Climate action: leading by example – Doug Wall

Climate action:

In June of this year, B.C. school districts will have to issue their first cheques to purchase carbon offsets from the Pacific Carbon Trust in order to comply with the carbon neutral mandate under the Greenhouse Gas Reduction Target Act (GGRTA). As is the case with the Revenue Neutral Carbon Tax, one of the objectives of putting an appropriate price on carbon emissions is to encourage school districts and other public sector organizations (PSOs) to factor that cost into future investment and purchasing decisions. The problem with that, however, is that if there is little or no capital available to invest in emissions reductions, the intended behavioural change will not be realized. Hopefully, this will not be the case for long.

In addition to the carbon neutral requirement for PSOs, the GGRTA also dictates that by 2020, total emissions in the province (public and private) must be reduced by 33 per cent below 2007 levels (and further reductions beyond that). In order to achieve these province-wide reductions, the government is going to have to require that the private sector make significant investments in emissions reductions, and enforce these reduction requirements through regulation. One would hope and expect that the government will lead by example and make similar investments to reduce their own actual emissions by an amount that approximates the GGRTA target. I believe that the government understands that merely declaring to be carbon neutral is unlikely to be a significant enough demonstration of leadership in the eyes of the private sector and the general public, especially when the carbon-neutral mandate actually enhances the business case for investing in actual emissions reductions.

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BY DOUG WALL

School facilities represent the single-largest component of the provincial government building inventory, and by far the largest opportunity for reducing actual emissions. Unfortunately, however, B.C. school districts have very little, if any, access to capital with which to invest in emissions reduction initiatives. Borrowing against avoided utility costs is prohibited by the debt cap under which the Ministry must operate. AFG funding is already insufficient to deal with growing deferred renewal backlogs, address curricular program renovations and adhere to access and safety codes without having to also rely on it for any significant emissions reduction investments. This will likely be borne out by the results of the ongoing Capital Asset Management System (CAMS) analysis.

There is very likely at least $300-million worth of investments in comprehensive emissions reduction measures in B.C.’s K-12 facilities that could be justified as being a better investment (i.e., a better use of taxpayer dollars) than continuing to pay escalating utility and carbon offset costs over the long term. One of the main reasons for this is that most of the upgrades involve replacing aging, inefficient equipment now (boilers, for example), thus avoiding a future capital expense when the equipment would have to have been replaced regardless. Each facility essentially has only one chance to implement a comprehensive emissions reduction project because any measures that are not implemented are unlikely to ever be implemented on a standalone basis.

The positive business case associated with these upgrades should warrant their being given a high priority within the capital budgeting process going forward, especially if they help the government demonstrate leadership on climate action. The need to manage the ratio of Total Public Debt to GDP is acknowledged but these projects need to be given a much higher priority within the capital funding envelope. Previous funding mechanisms, including the now-completed PSECA program, were insufficient in scale and did not have the requisite emphasis on comprehensiveness (and GHG emissions) for these types of investments. It is recognized that low-visibility retrofits inside existing buildings are not ideal investments for the purposes of public announcements and ribbon-cutting ceremonies. Surely, however, the business case and job creation attributes of these investments, combined with the positive impact they will have on facility renewal and the learning

Before and after pictures of a typical retrofit replacing an aging school boiler plant in Nechako Valley.

environment, would trump most other investment options that might have better ceremonial optics.

In contrast to B.C., where there is virtually no current funding or access to capital for school districts to implement emissions reduction projects, Alberta allows their school districts to borrow against guaranteed utility savings for up to 20 years. While this capability is reducing carbon emissions in Alberta’s schools, it was primarily put in place to give school districts an additional source of capital to deal with deferred facility renewal. It is ironic that school districts in Alberta, where climate action is not as high a government priority, have dramatically more access to capital for efficiency projects than their counterparts in B.C., where climate action is a legislated priority requiring a demonstration of government leadership.

If incremental funding is made available for comprehensive emissions reduction projects in B.C. school districts, the performance risks associated with these projects can and should be transferred to the private sector to ensure that the investments generate the intended emissions reduction results. If no one is contractually responsible for the results, then they invariably will not be met. It is very easy to estimate how much a project will cost and how much it will save; it is an entirely different matter to ensure that actual results match these estimates and the original business case of the project is maintained. An interesting exercise would be to go back and measure the performance of the PSECA projects in terms of actual energy and emissions reductions versus estimates.

Despite the limited emissions impact of electrical efficiency measures, the associated Power Smart incentives make them a vital component of any school efficiency project. Similarly, incentives that are now available from FortisBC (formerly Terasen Gas) significantly enhance the business case of gas efficiency measures. Unfortunately however, without adequate access to capital to pay for the portion of the implementation costs that are not covered by utility incentives, the majority of incentives that could be realized by B.C. school districts will remain untapped. For this reason and the other reasons noted above, I am confident the government will soon rectify the funding issue for emissions reduction projects in B.C. schools.

About the Author: Doug Wall is a professional engineer and Western Canada vice president for Ameresco.

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