Dive Brief:
- The biggest hurdle to achieving low-carbon or net-zero carbon emissions from Canadian buildings is the lack of a strong business case, according to a report published this month by the Canada Green Building Council, the Real Property Association of Canada and the Platform for a Low-Carbon Economy Centre at the Smart Prosperity Institute.
- In the absence of supportive measures — or penalties for not going green — the current “business-as-usual” model delivers better returns to owners and investors in the short to medium term, the report notes.
- Among the report’s 10 recommendations to expedite progress toward cutting commercial building emissions are for governments to provide tax relief and incentives for net-zero carbon buildings, provide electricity choice for users and harmonize building performance emission standards across Canada.
Dive Insight:
Operational emissions from buildings contribute about 18% to Canada’s total greenhouse gas emissions, according to the report, Decarbonizing Canada's Commercial Buildings: The Owner & Investor Perspective, citing the Canada Green Building Strategy released in August.
Building owners in most jurisdictions lack incentives for generating clean electricity on-site and have limited choices in the electricity they can procure, the report states. In some locations, grid capacity may be strained by competing demands from electric vehicle charging, data centers and industrial facilities, which further complicates decarbonization efforts, it notes.
The report lays out six significant barriers to building decarbonization: the long life cycles of existing gas-powered HVAC and water heating equipment, a lack of available debt or equity capital, property valuation models that may not reflect the value of green investments, the lack of or expense of low- or no-carbon energy sources, a lack of leadership and expertise in goal-setting and skilled labor for project execution, and inaccessible utility data on building energy use.
Earlier this year, the Canadian government launched funding initiatives to spur the adoption of national model energy codes and support energy-efficient retrofits in commercial, institutional and multiunit residential buildings. The report calls for more action from the federal and provincial and territorial governments.
To overcome the technology barrier, it calls for the federal government to extend clean technology investment tax credits to heat recovery chillers, water source heat pumps, high-performance building envelope solutions and electrical infrastructure upgrades that can support building electrification.
The federal government can also improve access to capital by providing long-term, low-fixed-rate debt financing for low-carbon buildings and retrofits, the report says. It calls for provincial, territorial and municipal governments to explore the feasibility of implementing a Commercial Property Assessed Clean Energy model, a financing mechanism that is used in many U.S. states to support energy efficiency upgrades and renewable energy installations.
The appraisal industry should incorporate decarbonization investments in commercial real estate valuations, and governments at all levels should encourage appraisers to consider a green premium for sustainable assets while valuing government building portfolios, the report says.
Further, the report calls for the Canadian federal government to expand electrical system capacity by adopting 28 of the recommendations in the Canada Electricity Advisory Council’s Powering Canada Report. Those recommendations include developing pathway assessments to inform energy system planning and policy as well as road maps that align energy systems with climate goals by 2050.
Other recommendations include giving building owners access to whole building data, harmonizing building performance emission standards across Canada, integrating low-carbon transition plans for assets and portfolios into capital plans and boosting knowledge and skills industrywide. The report also advocates for greater consumer choice in electricity purchasing, such as by allowing small-scale virtual power purchase agreements.
