inflated tires, light foot on the gas, and with my air conditioning on only if my windows are up. I can outperform the hybrid car, but if hybrid car does the same thing then we’re all winning.
The program we’ve created is BOMA BEST but the philosophy we advance is that every building has a role to play, and that role is in managing existing buildings as absolutely professionally and efficiently as possible.
That’s I think a good summary of where I think it might be worth having a conversation, but I’m wide open to your questions.
The Chair: Thank you very much, sir. We will begin with our first questioner.
Senator Massicotte: Thank you for being with us this morning. It is much appreciated.
We have heard a lot of witnesses in past months basically saying that a lot of energy efficiency we can be gained from the existing stock of commercial, office and residential buildings, including single family and high-rises.
In fact, the industry is often criticized in saying all this potential is there and all this opportunity is there. It is so easy and the payback is so significant and quick that people often say that there is a lot to be gained there. We can reduce the CO2 imprint significantly from being smarter, principally with modification of the existing stock.
Is that the case? Explain to us, if that is the case, if it makes economic sense to make those renovations and improvements, why owners who are to a very high percentage very fluid in cash or have no shortage of cash, such as pension fund owners and public companies, aren’t doing it.
I notice that you’ve given over 2,000 certificates. That is nothing compared to the hundreds of thousands of buildings out there. What is wrong with the industry?
Mr. Shinewald: Part of your question pleases me because I feel that I’m a bit of an evangelist sometimes in trying to shift that focus of attention from the tiny number of sexy, new-build construction to the bigger pool.
I also think you’re right. There are efficiencies to gain in the existing stock, but there will always be efficiencies to gain because there is always innovation in technology and in the way that building operators do their work. Those two things come together. It’s quasi-capital investment but also day-to-day operations that come together to raise the stock.
My organization, BOMA Canada, represents commercial owner/managers. We don’t have any real role in the single family house that I live in, for instance, but the principles remain the same. I’m pleased to tell you that those 2,600ish certifications of BOMA BEST across the country are overwhelmingly dominated by the biggest pension fund owned, institutional owned firms in Canada, some of which are nearing or may have already reached 100 per cent BOMA BEST certification of their stock.
As an aside, we’re now in a position where we can take the program abroad. They’re the ones leading the charge. It’s very early days, but they’re expanding their portfolios in the U.S. and elsewhere with our program.
The funny thing with our industry is that it’s a very difficult industry to define because we have the firms you mentioned that are fantastically invested in BOMA and in our programs and for whom — and I mean it sincerely — sustainability is part of the culture. I can come back to that, if you like. That’s certainly at one end of the spectrum. They are in it to win it.
Then it starts to peter off and you get into the smaller firms and regional firms and so on. Some of those firms will have different levels of corporate wealth to invest in these kinds of things. The smaller you are, the less scale you have. You go further and further down until ultimately you ask if the individual who is renting out an in-law suite in the basement is a commercial property owner. I’ll turn it back to you in a moment, senator, the further you go down the scale, the harder it becomes.
Senator Massicotte: Let me try this again. I appreciate that you are getting high recognition. If you look at who owns the majority of buildings, I bet that the certificates you awarded are predominantly to pension funded, high quality downtown office buildings, to a large degree.
If you look at who owns the buildings, you say it’s the biggest pension funds. I agree they are the biggest internationally. You have a lot of public REITs, a lot of public companies that own a lot of stock. You also have a lot of wealthy families who own a lot of real estate. Yet you have the duplexes and so on. I just name four, but they probably represent 95 per cent of all buildings in Canada.
I bet each one of them would say that the building manager, the BOMA member, recommended these improvements. You would ask why they didn’t pay it back in seven years. If the payback was seven years, I am sure all of them would say, “We will do it and have done it.” The argument, they say, is that it is not feasible or it is not economical.
What is the truth? Who is BSing us? What is happening here?
Mr. Shinewald: Not me. One gloss on what you said, it is not just the downtown office towers of the biggest companies. It is a very small proportion of their holdings and of our certifications. The explosion we’re seeing in our program is actually on light industrial properties in the suburbs. We have seven different modules.
Senator Massicotte: Why aren’t they doing these renovations if it’s so economical and feasible? Even a wealthy family wants a good payback. What’s holding them? Where is the contradiction?
Mr. Shinewald: I hear you. That’s a place where I think the government can play a role. We try to play a role in educating our members and at the end of the day they are motivated by the bottom line. In particular, pension fund owned and institutional firms have a quasi-public accountability to their pension holders. They really are progressive.
I don’t have the statistics in front of me, but I can get back to you. Of those 2,600 or so certifications, I guess that close to 2,000 are those firms. They’re nearing 100 per cent of their stock.
There are lots of REITs out there as well. We’re targeting them. We are talking to them. Some REITs are remarkably thinly staffed at the top as well. It can be a challenge for us, not for them.
To the extent the government can provide incentives to accelerate those paybacks, that would grab their attention and increase things. The business case will ultimately prevail for sure.
Did I answer your question okay?
Senator Massicotte: Sure.
The Chair: We will move on. He may have something a little later on.
Senator Griffin: Basically, there are two things I want to get at. Assuming an aging workforce and a shortage of skilled building operators, can you tell me more about the building operator certification program? Are you partnering with community colleges?
Mr. Shinewald: I’m thrilled for that question as well. Just yesterday we changed that name to the Building Operators Accreditation Program for a reason that doesn’t matter here. I’m thrilled you’re aware of it.
One of the challenges in this industry is that there’s no clear career path. No one ever goes to bed at night at 16-years-old and says, “When I grow up, do I want to be a police officer, a senator or an industry association CEO? No, I want to be a building operator.” It is an invisible profession that is there in plain sight. All those ordinary buildings we pass every day thinking they are static with a guy with a key and a mop, are complex businesses. The same goes with our association’s rank and file members.
It has become a clichéd truism in our industry that no one chooses this career at all levels. There are people who come out of MBA programs who want to be developers and so forth, but nobody picks the management side of the day-to-day operation of a massive industry from the ground floor operator all the way up.
We’re working with some colleagues in related organizations to create this Building Operators Accreditation Program. It’s sort of a one-two punch, if I can put it that way. One idea is to create a career path and a bit of visibility around it. My partners who are working on this a little more directly than I am are talking to technical high schools to get co-op kids interested in the first place and the teaching side of colleges as well.
The second punch in that one-two punch is to try to create a bit of market driven standardization. We’re not asking for regulation in this area. Frankly, I don’t think it would work. If we could create a situation where somebody could self-accredit with this designation, that would help create a market base for an industry standard where you could say, “As between two candidates who are otherwise equal, this one has the accreditation and therefore she is the better candidate,” or maybe you could say, “For this role somebody we need somebody who has the accreditation, given the complexity.”
The work has been incredibly slow and tedious, but we’re making some progress. We’re working primarily through the Ontario College of Trades which regulates it. They have been great partners. There are different aspects to how they create educational and curriculum standards. We’ve made some significant progress.
By the way, the reasons we’re working through them are, first, they’re bilingual and, second, we’re located in Toronto and they’re down the street. The idea ultimately is to finish this project in maybe another year or two, and then try to get it adopted by the P.E.I. College of Trades, the Nunavut College of Trades and so forth, with a view to creating a red seal.
All those things will only help enable building efficiency to be advanced all the more because we’ll have this basis of training.
Senator Griffin: I really like your slide which asks, “What government can do?” That’s great. That’s why we’re here. Your first three bullets deal with government setting a good example with the buildings it owns or leases, which is also great.
Government has other instruments at its control, for instance, economic instruments or regulatory instruments. Your last three bullets primarily relate to economic instruments like incentivizing investment in sustainable technologies.
Is there anything with regard to regulatory instruments that could be helpful to your industry?
Mr. Shinewald: The opportunities for government are more on the incentive side. The incentive side can come in all sorts of different forms. It’s unlikely there would be straight-out grants, but that has happened. Acceleration of capital cost allowance and tax treatment can help.
There are very impressive technologies for buildings coming out of places like the MaRS Discovery District in Toronto and elsewhere in Canada. They’re not our members but they’re supporting young entrepreneurs as well. Any number of tools can drive it.
On the regulatory side, nothing really occurs to me off the top of my head for this particular item, but I can’t let go of one thing you raised, senator, if you don’t mind. The government can lead. Going back to Senator Massicotte’s question, it’s the private side that’s really leading this charge.
When the senator asked why some private owners aren’t engaging more in retrofitting, technologies and so forth when there appears to be a significant payout, that comment applies all the more to the federal government, the provinces and the municipalities.
Some provinces have taken up BOMA BEST and the principles behind it really assertively and aggressively. Quebec is a great example. UPEI was certified at one point, but I don’t think they are anymore. We have discussions with them once in a while.
The federal government is coming around, but it waxes and wanes with the public sector about the money that is being spent on this precinct and the opportunities it presents. BOMA BEST is in many ways about preventive maintenance.
I did not include it in the deck but maybe I should have. There is ample third party evidence that BOMA BEST reduces operating cost and increases underlying asset value, which is still of concern for government because it increases the life cycle and so forth. Maybe less so for you, it increases tenant retention.
I would actually encourage the senator’s comments tied into yours to consider the government’s massive and huge stock. DND is the biggest single landlord in the country, and that is a department you don’t think of as being real estate focused. There are lots of opportunities right at home as well.
Senator Wetston: Let me ask you a straightforward question. How can BOMA contribute to Canada’s GHG emission reduction goals?
Mr. Shinewald: We’re here to be your partner on it, quite simply. At the BOMA Canada level we’ve been eaten by sustainability to some extent. We have become a sustainability organization. For us, it’s both an opportunity and challenge because we want to be more than just sustainability.
The short answer, senator, is that we can be your partner in everything we do. I had a great meeting yesterday, for instance, with a department here in Ottawa. I won’t give details, but they asked us if we could work with them on a guide to greening their stock of buildings. It’s a very unique stock because government buildings often have unique features. I jumped at the idea.
What do we offer? Beyond the program I described and keep describing, which we believe should be embraced aggressively, we offer knowledge, expertise and enthusiasm. We can filter in volunteers from all different levels and nooks and crannies of the industry. My members are hungry to do that kind of stuff. People get involved in BOMA for all kinds of reasons, one of which is as a community outlet in the same way as you might get involved in a charitable endeavour, because they believe in the cause of the industry.
We can do any number of things. We think we’re doing a lot already by advancing this program. I’ll also say that we won an RFP about a year ago from NRCan to launch a net zero award. It will be directly based on our BOMA BEST platform, although just sort of using the back end. The overt idea from NRCan is that they want to encourage the main stream of the industry to move toward net zero energy performance. That is another great example of how we can partner with you.
I’m giving you a whole bunch of hodgepodge answers, but the answer in one word is partnership.
Senator Wetston: I would like to pursue the net zero energy, but we’ve heard a lot about it so let me leave that for now. Just to understand your statistics better, I’m looking at your deck here and the new BOMA BEST certifications. You have a number of different categories. You go all the way to platinum. I think we saw something on the silver category. Do you have a lot of buildings in the silver category?
Mr. Shinewald: Yes.
Senator Wetston: Just to break down the statistics a bit, I’m looking at your chart where you say there are 2,600-plus total certifications in Canada and the U.S. today. How many buildings are there in the BOMA family?
Mr. Shinewald: We don’t know. We don’t ask our members to share that data because it’s always changing. The membership itself is always coming and going. They’re always buying and selling buildings, losing buildings and getting buildings. The nature of a building is changing.
Back in the day there were clear divisions between office and light industrial. Now with multi-use, retail at grade, maybe a hotel, a condo and so forth, it becomes very hard to categorize. There are numbers out there but it’s just impossible.
Senator Wetston: Give me a ballpark, your best guess. We won’t hold you to it.
Mr. Shinewald: How about I get back to you on the number of buildings of our members? Honestly, I’m not asked it often. I’m loath to give an answer only because it would be a wild guess.
Senator Wetston: The reason I’m asking is that we’ve heard a lot about retrofit and its contribution to greenhouse gas reductions. We’ve heard a lot of technical evidence from a number of witnesses. Senator Massicotte more or less pursued that in a somewhat different direction. From my own personal perspective I think the information would be of some interest.
If you could give us a ballpark and maybe share it with the clerk, that would be helpful.
Mr. Shinewald: I’ll bet back to you with something.
Senator Wetston: I’m not finished with platinum, gold, silver and the other categories. Tell me about that and the relationship between BOMA BEST and LEED certification.
Mr. Shinewald: First, it’s important to say that we get along with the CaGBC, which has the LEED program in Canada. It’s important that they represent their program. I don’t want to represent or misrepresent what they do.
Ultimately we have the same stakeholders or the same ownership, so to speak. My chair is down the hall from the person who is their chair.
They have a whole bunch of different streams of certification. Those streams are best known for new construction, core and shell design, and so forth. Don’t quote me on this, but I think one of 14 streams is existing buildings. They tend to be more of a high end product for class A tenants such as law firms, accounting firms and so forth. I believe their numbers of existing building certifications is in the range of 120 or so in Canada.
If memory serves, their idea is to pull from the top. The better the high performers are, the more the industry follows. It’s a terrific way to approach it. We are complementary to what they do because we are a mass market product.
We apply to every commercial and institutional building on the face of the planet, we say. Of those roughly 2,600 certifications, almost 2,600 of them are in Canada. We have just begun to go into the United States. We have about two dozen in the States and one in Mexico, with more to come, I hope.
The way our program works, to wrap it into the other part of your question, is that there are five levels of certification: certified, bronze, silver, gold and platinum. Certified is a basic minimum where you have to hit 16 different best practices. I have a list of those here, if you want it. That applies to every asset class.
We have seven asset classes in the program. Irrespective of whether you are office, health care, light industrial, open-air retail or whatever, there are basic core principles that you must meet to be certified. Once you improve beyond that you can move into the bronze, silver, gold and platinum. Those become tailored to the unique features of the different asset classes. They are not the same in office as they are in open-air retail.
What I think is most interesting is the third party data we have on our program which shows the biggest improvement, not at certification as you would expect but at recertification. There is a big hit. At recertification, buildings tend to move up. Every few years we have to change the program to raise the standard. We just did it last year.
What does that tell you? It tells you that this is a continuous process. Building operators have to keep getting better at what they do. They have to get more sophisticated with sustainability and bring in more technology. Bringing in technology isn’t enough. There are many examples out there of bringing in fantastic technology, but the people don’t know how to optimize it.
This is a treadmill. This is a hamster in a cage that never stops running. That’s okay because sustainability doesn’t stop. It’s the same way as when you drive that hybrid car off the lot the day you buy it. You’re not finishing your sustainability journey; you’re beginning it.
Senator Seidman: I too was going to ask you for help in my own education about the difference between BOMA and LEED because I had heard of LEED but I hadn’t heard of BOMA. That was my failing. I suppose part of it would be public education. That’s really critically important in this area. My first thought was that LEED is for new buildings and BOMA is for retrofit and older buildings, but that isn’t the case. Clearly it isn’t, as you explained to Senator Wetston.
I too was wondering about data and proportions. I look at your chart where you say there are 2,600 total certifications in Canada and the U.S., but I don’t really know what the denominator is so I don’t know what the proportion is in relation to all the buildings, so to speak.
Could you tell us, then, what proportion of the green building industry is focused on retrofitting existing buildings?
Mr. Shinewald: Well, 100 per cent of the industry is focused on it.
Senator Seidman: On retrofitting?
Mr. Shinewald: Focus is a loose word.
Senator Seidman: If you look at the green building industry, some of it is focused on building new buildings and some is focused on retrofitting.
Mr. Shinewald: Maybe I would put it this way, if I could. I’m not sure there is a green building industry distinct from the building industry anymore. I really think there is a green aspect of building construction, design and so forth, but absolutely on our end ownership and maintenance are woven in there.
I came to this position about five and a half years ago. I was reminding Senator Wetston on the way in that the job search that led me to this job included a stop in his office at one point for some excellent advice. It was great.
I came in without a real estate background. I had other skills which I presume were the reasons why I got the job. My hand to God, I was quite pleased at the beginning at how genuinely focused on sustainability the industry was. It’s truly part of the culture and the way they do business.
Part of it is the people who are in the industry but they are not the only reason. Tenants demand it. Owners demand it. Not unimportantly, going back to Senator Massicotte’s point or question earlier, there tends to be a straight line causal connection between green and green, between environmental initiatives and financial benefits. Unlike in other industries there may be things they have to do for all sorts of reasons, but they are sometimes seen as being a net cost, at least on a financial basis. For our industry, by and large, it’s a net win.
Senator Seidman: That’s helpful. I’m trying to understand. You talked about recertification. The certification is good for three years according to your deck, and there is a recertification process.
Do you collect data on, say, the cost of the most popular retrofits? I’m asking because I think in your mission statement BOMA Canada provides industry, education, research, standards and information programs. How many information programs do you provide your members in terms of what they might benefit most from?
Mr. Shinewald: Something else I can send to you later on is our annual National Green Building Report. As it happens, we’re reorienting the sequence this year. We just put out the 2017 report and the 2018 is about six weeks away. I’ll send you the full report and the executive summaries.
We hire a third party engineering firm. It has been WSP, the Canadian based global engineering firm, for the last few years. We do a dispassionate analysis. As you will see in our report, by and large the story is good. It has to be. Otherwise we wouldn’t be in business.
Every now and then there are funny quirks in the data. We are not afraid to say that we’ve noticed a flattening of energy consumption at the bronze level in light industrial. I’m making this up as I go. The idea is to get those property managers to investigate and push a bit as to why this sector has flattened.
In terms of your earlier question, there are two streams of certification. There is a one-off, one building at a time stream where it is a three-year cycle. You would renew after three years. We also have a portfolio approach, which is why we’re seeing such growth in the program. Buildings come in, in very large numbers, from very large private and public owner/managers. We hit an ISO standard where there is a 20 per cent actual on-site verification. A year after the first 20 per cent tranche is completed, 100 per cent is certified per the ISO standard. The next year we come back and certify the next 20 per cent and so forth.
One of the benefits of this approach is that the industry likes it better. It brings the price down to an annual fee, which is good for everybody. It keeps the sustainability benefits truly continuous. In the past three-year cycles it would expire. People would forget. They would get busy. Somebody would be on mat leave or whatever. We found three years spread over four or five and all those benefits were lost. This is an even more efficient way to drive sustainability.
Senator Patterson: I would like to ask about the actual certification process. How long does it generally take? I’m sure it’s impacted by the size of the building. Do you have a third party that verifies information submitted for certification? What is the average cost to have a building certified?
Mr. Shinewald: I am happy to answer that for sure. Much of that is available on our website, including the fees which are public. If memory serves, they range from about as low as $2,500 to as high as $12,000 or $13,000. The $13,000 would apply to the five biggest buildings in the country.
We’re a non-profit organization. We’re owned by the industry for the industry. Our objective is not to return a financial dividend to our members but to return a value dividend, if I can put it that way. By a long shot, we are quite well priced in this market.
The way the certification works is pretty straightforward. On a one building or portfolio basis there are some small differences, but you open up an account or create a profile on our online system, with a user name, password and so forth, and you begin answering the questions. The number of questions will vary depending on the asset class, with around 170 questions or so per asset class. When you’ve completed the questionnaire, you press submit.
Interestingly, the questionnaire itself will already prompt environmental benefits because simply by encountering questions the building operator will say, “I never thought about that. I can do that.” This is a very important point. The vast majority of the questionnaire is about day-to-day operational changes and improvements you can make that have little or no cost. As you rise in the certification levels, we put in quasi-capital things like switching out LED light fixtures, for instance. Before you even press submit, you’re already typically driving sustainability benefits.
Then, upon submission of the application, it gives notice. We dispatch a third party verifier. We have verifiers from coast to coast to coast in Canada. That verifier will go in and walk around with a clipboard and say, “You’ve answered question 37 by saying you have six of the eight points. Show me the evidence.” It really is that simple.
Senator Patterson: We heard from Public Works Canada about the great things they’re doing with their assets. They said that behavioural change was a big part of the picture.
I’m wondering if that’s part of the certification or awareness programs that BOMA BEST reflects and how important that is in energy savings in buildings.
Mr. Shinewald: Yes, a cultural aspect has to play a role. As I said earlier, the industry has embraced this on a cultural level. We get buy-in from the top down to the bottom, full stop.
We’re working with a multi-disciplinary team of academics right now out of Wilfrid Laurier University. The lead academic researcher is a psychologist but he has engineers, sociologists and others. We’re working with them because their thesis is our thesis or their hypothesis is our hypothesis.
Tenants are one way to close the gap, particularly in high performance green certified buildings, the name of their working group. They fascinatingly call them “building citizens,” as a way to try to create a sense of community, empowerment and buy-in.
You often see, particularly in class A downtown building stock, that corporate tenants such as law firms, banks and accounting firms are a sort of culture that would never imagine leasing space, sometimes significant space, in a non-green certified building, be that BOMA BEST or something else. Again it’s the idea that the moment you buy the hybrid car your environmental journey is beginning, not ending. Then they go into those spaces, but do they do the simple things? Do they turn the lights out at night? Do they turn the monitors out at night?
We’re launching a new program imminently called BOMA BEST sustainable workplaces. The idea is to engage tenants in their activities within that leased space to close the gap in performance. It’s a very simple unaggressive program. You can’t fail it. We basically say, “You guys go out and make your own policies, programs and procedures that work for you in your workplace. Report back to us and we’ll give it a smell test and approve it.” All you have to do is report back to us once a year showing you have reviewed it and have raised the bar. You choose how to raise the bar.
The fruit is so low hanging it’s almost on the ground, like turning the lights and screens off at night or creating an e-waste program if there isn’t one in your building already for when you’re throwing out a printer. It’s easy to divert it from landfill. There are nine or ten different categories. It’s something we are quite excited about.
Senator MacDonald: You touched on something I was going to bring up about tenants being the last frontier of building performance.
Could you describe your pilot program for us?
Mr. Shinewald: Yes.
Senator MacDonald: How do you measure all that? How do you make people comply?
Mr. Shinewald: There is a bunch of different ways you can do that, but I truly believe the most effective way is culture. That’s not a weasel answer. It’s a very effective way to do it.
Our offices in downtown Toronto share a floor with well-known retail clothing brands. There are 20-year-old kids coming in and out of their offices all the time. That’s the group that is going to care more and more about how their employer behaves on culture and forget about the building. There will be a war among employers to attract that talent. There are ample data that I should have put in the deck saying which millennials are truly picking employers and even career paths based on the sustainability of their employer.
We hope that initially this will be a distinguishing feature: This law firm has the certification or has taken steps and that one doesn’t so come work with us. Over time, our hope is that it will be a bottom-up from young people for whom this matters.
Senator MacDonald: The government asks us to look at the challenges of transitioning to a low-carbon economy. In your deck you ask what government can do to benchmark its own buildings and demand BOMA BEST certification where it leases space. You have a number of recommendations.
Have you made these recommendations to the three levels of government, and what has the response been?
Mr. Shinewald: We do it repeatedly. I had two meetings on it yesterday here in the National Capital Region. It’s spotty. There are some great stories and great consistency, and there are others that are not so great.
In fairness to government, one of our challenges in talking with them is that we’re a small organization and government is big. We don’t have the resources to knock on the dozens or hundreds of doors in Ottawa and elsewhere.
PSPC, Public Services and Procurement Canada, put in 50-plus buildings across Atlantic Canada. Fantastic. The premier of Newfoundland and Labrador, for the first time ever, said in his mandate letter a couple of years ago to his Ministry of Transportation and Works that BOMA BEST should be the certification standard to which we should aspire in our provincial buildings. The Premier of Alberta has done a similar thing recently.
In an organization as big as government there will never be complete consistency. I get that. I worked in government for three years just across the street. There is a long way to go. These are easy, cost effective and inexpensive ways to drive real change. There is a lot of scope in government for this.
Senator MacDonald: I have just one point. Back in the 1980s I used to work in public works and government services in contracting and BOMA BEST certification where it leases space. All governments lease an awful lot of space around the country. Government space in a mall or any building is cherished by those who are leasing the space. If the government uses that leverage alone, they could have a big impact.
Mr. Shinewald: I agree 100 per cent. The purchasing power of government is massive. You’re basically purchasing lease space. The smallest nudge toward better environmental performance by your landlords can have a massive impact in the immediate sense that those buildings will perform better. It also has a cultural ripple effect around the industry for sure.
Government leadership would be welcome. Make us play our A game. We’re ready for it.
The Chair: I want to ask one question. I think you said 2,000 buildings.
Mr. Shinewald: Some 2,600 are certified, give or take.
The Chair: Are they spread across Canada? Is there as much in the west as they have in the east?
Mr. Shinewald: Absolutely, across Canada. I can get you a breakdown by province and territory, if you, but they’re well scattered.
The Chair: Please provide that information, and the information you said you would provide to one of the other senators, to the clerk so that everybody gets it.
Senator Massicotte: I’ll paraphrase the way you responded to my last question. You said, of course, everything is going to be a bottom line because it has to make sense financially. Intuitively, what you’re really saying is that the renovations possible today are not economically based on normal payback, which may be the reason why the industry is not doing the stuff.
If you agree that the buildings are being bought for basically 15 or 20 times net cash flow and if the renovation is not economical, it means payback must be less than 15 years. Otherwise it wouldn’t get done.
If you look at the nature of the industry, the renovation costs for office, retail and industrial are actually borne by the tenants because of the way the standard lease is dictated. The tenants would love it because it reduces the operating cost. In fact it’s economical and they would love it.
Again we reach the conclusion that this is not happening because the payback is not good enough to the tenants or the building owners. Would you agree with that?
Mr. Shinewald: With respect, I don’t think it’s quite as black and white as that. There are retrofits, renovations and improvements happening every day across building stock. Usually I get the notices for my building because I want to follow them. We get them all the time in a Cadillac Fairview building at Eaton Centre in Toronto.
There is a spectrum, and at some point different owner/managers will find there is that breaking point where it doesn’t become cost effective on a marginal basis to do the next thing today. That can be for all sorts of idiosyncratic reasons. Maybe somebody else in the same position would say differently. Maybe their workflow changes or their cash flow changes or their human resources change.
One of our challenges in expanding the program is that building operators are so darn busy at an operating level.
I don’t want to give the sense that nothing is happening. What you’re getting at, senator, is why some of these things aren’t happening as aggressively as you would like to see it? That is because at some point the stuff that is slightly more risky, a slightly bit more expensive or even challenging on a workflow basis is the straw that breaks the camel’s back.
That’s where you guys can come in and help. The more you can provide incentives to do those marginal improvements, the more that will happen. The price will come down. The industry will take notice and others will start doing it.
I don’t want to give the impression it’s not happening. It’s happening every day. It’s happening here.
The Chair: Thank you very much, sir. It was an interesting presentation, with some good dialogue between you and the senators. We appreciate your coming.
For the second segment, I am pleased to welcome from Engineers Canada, David Lapp, Practice Lead, Globalization and Sustainable Development; and from the Royal Architectural Institute of Canada, Emmanuelle van Rutten, Regional Director, Ontario North, East and Nunavut, and Bruce Lorimer, Interim Executive Director.
We will listen to your presentations and then we will go to questions and answers.
The floor is yours.
David Lapp, Practice Lead, Globalization and Sustainable Development, Engineers Canada: On behalf of Engineers Canada, I am very pleased to discuss the engineering sector’s efforts in reducing the carbon footprint of Canada’s built environment and supporting the national objective of a low-carbon economy.
Engineers Canada is the national organization that represents the 12 provincial and territorial associations that regulate the practice of engineering in Canada and license the country’s 290,000 members of the engineering profession. Together we work to advance the profession in the public interest.
Engineers Canada has been engaged in the issue of climate change from an adaptation and mitigation perspective for over 16 years, since the time of Kyoto negotiations.
The built environment, which includes all forms of buildings, is responsible for approximately 35 per cent of Canada’s greenhouse gas emissions.
Our transportation infrastructure is responsible for an additional 24 per cent of emissions. Reductions in emissions from these infrastructures, achieved through government policies combined with changes in engineering design, construction and infrastructure operations, not only reduce their carbon footprint but also reduces costs and stimulates a clean technology industry in Canada.
We strongly encourage the federal government to invest in and support the adoption of a national strategy to reduce greenhouse gas emissions. The federal government must also invest in the development and implementation of clean technologies that will contribute to a lower carbon economy over time. Progressive policies mandating greenhouse gas reduction for federal infrastructure assets set an excellent example for other levels of government and demonstrates international leadership in this area.
In addition, supporting the increased development and adoption of clean energy and clean technologies will not only enhance our internal economy but will also offer export opportunities to further enhance economic growth. Such policies and investments contribute to addressing climate change globally and toward meeting Canada’s greenhouse gas reduction commitments made in the Paris agreement.
As I mentioned, one of the greatest sources of greenhouse gas emissions is the built environment. Modelling of the most cost effective pathways to decarbonizing the Canadian economy suggests that the building sector must reduce greenhouse gas emissions by 80 to 100 per cent by 2050. Action needs to occur in two areas: new builds and existing buildings.
For new builds, policy direction from all levels of government suggests that a net zero energy ready standard could be reached by 2030. For example, British Columbia’s energy step code establishes performance targets and provides a consistent approach to achieving energy efficient buildings. The City of Vancouver has also developed their zero emissions buildings plan with similar energy performance targets enforceable through their rezoning policy. In addition to these energy performance targets there are also requirements that building achieve a certain degree of airtightness to minimize heat loss.
Another example is the City of Toronto’s zero emissions buildings framework which features performance requirements for energy and greenhouse gas emissions intensity, as well as a checklist for climate resilient design.
New builds account for a small portion of buildings in Canada. Addressing only this aspect will not be sufficient to achieve deep emission reductions in the building stock as a whole. For example, in British Columbia it is estimated that code requirements for new buildings will result in less than a third of the reductions needed in the building sector by 2050. There is a clear need to create and implement a comprehensive strategy to meet the greenhouse gas targets.
The Canada Green Building Council’s zero carbon building standard has established Canada’s first green building program developed to assess carbon emissions in commercial, institutional and multi-family buildings. It is applicable to a wide range of new and existing building types across the country. Currently, the energy retrofits of existing buildings is being carried out at the research and pilot stages.
Mitigation can be a positive economic force. Energy efficiency retrofits and green buildings are significant job creation drivers in Canada and a key element of the shift to a low-carbon economy. It is estimated that every $1 million invested in energy efficiency generates $3 million to $4 million in economic growth and up to 13 jobs.
A large capacity building effort is necessary to support this transition, particularly where these efforts overlap with the adoption of performance-based codes. We will need more energy advisers, energy modellers and building science engineers. These individuals need to be guided by the development and adoption of best practices and design guidelines.
Engineers Canada’s national guideline on the principles of climate change adaptation and mitigation for professional engineers assists professional engineers in considering implications of climate change in their professional practice and directs them to create a clear record of the outcomes of those considerations. The principles described in this guideline provide a basis for sound professional judgment to address this element of engineering practice. Adapting to and mitigating climate change present opportunities to save money and protect public health and safety.
Thank you for allowing Engineers Canada to present to the committee today on this important issue. We hope the committee recognizes the integral role professional engineers play in Canada’s environment and know that our profession is ready and willing to help the federal government on this important issue.
Emmanuelle van Rutten, Regional Director, Ontario North, East and Nunavut, Royal Architectural Institute of Canada: Mr. Chair, honourable senators, on behalf of the Royal Architectural Institute of Canada, we would like to thank you for inviting us to present our comments to you today.
Our mandate is to advocate for excellence in the built environment in Canada and demonstrate how design enhances the quality of life and address important issues of society through responsible architecture. The RAIC has been addressing environmental challenges for decades through education, advocacy and promotion of the 2030 Challenge. Our early stainable buildings committee was the incubator for the Canada Green Building Council.
Currently, the championing of a low-carbon built environment is being carried out by the Committee on Regenerative Environments. Two other committees have a strong sustainability focus: the RAIC Indigenous Task Force, which is concerned with living conditions in indigenous and Northern communities, and the Age Friendly Housing Options Task Force, which sees retrofits as an important aspect of aging in place. Our scope is national and we are also part of an international network of architectural associations that share information on sustainability.
Architects, as trained complex problem solvers, can help. Design is the act of creating holistic solutions. Architects are already designing high performance buildings and leading multi-disciplinary teams to deliver innovative projects.
At the scale of individual buildings, architects can reduce operational and embodied carbon production through passive design strategies, energy efficiency measures, design for increased durability and resilience, innovations that find ways to use less space, integration of renewable energy sources, specification of low impact building materials, promoting stair use and cycling, integration of electrical vehicle charging stations, and the design to help shift people’s behaviour to more sustainable patterns. These strategies serve not only to reduce emissions but to increase human health and productivity.
We also have slides if you want to follow along with them. We’re moving to the slide where we’re showing the integration of the team.
It is not solely a technical fix. Successful projects require an holistic and integrated approach to the design and construction process, and collaborative delivery models. We urge the adoption of approaches to project delivery characterized by early and regular involvement by owners, architects, consultants, constructers, fabricators and end user operators in an environment of effective collaboration, mutually defined goals and open information sharing. Among other benefits, an integrated project delivery process can increase creativity and innovation, which we believe is key to meeting aggressive sustainability targets.
The buildings sector offers a significant opportunity for moving to a low-carbon economy. Emissions from residential, commercial and institutional buildings account for almost 30 per cent of energy use in Canada and almost 25 per cent of Canada’s greenhouse gas emissions. In Canada’s urban centres, buildings are reported to be responsible for about half of all emissions.
Today, there exist many barriers to innovation. How projects are defined, how consultants are selected, and the relationships with clients all radically shape the potential outcome. The federal government is showing leadership and needs to do more. As Canada’s single largest owner of buildings and a major lessor, it has a central role in setting the highest standards of excellence in environmental sustainability.
Within the 26 federal departments and agencies that are custodians of buildings there is an inconsistent commitment and application of sustainable goals. The procurement of services has a significant impact on the successful achievement of project objectives and innovation.
While federal procurement varies, it often leads to a lowest fee approach which stifles innovation. Additionally, placing intermediaries such as building management service providers to manage procurement and delivery can create barriers to realizing the full benefit that architects bring to a project.
The transfer of uninsurable risks to professionals is also a serious impediment to innovation because it creates a risk averse and adversarial environment. There is a better model that values quality, skill and innovation. Qualifications based selection, known as QBS, has growing support in Canada from organizations including the Federation of Canadian Municipalities and virtually every national professional services association.
Last month, the RAIC, the Association of Consulting Engineering, and Public Services and Procurement Canada participated in a workshop organized by a RAIC member on the value of QBS. The outcome of that workshop was to begin discussing a pilot project to explore the benefits of QBS on several PSPC projects.
You have heard from CaGBC that 20 to 40 per cent of available energy savings is within the existing building stock. We strongly support targeted retrofits that contribute to a strong economy, preserve neighbours and protect heritage. LEED living building challenge standards and benchmarking frameworks are effective in improving the performance of new and existing buildings. They are, however, voluntary in most jurisdictions and therefore used in a small percentage of buildings.
The overhaul and mandatory implementation of the National Building Code and the National Energy Code ultimately needs to be the main objective.
Finally, our goal is to work with the federal government to foster innovation and generate the cultural shift to a low-carbon economy and an holistic understanding of sustainable goals. Key recommendations are that the federal government can take the lead in aligning procurement practices such as moving to a QBS program with a pilot program; re-evaluating third party procurement services; sharing risk appropriately among team members; adopting collaborative project delivery principles where owners, builders and designers share common goals and project risks; and showing leadership in setting high sustainable standards through a revised National Energy Code, benchmarking and higher harmonized standards for federal buildings.
On behalf of the RAIC, I wish to thank you for the opportunity to speak to you today.
The Chair: Thank you very much. We will now go to questions.
Senator Massicotte: My thanks to the three of you for joining us this morning, and thank you also for your presentations. I understand from your presentation that you can help us, that you can be of use, that you have a lot to bring to this matter, and that you want to partner with the Government of Canada. You know that everyone wants to be a partner. Everyone believes that they have a lot to contribute, especially with other people’s money. Is there something more specific, more concrete? The government has committed to change the code for new buildings and for existing buildings. Studies on the matter are currently being done and the focus is on the economics and the efficiency of the buildings. Is there something more specific, more concrete, aside from your availability, which will achieve the objectives of the fight against climate change?
Ms. van Rutten: Yes, indeed, the first goal is to reduce the energy level of the buildings and to have those standards written into the code, as well as into the individual specifications of federal government buildings. That has to be harmonized across the various departments.
The code really is the minimum acceptable for all provinces, as the NRC presentation demonstrated last week. In Ontario, at the moment, the energy code is higher than the national code will be. So it is a minimum. Beyond that point, I believe that the government will do better as the code changes and improves.
We also have to find a way to create a climate that will encourage other private clients to attain better standards and to raise their level.
There has also been talk about issues around procurement. They are important in ensuring that we generate an environment that will stimulate innovation in those areas. That is also an important aspect.
Senator Massicotte: I will extend the question a bit. If I look at your profession of engineers and architects and so on, your principle relationship is with the owners of new and existing buildings. That’s where your principle relationship is. That’s where your livelihood is.
How can you use your influence? You have a significant relationship with these people. It is these people decide whether they renovate or improve the quality or design of new or existing buildings. What can you do to maximize your impact with those key decision makers?
It’s okay for the government relative to their buildings, but what can you do and what are you doing to achieve our climate change goals with these key decision makers for existing and future buildings?
Ms. van Rutten: Certainly advocacy and education is big part of both our association and what architects do on a daily basis. It is advocacy through the promotion of environmental issues, through the association and our core committees. Also it is education through our continuing education programs where we educate not only the architects but also the clients who are often professionals themselves. The clients usually deliver projects through project managers who can often be trained as architects or engineers. Their education is quite important to make sure the client is knowledgeable of sustainable issues.
It’s a two-way relationship where there needs to be the education part of both of us educating the client and vice versa to create a strong dialogue between both.
Bruce Lorimer, Interim Executive Director, Royal Architectural Institute of Canada: If I may answer that, the architect or the consulting team can speak to the clients regarding social value and the economic benefit of sustainability. You will find many stores, for example, are now broadcasting their commitment to green buildings for marketing purposes.
Mr. Lapp: I certainly echo my colleagues in terms of the approaches that are taken in relation to education and professionals.
In addition, we often undertake a lot of demonstration projects with particular owners that one might say are champions. Then, as part of our professional development, we bring those folks who have actually worked with these tools and approaches to convince the others who are perhaps later adopters to adopt these approaches.
Part of it is to try to build internal capacity and then to transfer that capacity between owners and practitioners. That is another extended approach.
Senator Galvez: Thank you. It is very good of you to join us this morning to explain these very technical things to us.
I worked for you more than a couple of times because I went around Canada doing accreditation and revising the engineering programs of Canadian universities. I understand very well what you are saying about it having to be a relationship with education. You have a relationship with universities and the universities have a relationship with you.
However, I wanted to say from my experience that we have been subject to your guidelines, but I don’t see much of our work in universities being translated fast enough into real practice. It is spectacular what Engineers Canada does to harmonize engineering programs in Canadian universities. This is very positive compared to what is happening in Europe and other parts of the world. I really support this.
The revision of programs like the code every five years is too long. It’s exactly the same with programs in engineering. The frequency with which it gets revised is too long.
You didn’t mention something that is very important: the notion of risk being taught at undergraduate and graduate levels so the engineers who come out can deal with the current climate where risk is important to be understood and applied in what we design. The other point is to be able to design data and to use materials.
First, how are you picking up on research and innovation that are being done in universities and translate them into real practice? Second, we agree the building code has to be renewed and we are trying to do something about it, but what have you done to improve the building code? Anyone can influence that.
Mr. Lapp: Your questions are very relevant to the whole ongoing dialogue.
Engineers Canada has actually been very active in the area of risk assessment. Actually with Natural Resources Canada in 2005 we started a program to develop a protocol to assess climate risks in infrastructure. We developed a protocol called the PIEVC protocol. We have applied this protocol. We worked with Natural Resources Canada and many federal, provincial and municipal departments on applying this protocol to assess climate risks to infrastructure, both current and future. We have done close to 50 projects across Canada in various kinds of infrastructure and buildings.
We’re building a database of vulnerabilities, which we are using to inform National Research Council on their ongoing code development right now. The government has allocated funding to improve the building code to account for climate change. This provides evidence to adjust that.
When we do that, we’re working a lot with the infrastructure owners in getting them to understand the climate risks to their infrastructure. What comes out of this protocol are conclusions and recommendations for our next steps. The owners actually implement these.
To give you an example, we work with the City of Welland to assess their stormwater/wastewater system. They assessed high, medium and low climate risks. We came out with 44 recommendations and they’ve implemented 33 of them over the last three years since that project was done. We’ve done this quite extensively across Canada. Interest in the protocol is also now international. We’re actually working in other countries in this protocol.
This protocol was developed in partnership with the Government of Canada. National Resources Canada is our partner. More recently, we’ve been suggesting that risk be considered as part of the new infrastructure programs coming out. You need to have a climate lens on the procurement of new infrastructure and have criteria there.
Our protocol is a risk and vulnerability assessment. It is mentioned as a methodology. Of course, you can’t prescribe a particular methodology. You have to give flexibility. This is one that is mentioned. Transport Canada just recently announced a program of risk and vulnerability assessment of $60 million over the next five years. The protocol is mentioned as a methodology to assess federal assets.
We’ve been really working hard with various departments in the federal government to advocate for the notion of risk and vulnerability assessment as part of that.
It comes down to how we get this mainstreamed. You talked about education. That too is very important. It’s not going to be me who’s dealing with upcoming climate effects. It’s going to be our students and our young people. Risk management now is getting more into undergraduate engineering programs and climate science. We’re very active on this front.
By accrediting the programs we don’t dictate how it’s to be delivered, but we certainly want to see climate as part of the curriculum. We’re working with our university programs to see how we can get that incorporated.
There’s that level and then, of course, the practising engineers.
The Chair: I’m going to interrupt here for a minute. You have elicited a lot of interest from the senators, and they all want to ask a question.
Mr. Lapp: My apologies.
The Chair: I watch the clock. I know I’m the bad guy.
Mr. Lapp: You have to be.
The Chair: You folks are way over what time I have left on the clock, and there are people who want to ask questions. I’m actually going to go to the next questioner, please.
Senator Griffin: I looked at your recommendations in both the briefs. It is great that they are very similar in recommending mainly that the government take the lead in its procurement practices and do a number of other things such as adopting collaborative project delivery methods and showing leadership. I like the fact that you indicated the revised National Energy Code would be one of those, but government has economic and regulatory instruments.
Do you see any regulatory instruments that the government could enact that would be beneficial to achieving what we’re trying to achieve here?
Mr. Lorimer: I will try to answer that question, senator.
I’m not sure what the difference is between a regulation or a standard or a policy. With its 26 different custodian departments and agencies, with many kinds of buildings in many geographic and climatic conditions, I believe the federal government can set standards for energy and resource management, established on the basis of type of building, the age and location of the building. Whether by regulation or policy it becomes part of a contract, I don’t know, but I believe it can be done and the government has the expertise to do it, with our assistance, of course.
Senator Griffin: We won’t go into the difference is between a regulation and a guideline today. We can do that offline.
Senator Galvez: Can I ask Mr. Lapp to send a written answer to my question?
The Chair: I can come back to you on second round, but if it is in relation to what Senator Griffin asked, I will take the question.
Senator Galvez: He didn’t finish his answer.
The Chair: We’ll come back to it, Senator Galvez.
Senator Seidman: I’d like to address my question to you, Ms. van Rutten. In your presentation you said that there are three committees championing low-carbon built environment. One is the committee on regenerative environments. Then there is the RAIC indigenous task force. The third one is the one I would like to ask you about. It’s the age-friendly housing task force, which sees retrofits as an important aspect of aging in place.
My experience on another committee, which I sat on for a long time, is that aging in place is indeed the way of the future for many reasons, including preference of consumers but also for many economic reasons.
I’d like to ask you how you see that as an important aspect of sustainability and the retrofit process. I’m complicating it here, but I was pretty impressed with your integrated project delivery holistic approach,because that must integrate disciplines, communities, and information sharing in a sort of psychosocial environmental, economic approach. You can see where I’m coming from, I think.
It’s very important as we consider sustainability of buildings going forward. This is a pretty important thing to consider.
Ms. van Rutten: First of all, I have a clarification. For the other two committees that we listed, the indigenous communities task force and the age-friendly housing task Force, their focus is not reduction of carbon. Their focus is the subject of the committee, but they have reached into sustainable issues.
To start with your last point about holistic design, one of the messages we would like to present today is the notion that it is an holistic problem, just looking at carbon emissions. Sustainability has a broader discussion tied to it. You know it stems from looking at things in silos, which is one approach to looking at things as an integrated whole. One of the reasons we have energy issues today is because we’ve tried to solve one problem with another issue and didn’t look at it as a complete picture.
The aging in place really touches on that issue. How do you look at an aging issue from different angles and different perspectives? There is a lot of social value and human value in seeing how you could age in your home. This committee is looking at that in particular.
How does that relate to issues of carbon sustainable issues? That’s a broader question. If you’re not having to rebuild, if you can use and transform existing resources, that is a very sound, sustainable principle that we would like to look at. It keeps communities intact and that’s a very helpful and important social element.
Senator Seidman: I appreciate your emphasis on this particular issue. It’s not just about the sustainability or carbon reduction. You have to look at the integration, the social issues, and how to do it in a community-based way. I think that’s an important aspect of this, and I appreciate that very much.
Senator Wetston: I want to ask a couple of questions that come from your remarks. Help me a bit with the transfer of uninsurable risks that you talked about in your presentation.
Are you having difficulty with insurers insuring these risks? Are you getting sued a lot? Is there a lot of litigation? What’s going on?
Ms. van Rutten: There seems to be a tendency in the climate today to shift risk to professionals that have not been traditionally delegated to professionals. A responsibility and duty of care are tied to our profession, but unfortunately there are a lot of inexperienced people, not in the federal government but in other entities, that seem to transfer those risks.
When you do that you create an environment that leads to litigation and stifles innovation. We want to bring it back to the notion of innovation. In moving to a low-carbon economy we want to promote innovation in all sectors of the building industry, with architects, engineers, constructers, trades and manufacturers, so that you create an environment that promotes new ways of thinking and new ways of doing.
When you transfer risk, you limit that innovation because you create strong adversarial environments.
Senator Wetston: I have one follow-up question, if I may. I don’t understand where the risk is being transferred. In your professional capacity you are avoiding and you have a duty of care. You’re concerned about negligence or some sort of tort action that might occur as a result. I’m just trying to understand if there is a transfer of risk.
First, can you get the professional insurance that you obviously might require? Second, what is the risk transfer exactly that you’re talking about?
Mr. Lorimer: You’ll have to excuse me. I am new to this issue myself. The word “interim” means I have arrived recently and I will be leaving in a few months.
Senator Wetston: I don’t mean to ask you an unfair question.
Mr. Lorimer: No, it’s not an unfair question. It’s a very serious question and it relates a lot to Public Service and Procurement Canada’s service provider that is demanding very high levels of insurance for relatively small jobs.
In the province of Ontario, with the Ontario Association of Architects, all architects must purchase their insurance through one firm associated with the OAA. They are refusing to recognize some of the demands that are being made. We see this as a trend that needs to be stopped to promote innovation and collaborative design teams.
Senator Wetston: If we have a second round, I will ask another question.
The Chair: We’ll have a second round.
Senator Patterson: Perhaps we don’t have time to go into detail now, but could you send me some information? I’m from the North. Could you send me some information on the work of the Royal Architectural Institute indigenous task force is doing, or could you send that to the clerk, please?
Mr. Lorimer: The task force had a symposium several months ago. The results of that symposium are online. First, I can send the link to that. There is a report being issued mid-November, which we can also send along. There are case studies now under way on behalf the Indian and Northern Affairs, which is due at the end of March. We can also send those along.
Senator Patterson: That’s very helpful. Thank you.
Public Services and Procurement Canada is the biggest landlord and real estate holder in the country. You’ve said that the way they manage procurement and delivery is not good and that it can be improved by QBS.
Could you explain for me, in simple language, what is flawed with the management of procurement and delivery? How would QBS be better and give better value for dollars?
Ms. van Rutten: Certainly I don’t want to say that procurement of services is not good. The markets evolve and adapt to procurement services and need improvements over time.
The question with the current procurement model is based on a 90:10 ratio where 90 per cent is based on qualifications and 10 per cent is based on fees. With the way the 90 per cent gets evaluated currently, it is happening that a lot of people end up with very close to the same point evaluation. A lot of highly qualified architects and teams throughout Canada are bidding for the project. The driver of the selection ends up being based on that 10 per cent fee.
There are enough studies we can forward to you to demonstrate that what effectively becomes a fee-based approach, even though the intent was not that it be a fee-based approach, does not necessarily lead to the best quality of results for the client. The fee is tighter for designers and design teams. There is less potential for innovation and less room for looking at different solutions for the project that might lead to long-term benefits to the owners and clients.
Senator Patterson: Could you send us some information on how QBS is different?
Ms. van Rutten: Yes, we can definitely send that.
Senator MacDonald: Senator Patterson has just wandered into an area which I want to speak to you about. BOMA just spoke to us about the way they procure and deal with government. The government has asked us to look at the realities of transitioning to a low-carbon economy.
Again, I want to get back to what Senator Patterson mentioned about low-bid procurement. You said it wastes $5 billion a year. I’m curious how you determine that figure. There is no problem that can’t be solved if we have enough money to throw at it but, of course, there’s never enough money to solve all the problems.
I’m curious about that $5 billion figure. That’s a substantial amount of money. How do you determine that?
Mr. Lorimer: There’s a group that studied QBS over the last several years and the number comes from them. We’ll have to get the report and pass that on to the committee.
I spent 30 years ranging from project manager to regional manager to regional director in two regions, and then to director general in Public Services and Procurement Canada. I’ve seen how, with the best intent possible, the 90:10 ratio gets distorted because people are scoring too closely.
I would add that QBS does not ignore costs or fees. It’s a similar process to what the government currently uses. The first stage would be a pre-qualification or short-listing. The second stage is an evaluation of the abilities and the approach of the firm. Then there is a negotiation with the winning firm.
The government side has to be well trained in negotiation. If that first negotiation doesn’t work, it moves on to the second team. This is used fairly frequently in the U.S. and is successful.
If fees are low, the team will be looking for ways to make that up. It becomes adversarial and the wasted money that is referred to is because of that adversity and consulting teams, fairly or unfairly, looking for ways to make up what they believe are their losses.
The Chair: We will now go to round two with Senator Galvez’ second question that wasn’t answered. Perhaps you could ask the question again.
Senator Galvez: No. Because it is a technical answer, I prefer if the witness could write it down and send it to the committee.
Mr. Lorimer: Yes, we will do that.
Senator Galvez: I have another question. You said in your graphic that the innovation or solution is the National Building Code, and you included the barrier that it was voluntary versus mandatory. In its present state is the building code to your satisfaction?
Is this the building code that you want to make mandatory, or are there some improvements that can be done, and which are they?
Ms. van Rutten: The current National Building Code certainly needs improvement in its sustainability focus. I know that is upcoming.
Senator Galvez: Could you be more specific about what you expect to see?
Ms. van Rutten: In terms of the energy codes, the National Building Code will come out with a new edition of energy codes which will bring it to a very high level. I don’t know specifically what level they’re coming out with.
Currently, in Ontario, there are new energy codes that are quite demanding. I don’t know that they meet the net carbon, but they’re high level and they’re doing quite well.
Senator Galvez: Building codes are very low. Here is safety and security and here is energy, and there is nothing on sustainability, risk or materials.
Are you saying that you’re just happy with health, safety, security and energy, or are there other things that we should include in the building code to harmonize it before we render it mandatory?
I don’t want to put words in your mouth, but I find it frustrating that you don’t know more about this tool that is so important in your profession.
Ms. van Rutten: What I don’t know is the nature of what they’re developing right now. Currently, the codes are not sufficient as they are. We know that they’re working on them, but we don’t actually know the content of what they’re developing. I cannot speak to that.
Mr. Lapp: The codes are insufficient in the sense that they don’t reflect our changing climate. We need to make sure those codes reflect our future climate. We’re talking here about the life cycle of infrastructure that will be around for 50 to 100 years in some cases. Our climate is changing, and we need to account for that period of time.
I know the NRC has quite a bit of money right now. They’re working on updating climate design values for buildings and the building code. There is ongoing work there. Another improvement to the code could be instituting the principle of life cycle assessment. Rather than just building to the present, look at the whole life cycle, which is not just the construction but also operation and maintenance. That’s an improvement. They need to demand more around consideration of climate because that’s the biggest change to happen in that period.
Another point is that the National Building Code is a minimum standard. It’s not a maximum standard. We instruct engineers to use it as a starting point for design. They have to look at the local situation and at the local jurisdiction because, for example, Ontario has its own building code, which is an enhancement to the National Building Code.
A lot of infrastructure is governed at the provincial level. The National Building Code can be like a model for all the provinces and territories, but then certain jurisdictions will enhance it. There has to be some good interfaces between those codes.
Also, there are some instruments like the national master specification document that exist in the NRC. It is another one that could be adjusted for accounting for future climate.
When a design is submitted for an infrastructure, we would like to see it also include an operations and maintenance schedule. The difficulty that owners and operators have is that there’s a disconnect when an infrastructure is designed and there’s another jurisdiction or pool of money that handles the operation and maintenance.
The operators of infrastructure have pressure on budgets to maintain it to an adequate level. It is almost like a car where you have a warranty and at 6,000 kilometres you must do this and all that. If you had an actual schedule of operations and maintenance on an infrastructure that will guarantee its design, it would be a major improvement in terms of our infrastructure.
Senator Wetston: This is a complicated area. We understand the important work that you both do with engineers and architects in this area. Our goal is to try to understand and address the issue of greenhouse gas reduction.
We talk a lot about codes, which are important. We talk a lot about federal jurisdiction. There are a lot of provincial and municipal buildings. We understand that the relationship between all these governments is important and critical for you to be able to do your work in an environment that addresses broad goals of governments.
There are a number of things. I wanted to ask you a very general question on the Pan-Canadian Framework on Clean Growth and Climate Change. I know you both know it and have thought a great deal about it. Tell me what you think about it in general terms.
Will it be sufficient to meet the goals that the Government of Canada has set for 2030? If not, what is necessary from your perspective? We have your list of challenges and obstacles, but can you give me a general sense of what both organizations think about that?
Mr. Lapp: We were quite engaged in the whole process of the development of that. We made representations and participated.
It’s a very good document as a framework for action, but the proof is in the action. Part of it is going beyond and putting words into action. They need to be put into action. That will require cooperation between all levels of government, along with the practitioner community. In a lot of ways, practitioners will be the ones who actually have to implement it.
Once you have the policy frameworks and the agreements in place, then, as Nike says, “Just do it”. Really, that’s what it comes down to. We have to foster the environment.
The plan also has resources. It’s great to have a plan, but you need resources to support the implementation of the plan. There are resources out there in various federal departments. I’m optimistic that the plan can be implemented because the resources are behind it, along with the willingness of both governments and practitioners to work together on it.
Ms. van Rutten: If I may, I would like to give my answer in written form at a later date.
Senator Wetston: We do get a lot of material. I guess we can accept more material.
Senator Massicotte: I want to follow up a bit on the same thing. You’re in a privileged position where you have a lot of knowledge relative to buildings, obviously. You also have a lot of knowledge of all the new technology to make them more efficient in regard to climate change and so on. You also have privileged access to the owners of most buildings in Canada. You know a lot about the numbers and whether it’s economical or not to make these renovations
What is the result? What has been the result so far and how do you explain it?
I’ll help you a bit. I’ll suggest maybe an answer. We’re being told by many people that significant renovations and improvements can be made to buildings and it would be economical to do so. We’re also being told that very little of the potential is being done to accomplish those improvements.
Why? Give us an insight. Why is it we seem to be so slow to respond? Is it economical? What is happening there? Why are we not moving faster to satisfy our climate change goals?
Ms. van Rutten: Perhaps I can answer. Certainly this is more of an experienced-based response. When we have a clear mandate at the initial project stage, whether it’s a code mandate or a client mandate to go with a certain level of sustainable goal, that certainly helps. That sets the bar from the start of the project when you have clients who have those goals.
After that, if the client doesn’t have a certain personal goal and it’s not a mandated goal, it’s often quite hard to convince clients that the capital investment will achieve long-term results. It requires greater capital investment. It might not be a very big percentage increase, but it could be a few percentage points increase to invest in that capital cost. Then you see long-term gains.
Depending on whether or not the client is actually the owner of the ultimate building, if they sell the building they might not have the incentive to actually build it very well, initially.
Senator Massicotte: The fact is that most building owners chose to buy buildings with a certain return. They are economically oriented. They are responsible corporate citizens of our country, but they are very influenced by the numbers.
I know you’re waiting for a mandate letter, but before you get the mandate letter, given that you have access to these decision makers, are you able to create an economic argument saying that you should do this, that you should be more proactive or the numbers won’t justify the issues?
Ms. van Rutten: We do try at a project level to influence the decision of the owners. For example, right now there is a very large development in condo booms in Toronto, Ottawa, and other different cities. Ultimately, the developers are not the final owners of the building. It’s very hard to convince them that they need to invest in the actual building today because they are selling the units to individual owners. They look very much at the bottom line and the profitability, and not necessarily at the long-term costs and the impacts of their decisions.
We do try. Some developers look to have a LEED certification, for instance, as a marketing tool to promote their buildings, but they don’t have very much incentive to actually invest capital in the actual building because they’re not the final owners of the building.
The Chair: Mr. Lapp, in your presentation you talked about the adoption of clean energy and clean technologies enhancing our economy, but that such policies and investments contribute to addressing climate change globally.
Can you only use clean technology and clean energy to reduce CO2 globally? We all live on the same planet. We all have the same atmosphere. Is it just clean energy?
I want to qualify that a bit. As I understand it, there are about 2,000 coal plants, some of them being built now and planned for the future. Yet, off Canada’s east and west coasts we could export LNG, which will contribute to more greenhouse gas emissions within Canada.
I want you to explain to me how you think that works in actually reducing greenhouse gases globally.
Mr. Lapp: When I talk about clean energy I’m talking a lot about renewable energy: water, solar, wind and that sort of thing. None of these panaceas or the magic bullet. They are among a suite of strategies that one must take.
From the point of view of that sector as an industry, developing expertise and applying it in Canada creates the potential for export overseas. That was the thread of that particular argument.
As far as other sources, world energy monitoring certainly shows that carbon-based fuels will be with us for a long time to come. In the case of sources like coal an area that has potential is technologies that will reduce coal emissions. We’re not in the old days of it going out in the air and that. There are technologies that can be adopted to remove a lot of the gas emissions. Carbon capture and storage is another option to be pursued. We’re doing some of that in Canada.
LNG transport all depends on how you look at it. Greenhouse gases are emitted by the ships that are transporting that LNG to other countries.
I see it more strategically in that applying these kinds of technologies in other countries and showing they can work will in general reduce our greenhouse gases. We can be one of the proponents of that. In so doing we support our growing clean technology industry. If you look at the Sustainable Development Technology Canada website, you can see a profile of industry there that is growing and is a significant contributor to the Canadian economy. That could be strengthened by a focus in this area.
The Chair: I have one further quick comment, and I won’t ask for an answer. You’ve already committed to giving us a number of written answers through the clerk, so that everybody gets the same response.
Mr. Lapp: Yes.
The Chair: Further to Senator Wetston’s question, I look at government targets and numbers. They’re not mine. They are this committee’s. By 2030, we’re supposed to reduce it by about 219 megatonnes. That’s an awful lot.
What is projected for 2030 for the oil and gas industry alone is 233. Even if you pretty well wiped out the whole oil and gas industry and you never had one fossil fuel of any kind be used in Canada, you might make that target.
I’d like you to respond to me in writing how you think we can actually get that 219 megatonnes someplace in Canada without destroying the economy we presently have and the lifestyle that people in Canada have become accustomed to.
I know there have to be changes, but I would like a bit more insight from both of you on that.
Mr. Lapp: I would be delighted to do that.
The Chair: Thank you for your presentations. There have been very interesting, and certainly some good questions and some great answers.
(The committee adjourned.)