Big buildings contribute nearly a fifth of the province’s greenhouse gas emissions through energy and water use. But trying to reduce those emissions without detailed information on building performance is “like trying to land a jumbo jet with a blindfold on,” according to Bryan Purcell of the Toronto Atmospheric Fund. With the help of new provincial regulations, those blindfolds may soon come off.
Sure, Energy and Water Reporting and Benchmarking sounds dull, but the rules it embodies represent a Canadian first, and the data it unleashes will offer municipal planners, building and condo owners, tenants, and investors unprecedented insight into the performance of any city’s most valuable non-human asset.
“For the province and cities to respond to climate change, this information is critical,” says Purcell, who is the director of policy and programs at TAF, the city agency working to reduce greenhouse gas emissions by 80 per cent in the Greater Toronto Area by 2050.
Under the proposed rules, the largest commercial and industrial buildings in the province (those with more than 250,000 square feet of total floor space) would have to report granular information about their previous year’s electricity, natural gas, and water use as early as July 2017. Over the following two years, smaller structures — down to 50,000 square feet — would be added to the mix, including multi-unit residential buildings containing at least 50 units. Reporting this data would be an annual requirement.
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Much of this information would be made available on the province’s Open Data website a year after it’s reported, allowing anyone with an internet connection to access it, while the Ministry of Energy would publish annual reports summarizing the data and key trends.
Purcell says this will allow cities such as Toronto and Mississauga to see if conservation programs are working or if updates to the building code are having the desired effect on building performance. “We can track progress against our targets, see where to invest more in conservation, and where to invest less,” Purcell says. “This regulation really changes the game.” (Ontario is going down the same path with households: the province will soon require energy audits before any single-family home can be listed for sale, and the results of those audits will have to be disclosed.)
TAF began advocating “building benchmarking” rules about three years ago, after similar measures were introduced in the United States. Sixteen major American cities and two states — California and Washington — now require commercial buildings to report energy use. New York City and Washington, D.C., led the way, but Boston, Philadelphia, and Chicago have since embraced the policy.
“It’s a rapidly growing number,” says Cliff Majersik, executive director of the D.C.-based Institute for Market Transformation. “It’s still early days, but the data seems to be telling a story that it’s working quite well. What we know is that in cities requiring public disclosure of energy use, the buildings are becoming more energy efficient.” (An added bonus for municipalities: investment in energy efficiency creates local jobs. New York City estimates that between 2010 and 2013, more than 3,000 jobs were created directly as a result of motivated landlords trying to boost building performance.)
Ontario already has a sense of what impact the new regulations could have. Since 2012, the province has required public buildings such as schools, hospitals, and community centres to report their annual energy use. Data collected so far, according to the latest conservation report from the Environmental Commissioner of Ontario, suggests taxpayers could save $450 million and one megatonne of greenhouse gas emissions per year if all buildings performed as well as the top quarter in their respective categories.
Essential to this finding was the ability to compare buildings on an apples-to-apples basis. That wasn’t easy do to in a standardized way until 2000, when the Environmental Protection Agency developed a free tool called Energy Star Portfolio Manager. Natural Resources Canada released a Canadian version in 2013, giving Ontario a reliable platform to work with.
The web-based tool gathers basics such as building type (commercial, institutional, warehouse), floor area, operating hours, and occupancy — all information required under the proposed regulations. It can also capture smaller details, including whether a building has a parking garage or a pool. “It’s a pretty sophisticated tool,” says Majersik. “Plus, it normalizes for weather, such as if a building in a particular city experienced a cold winter.”
The technology doesn’t work for all buildings, however. Some facilities, such as farms, manufacturing plants, and data centres are difficult to compare accurately. They would be exempt from the Ontario regulations — at least until the software gets better. “They left the door open for updates in future years,” Purcell says.
Gordon Hicks, president of Toronto-based real-estate management firm Brookfield Global Integrated Solutions — which looks after more than 15,000 buildings across Canada — welcomes the proposed regulation. “It’s the old adage: that which gets measured gets managed,” Hicks says. “We’re on this trajectory where we have to shift to a low-carbon era, and obviously for the built environment that means we have to reduce our emissions.”
And that’s not a bad thing, he adds: “The government’s just trying to open our eyes, put everyone on a level playing field. All of us need to be thinking about how we can operate our portfolios in the least wasteful ways possible. And those who are most efficient will be better off in the long run.”
It’s a simple formula: consume less, pay less.
But property owners aren’t likely to pursue potential savings if they have zero insight into how similar buildings in the same market compare. Purcell says it’s not uncommon to see the worst-performing building in a category using three times more energy than the best-performing building. Such a wide gap, when revealed, can act as a wake-up call to senior executives. “It really does produce a change in behaviour,” Purcell says. “It motivates people to make those energy-efficiency investments.”
A 2012 EPA study, for example, looked at 35,000 benchmarked buildings and found they were reducing annual energy costs by an average of 2.4 per cent. Buildings that had been benchmarked for three consecutive years saved an average of 7 per cent.
The benefits go beyond savings. “Studies indicate that energy-efficient buildings typically rent for about 3 per cent more per square foot,” according to a report from Natural Resources Canada. Many commercial tenants see a high efficiency rating as the sign of a well-managed building and, from the perspective of occupants, a more comfortable one — and that boosts asset value. “Greater energy efficiency in buildings can also increase the selling price of a building by as much as 13 per cent,” the report notes.
Without a doubt, Majersik says, building benchmarking is raising the bar for energy efficiency: “It is already triggering a virtuous cycle of competition where landlords are competing to attract and retain the best tenants. Over time, that bar is going to get higher and higher.”
For Allison Annesley, vice-president of energy solutions at Efficiency Capital, it’s a massive business opportunity. Using a financing model developed by TAF, her company helps landlords pay for efficiency upgrades through the savings they achieve. It oversees the engineering and installation of retrofits and even insures all projects to make sure they deliver as promised. The whole process is supposed to be financially painless for the landlord.
Annesley says there’s no shortage of money out there to help building owners boost efficiency, but a lack of public information about performance has made it challenging to sign those owners up. Cold-calling building managers takes time, and those willing to listen often don’t understand how their properties perform or compare. That’s made for a long sales cycle, Annesley explains. “Most buildings overestimate their performance; they think they’re way more efficient than they actually are.”
Once energy and water data is regularly reported, Efficiency Capital and others will be able to target landlords that need the most help. Those landlords are also more likely to want help. “Obviously they don’t want to be seen as laggards,” Annesley says.
As far as Hicks is concerned, there won’t be any more excuses not to act. “Up until now it’s just been a decision that hasn’t been a priority,” he says. “But now, it’s going to be a priority.”
Tyler Hamilton is a climate writer, an adjunct professor of eco-studies at York University, and the senior manager of partnerships at MaRS Cleantech.