Canadian Property Management June 2019 by MediaEdge

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VOL. 34 NO. 2

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Editor-in-Chief Barbara Carss barbc@mediaedge.ca Publisher Sean Foley seanf@mediaedge.ca Contributors Bev Dahlby, Don Drummond, Brendan Frank, France St-Hilaire, Chris Ragan, Mark Petersen, Kent Waddington, David Wylie Senior Designer Annette Carlucci Wong annettec@mediaedge.ca Web Designer Rick Evangelista rickr@mediaedge.ca Production Manager Rachel Selbie rachels@mediaedge.ca National Sales Dan Christie danc@mediaedge.ca Kelly Nicholls kellyn@mediaedge.ca Melissa Valentini melissav@mediaedge.ca Digital Media Director Steven Chester stevenc@mediaedge.ca Circulation circulation@mediaedge.ca Alberta & B.C Sales Dan Gnocato dang@mediaedge.ca

President Kevin Brown kevinb@mediaedge.ca Group Publisher Sean Foley seanf@mediaedge.ca Controller Nadia Piculik, CPA CMA nadiap@mediaedge.ca TEL: (416) 512-8186 • FAX: (416) 512-8344 Published and printed six times yearly as follows: March, April/May, June, Aug/Sept, Oct/Nov, Dec by MediaEdge Communications Inc. 5255 Yonge St., Suite 1000, Toronto, Ontario M2N 6P4 (416) 512-8186 Fax: (416) 512-8344 e-mail: circulation@mediaedge.ca Subscription Rates: Canada: 1 year, $60*; 2 years, $110* Single Copy Sales: Canada: $12* Outside Canada: US 1 year, $85 International $110 *Plus applicable taxes Reprints: Requests for permission to reprint any portion of this magazine should be sent to info@mediaedge.ca. Copyright 2019 Canada Post Canadian Publications Mail Sales Product Agreement No. 40063056 ISSN 0834-3357

editor’snote ALBERTA'S NEWLY installed Minister of Environment and Parks recently told an online forum: "Albertans want to pay for their own light bulbs and showerheads. They don't want us to tax them, and return it, and buy them showerheads and light bulbs." Virtuous bunch, those Albertans. Elsewhere, a lot of consumers might want to channel the combined cost of an LED 9W bulb and a water-efficient showerhead into the six or so fancy coffee-based drinks that the same amount of money could finance. Energy and water efficiency are worthy expenditures, but perhaps not as enticing as those 2,300+ empty calories. Similarly, most of us spend much more than $260 — the amount the Ontario government boasts it saved the average family when it dismantled cap-and-trade — on coffee and snacks every year. Few of those debating how to tackle climate change dispute that it is real or that action is needed. That's important common ground to cling to as we head into a federal election campaign in which the spin-doctors will be out in force to politicize and polarize the discussion. The commercial real estate sector could play a key role in reclaiming the debate and refocusing it on imperatives for ensuring and enhancing resiliency. Reports like the Global ESG Investment Survey, summarizing insight from holders of USD $1.1 trillion in real estate assets worldwide, emphasize the industry's stake. We highlight the findings in this issue. Supporters of carbon tax, including economists affiliated with the Ecofiscal Commission based at McGill University, note that one of its most effective attributes is also what earns it scorn. It's an in-your-face price signal that can be interpreted as punitive. Yet, that's kind of the premise — to inspire a more frugal approach to the purchase of greenhouse gas emitting products. Completing the circle, collected revenues are then returned to consumers in a targeted way aimed at reducing emissions further. The Ecofiscal Commission's analysts argue carbon price is a market-driven motivator of behavioural change with more flexibility and fewer hidden costs than other potential paths to a commonly endorsed goal. That is, of course, addressing the real threat and growing socio-economic toll of climate change. They make their case in our Policy Instruments feature. Energy efficiency also builds common ground, delivering GHG-reducing results and cost savings. We look at its technological, economic and policy components in this issue. Barbara Carss barbc@mediaedge.ca @BarbaraCarss

Authors: Canadian Property Management Magazine accepts unsolicited query letters and article suggestions. Manufacturers: Those wishing to have their products reviewed should contact the publisher or send information to the attention of the editor. Sworn Statement of Circulation: Available from the publisher upon written request. Although Canadian Property Management makes every effort to ensure the accuracy of the information published, we cannot be held liable for any errors or omissions, however caused. Printed in Canada

Canadian Property Management | June 2019 3

contents

Focus: Energy Strategies 6 Global Investment Trends: 2018 saw a decline in spending on energy efficiency in the buildings sector. 10 Ontario Energy Policy: A pullback on conservation and demand management programs has already occurred, while the Global Adjustment allocation formula remains in place for now. 17 Voltage Management: On-site controls save energy and guard against power surges. 18 Passive House Encounters Cold: University of Northern British Columbia's Wood Innovation Research Laboratory. 20 Health Care Tools: Energy management software tailored for health care operators. 22 ESG Guidance: Institutional investors, property funds and asset managers take heed. 24 No Hiding Carbon Prices: Visibility can be both a vulnerability and an effective behaviour change lever. 26 Federal Budget Commitments: Green Municipal Fund gets $950 million deposit for locally based energy efficiency projects. 28 Atlantic Leadership: Conservation plans, programs and performers in New Brunswick, Nova Scotia and Prince Edward Island. 30 Rising Electricity Costs: British Columbia commercial ratepayers will continue to pay disproportionate share.

4 June 2019 | Canadian Property Management

Departments 3 Editorâ&#x20AC;&#x2122;s note

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energyinvestment

SPENDING SLIP Off Year for Energy Efficiency in Global Buildings Sector The International Energy Agency's World Energy Investment 2019 Report offers a mixed assessment of recent global trends. Investment in energy efficiency is not keeping pace with ever-increasing consumption, as the dollar value of projects in the buildings sector actually declined last year. However, there is evidence of spending shifts toward shorter-cycle renewable sources of generation such as solar photovoltaics and on-shore wind. Momentum for instruments such as green bonds is also building in the capital markets. The following is an excerpt â&#x20AC;&#x201C; Editor. IN 2018, a total of USD $240 billion was invested in energy efficiency globally, across the buildings, transport and industrial sectors. That's the same level as in 2017 â&#x20AC;&#x201D; stagnation largely reflective of lower spending on energy-efficient buildings. At the same time, energy efficiency investment needs to increase significantly in the near-term to meet global sustainability goals and reduce the overall effort required from energy supply measures. The buildings sector remains the largest destination of energy efficiency expenditures. However, for the first time since the World Energy Investment Report started publishing estimates, growth in investment in buildings energy 6 June 2019 | Canadian Property Management

efficiency has faltered. In 2018 it declined by 2% to USD $139 billion. An underlying factor was the static energy efficiency policy environment in 2018, with lacklustre progress on implementing new efficiency policies or increasing the stringency of existing policies. Although investment in China and the United States remained relatively stable, spending has decreased in Europe in step with a significant reduction of government support for energy efficiency measures compared to 2017. In France and the United Kingdom, two of the larger European markets for energy efficiency, investment remained stagnant, In Germany, the government remains a key driver of energy efficiency in larger

buildings, but it cut its grants and loans in the home construction and renovation sector in 2018. In China, efficiency investment has tracked alongside the total investment in real estate, as efficiency standards have tightened in recent years. Real estate investment has risen by around 6% per year on average since 2015, taking it above USD $1.8 trillion in 2018. During this period, residential construction has increased, while non-residential buildings investment has declined. As a result, buildings efficiency spending has risen 33% since 2015 to around USD $27 billion in 2018, though the level remained stable from 2017. In the United States, total incremental spending on buildings energy efficiency

energyinvestment

PPAGE has been broadly unchanged in recent yea rs even wh ile investment in construction has risen in both the residential and non-residential sectors, with an average nominal growth of 3.8% since 2015, reaching USD $1.4 trillion. Therefore, the share of total construction investment that is dedicated to reducing energy use in buildings in the United States is in decline, and currently stands at just 2%. Property assessed clean energy (PACE) financing, which facilitates the repayment of loa ns for energ y ef f iciency improvements through property taxes also declined in the United States last year due to the application of new consumer protection laws and the consequent barriers faced by contractors. AIR-CONDITIONING & HEAT PUMPS Global air conditioner sales experienced the largest ever annual increase in 2018, with 16% growth contributing to more than 175 million units sold. Extreme

weather and prolonged heat waves underpin last year's sales figures. India, North America (especially Mexico), Brazil, the Middle East and China helped to push sales growth. China’s market remains the world’s largest and is not yet saturated. Meanwhile, rising demand for space cooling is already putting enormous strain on electricity systems in many countries, as well as driving up emissions. Space cooling can represent as much as 50% or more of peak electricity demand on hot days in regions with high air conditioning demand. Globally, carbon dioxide (CO2) emissions from cooling have tripled since 1990, to 1.1 billion tonnes, which is equivalent to the total emissions of Japan. There is huge scope to reduce the gap between the most energy-efficient air conditioners on the market and the market average, which is often only half as efficient. Improved regulations and more efficient supply chains could reduce

cooling energy consumption by as much as three to five times. Heat pump sales remain an order of magnitude smaller than air conditioner sales, but maintained nearly 10% annual growth. This was despite a slowdown in China as policy incentives waned. North America became the largest heat pump market again. Overall, heat pumps comprise around 2.5% of the sales of global building heating equipment, but this share is growing. Since 2016, growth in heat pump sales has been pushed by Europe and Japan. European sales have been boosted by market incentives, including the eligibility of heat pumps to count towards EU renewable energy targets. ESCO MARKET GROWTH The market for energy service companies (ESCOs) — which provide energy services and energy-efficient equipment to end users — is growing steadily. The global value of the ESCO market (by Canadian Property Management | June 2019 7

energyinvestment CANADA SEEKS BREAKTHROUGH ENERGY INNOVATION The buildings sector has been targeted in the Canadian government’s search for breakthrough energy solutions. A new fund bearing that name will provide clean technology developers with up to $3 million or 50% of project costs toward the advancement of manufacturing, electricity, transportation or buildings related innovations with the potential to reduce global greenhouse gas (GHG) emissions by 0.5 gigatonnes annually. “The dawning global low-carbon economy is estimated to be worth $26 trillion,” says Catherine McKenna, Canada’s Minister of Environment and Climate Change. “Every day, Canada’s inventors and investors, engineers and entrepreneurs are coming up with smarter, cleaner ways of doing things. Their ideas are our best tools in the fight against climate change.” Candidates who own or have licensing rights to an intellectual property and meet prescribed technology-readiness requirements have until September 11 to apply to the newly announced Breakthrough Energy Solutions Canada (BESC) program, which is envisioned as a means to accelerate clean technology development and attract further investment. Natural Resources Canada will oversee the program, while the investor-led Breakthrough Energy Coalition will act as a consultant and offer successful proponents potential backing of its associated $1-billion+ global fund in support of climate change action. “Collaboration across the public and private sectors is a powerful way to advance the energy innovations and companies needed for a carbon-free future,” maintains Bill Gates, the Chair of Breakthrough Energy

energy performance contract revenue) was nearly USD $30 billion in 2017, up 8% since 2016. Much of this growth is occurring in China, the largest market by far. Government policy remains a key driver of ESCO activity. In China, policy incentives have driven ESCO engagement in the private sector, while government procurement rules have been a barrier to further development in the public sector. In North America, public sector asset owners are able to obtain debt on favourable terms to finance ESCO contracts. In Europe, where the ESCO market is 10% of the global total, the European 8 June 2019 | Canadian Property Management

Ventures. “We are hopeful that this Breakthrough Energy partnership with Canada will be a model for developing more collaborations.” Potentially eligible innovations include those that: decrease the carbon intensity of a GHG-emitting product or system; increase the deployment and/or improve the performance of an existing low-GHG product or system; introduce a new lowGHG product or system into the market; or introduce a systems-level structural change that enables any of those advancements. Within the buildings sector, BESC administrators foresee that occurring via low-carbon building systems and construction techniques, intelligent buildings and innovative, high-performance heating and cooling technologies. Qualifying electricity technologies include those related to low-carbon generation and grid management. Targeted manufacturing technologies would also have a impact in the built environment since they centre on low-carbon production of steel and cement among other materials. Up to $30 million will be available to disperse in amounts of $300,000 to $3 million. Proponents will be required to begin work by April 1, 2020 and achieve tangible performance targets within two years. Preference will be given to companies that are already generating revenue, have previously secured at least $500,000 in investment or have signed on a significant co-funder prepared to adopt the technology. For more information about Breakthrough Energy Solutions Canada, see the website at www.nrcan.gc.ca/breakthrough. – REMI Network

Commission recently clarified the terms under which an EPC can be accounted for off-balance sheet. The impact that these changes will have on the European ESCO market is still to be seen. Globally, nearly half of ESCO investment is for private sector customers. Most agreements between customers and ESCOs are underpinned by energy performance contracts that clarify ongoing payments and commit the ESCOs to installing equipment and guaranteeing savings. Digital technologies, such as sensors and smart meters, that provide real time information on equipment and system

performance, along with analytics and remote monitor ing, can improve measurement and verification (M&V) of energy savings in ESCO projects. More accurate information and improved M&V could further facilitate financing of ESCO projects and boost investment in the sector. SOLAR PV Investme nt i n d i st r ib ut e d s ol a r photovoltaics (PV) in the United States was around USD $15 billion in 2018. It is the second largest market after China and has remained one of the most dynamic in terms of installations, despite relatively higher capital costs compared with the global average. In addition to policy support at the federal and state level, the availability of finance has continued to improve, with more players and products entering the market. While fewer installations are now made by the top developers, payment mechanisms for distributed solar PV in the United States continue to evolve towards increased consumer ownership, compared with entering into leasing a r rangements or power purchase agreements with third parties. This reflects the better availability of financing options for consumers and the desire by developers to ease upfront capital expenditures. A number of financial institutions now offer solar loans, which have helped to facilitate direct ownership. Developers and financing companies are also using the secondary markets to refinance the leases and contracts on their balance sheets as well as their portfolios of solar loans, which spreads the financing costs and risks among more investors. In 2018, a record amount of asset-backed securities based on US distributed solar PV projects was issued — more than USD $2 billion, equal to around 15% of primary financing. These developments have helped to keep the cost of financing relatively stable. Broadly, the cost of financing for large portfolios of distributed PV projects remained stable in 2018 and was slightly lower compared with two years ago, even as US benchmark interest rates rose, with somewhat more debt used to finance projects and an increased diversity of equity sponsors. zz The complete text of World Energy Investment 2019 can be found at www.iea.org/wei2019.

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energypolicy

CURRENT

DIRECTIONS Ontario Commercial Sector Contemplates Evolving Energy Policy

By Barbara Carss

COMMERCIAL LANDLORDS have been left off the stakeholder list for Ontario’s in-progress consultation on industrial electricity prices, but any resulting overhaul of hydro rates is expected to flow through to the operating costs of a broad range of non-residential buildings. Hosts of a recent seminar to help commercial electricity customers explore options to mitigate the global adjustment (GA) apportionment on their hydro bills caution that the rules could be changing. “We all know it’s quite a complex topic and there are a lot of things happening,” observed Bala Gnanam, Vice President, Energy, Environment and Strategic Partnerships with the Building Owners and Managers Association (BOMA) of Greater Toronto. “Before, it was confusing and somewhat stable. Now, it’s confusing and somewhat chaotic. But the one thing that’s consistent is that it’s confusing.” Delivery of conservation and demand management (CDM) incentives is also in 10 June 2019 | Canadian Property Management

flux as Ontario’s Independent Electricity System Operator (IESO) assumes oversight of a more modest program following the March 21 directive from the M i n i s t e r of E n e r g y, No r t h e r n Development and Mines, Greg Rickford, wh ich t er m i nat e d t he pr ev ious government’s conservation framework. Insiders affirm that the departure of dozens of CDM account managers, who have suffered job loss from local distribution companies (LDCs) in recent weeks, leaves a gap in service. “We are being asked to do a whole lot with way less funding,” Rob Edwards, the IESO’s Private Sector Business Manager, told seminar attendees. “There is going to be an impact. We will not be offering the same hand-holding component.” NEW CDM DELIVERY AGENT BOMA Toronto schedules the annual event in advance of the mid-June deadline for large consumers with average monthly peak demand of at least 1 megawatt

(MW) to opt in as Class A customers for the purposes of Ontario’s Industrial Conservation Initiative (ICI) program. However, with a new government taking office last summer, this year’s edition touched on hinted or already enacted energy policies with repercussions for the commercial real estate sector. Given the ongoing consultation with industrial consumers and the ICI program’s customary July 1 to June 30 timetable, the current formula for allocating GA costs is generally thought to be locked in for at least another year. Changes in the CDM regime are unfolding more rapidly. Amendments to the Electricity and Ontario Energy Board Acts, adopted on May 9, now give the government flexibility to fund CDM programs through general tax revenues rather than the electricity rate. That likewise gives the government discretion to adjust or cancel that budget as it chooses, although, the IESO is working on the premise that funds will continue to flow.

energypolicy “What we understand is that we will be doing programs post-2020,” Edwards reported. In the interim, the Minister’s directive — which did not require legislative approval — has begun to play out, with LDCs now la rgely relegated to administering CDM contracts that were in place before April 1. The IESO has developed and is rolling out a replacement slate of offerings for April 1, 2019 to December 31, 2020, largely mirroring eight of the 16 incentive programs the LDCs previously offered. “It’s not an all-bad-news story,” Edwards asserted. “There is an emphasis on business programs and continuity for low-i ncome a nd I nd igenous communities.” For the buildings sector, financial support will continue to be available for in-house energy managers, lighting and equipment retrofits and/or building system upgrades, and whole-building energy performance. Applicants will now deal directly with the IESO, which is formally and informally procuring resources to help handle its new responsibilities.

An RFP will soon be issued for thirdparty technical reviewers and program support, while energy service providers are tagged as an important part of outreach efforts. “We have great relationships with our trade allies and we want to grow that immensely,” Edwards reiterated. Instead of vetting applications, LDCs are now invited to join the applicants. Ontario’s 68 LDCs will have access to a $27-million pot earmarked for specialized local programs, but there is no guarantee of continuity of earlier efforts, such as Toronto Hydro’s race2reduce, which the Minister’s directive effectively shut down. LDCs will now have to apply anew for IESO approval and funding for such programs. ICI RESET FOR 2019-20 At the time of the seminar, commercial electricity customers large enough to qualify as Class A customers were waiting for LDCs to release peak demand factors, derived from each eligible account’s peak energy demand during the five hours between May 1, 2018 and April 30, 2019 when the highest total system

demand was recorded. Should they choose to participate in the ICI program, the peak demand factors will be used to calculate Class A customers’ monthly share of the global adjustment from July 1, 2019 to June 30, 2020. The larger remainder of commercial accounts will be designated as Class B and will pay for the bucket of costs the GA encompasses on a straightforward per kilowatt-hour (kWh) basis. That’s determined after the Class A portion is subtracted out every month. The commercial sector’s discontent with this split is longstanding and welldocumented. Keith Sandor, Vice President with the energy storage developer/ provider, NRStor Inc., noted that, on average, Class A customers paid 7 cents/ kWh toward the GA last year, while Class B customers paid 11 to 12 cents/kWh. “That’s roughly a 35% difference between Class A and Class B,” he said. “If you’re Class B, you’re a price taker.” Nevertheless, having relatively recently gained standing for larger commercial buildings when the threshold for ICI program participation was lowered to 1 MW in the fall of 2016, commercial real

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energypolicy

“That’s roughly a 35% difference between Class A and Class B. If you’re Class B, you’re a price taker.” estate operators and advocates are wary of future policy shifts. Beyond seven sessions to hear specifically from consumers in the automotive, forestry, mining, agriculture, steel, manufacturing and chemicals sectors, the consultation on industrial electricity prices has asked for feedback on nine questions — beginning with a multi-part question related to the effectiveness of the ICI and its peak-hour triggers. “Obviously, they are getting their asses lobbied off by big industrials,” suggested Adam White, Chief Executive Officer of the energy management analytics firm, powerconsumer inc. White traced the ICI program’s decade-long evolution, arguing that it was originally conceived largely as an instrument to support trade-exposed manufacturers in the wake of the 2008 financial crisis, which had bonus complementary benefits for the electricity system. Sandor pointed to “skyrocketing GA costs” and concern about spiking peak demand as other key factors in the ICI’s genesis. “The GA was roughly one-third of what it is now,” Sandor noted. “The justification at the time was there were about 250 [eligible] customers in Ontario and they all had the right meters in place,” White recalled. “Now there are thousands of

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customers eligible to opt in. It has gone maybe about as far as it can go.” After opening the program to larger commercial accounts — a 350,000-square-foot office building would typically have an energy load in the 1 MW range — the former government also extended access to manufacturers with peak demand of at least 500 kilowatts. However, White noted that the initial 250 or so large industrial consumers still represent half of the overall Class A load, while approximately 50,000 customers make up the other half. Online submissions to the consultation process will be accepted until June 14 — in sync with this year’s deadline for eligible Class A customers to register for the ICI program. “It affects all of us so we should try to get our voice heard,” urged Scott Rouse, Managing Partner with the consulting firm, Energy@Work. STATUS QUO IN SHORT TERM Seminar presenters advise both Class A and B customers to assume a global adjustment status quo, at least for their short-term decision making. In particular, the next four months could have a critical influence on costs for 2020-21 since the five peak hours almost invariably occur in the summer. Rouse endorsed an energy management strategy that considers how to curb energy loads when those peaks are projected and/or in progress, but also focuses on minimizing energy use in general. The latter will be imperative for Class B customers. “The support you are going to get from the LDC now that the CDM group is gone is going to be a lot different,” he predicted. “One of the real valuable tools is real-time monitoring. Letting the operations team see what’s happening, when it’s happening, is extremely valuable.” “Once you are Class A, you are chasing peaks for the following year,” Abdi Mohamed, the IESO's Business Manager, LDCs, reminded seminar attendees. “It’s becoming a bit of a challenge to chase those peaks, but it’s not impossible.” And it’s likely less perilous than gambling on other scenarios. An outcome from the consultation on industrial prices is not expected before this fall, and a reduction in CDM program costs will make a negligible dent in the various program and contracted supply costs — including the multi-year nuclear refurbishment commitment — opaquely lumped into the GA. “The actual quantum in the global adjustment isn’t going anywhere. When Pickering [refurbishment costs] comes out, it will come down in real terms and then it will stay flat,” White advised. “How’s it going to be allocated? That’s the big question.” Energy and conservation policy advisor Marion Fraser has watched the global adjustment’s purpose change and its momentum build throughout the 21st century. “The GA was created by the then IMO (Independent Electricity Market Operator) in order to deal with a new adjustment based on largely out-of-market purchases for reliability, and it became this new other thing,” she reflected. “No matter what decision is made, in the short term, someone will lose out and someone will benefit.” zz

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energystrategies

SMOOTH DELIVERY Voltage Management Complements Distributed Generation

By Mark Petersen

THE ELECTRICAL grid, which delivers the resource that powers day-to-day existence, has been called “the largest machine in the world”. Like all machines, it will get old, wear out and occasionally be pushed to do things it wasn't designed to handle. Today's electrical grid is volatile, and it is becoming more so every day. Inflows of distributed generation, such as wind and solar, and fluctuating demand contribute to the situation. Meanwhile, utilities are tasked with delivering the correct amount of power, at the right time of day, to meet demand that fluctuates wildly across a 24-hour period: low overnight, up through the day, and peaking through the dinner hour and into early evening. Imagine working to meet those fluctuating demands in real time, and ensuring that as little of this precious resource as possible is wasted. That’s a day in the life of those who manage the grid. Producing, then transporting power over vast distances across aging infrastructure is an ongoing challenge. Utilities typically send out more power than is required — albeit still within a prescribed allowable range — to ensure that all of their customers receive the power they need. This is referred to as overvoltage. Electronic and electrical devices are designed to operate at a certain maximum supply voltage, and considerable damage can be caused if the voltage is higher than that for which the devices are rated. In Canada, allowable voltage levels are set out in the standard, CAN-3-C235-83 (R2015) Preferred Voltage Levels for AC Systems, 0 to 50,000 V.

The standard allows for a wide range of voltages at the service entrance of a facility or building. Anything from -8% to +4% for 600V service is acceptable, meaning that voltage can range from a low of 550V to a high of 625V. For their part, building owners and operators have the ability to monitor and control the voltage levels at a facility. If they can ensure that the variation is managed, reducing the range of voltage seen at the building and passed on to the various loads (electrically powered equipment and resources) presents an opportunity for energy savings. Utilities likewise have an interest in voltage management. BC Hydro, Hydro Quebec, and the United States Department of Energy (US DOE) have conducted research into energy usage, and they all came to the same conclusion: reducing voltage saves energy. For example, the 2010 US DOE study estimated that electrical consumption could be reduced by 2.4% to 3% through implementation of a conservation voltage reduction (CVR) program. The question is: where in the system can energy be reduced? Implementing voltage management at the utility sub-station level is imprecise and expensive because every circuit provides energy to numerous facilities. Interventions at this point are unable to tailor the voltage needed to balance equipment performance, reliability and energy use to each recipient. Voltage control at the facility level — which utilities term "on-site" — can meet that need. A commercial office tower with a typical voltage profile can usually attain a 4% to 6%

average voltage reduction. Over a one-year period, implementation of an up-to-date, active voltage management solution could provide a 100,000 kilowatt-hour (kWh) reduction in energy use for a facility with a 3 million kWh energy baseline. There would also be a related drop in GHG emissions. Given that systems typically have 20-year or longer useable lifecycles, the ongoing savings and overall long-term value can be substantial. This delivers best results when voltage levels are managed holistically in the elect r ica l room. On-site voltage management platforms effectively become an extension of the grid, bridging the meter and the switchgear. They read inbound voltage from the grid and fine-tune it to the optimum levels for the building, and for every piece of electrical hardware in it. In this way, everything from lighting to highly sophisticated machinery will get the voltage it was designed for, and avoid issues that come from overvoltage. The technology may also qualify for incentives that various North American jurisdictions and/or power utilities offer for energy efficiency. Typically, these range from $0.10/kWh to $0.30/kWh and can cover up to 50% of the total capital cost of a voltage management implementation. zz Mark Petersen is Vice President, Engineering, with Legend Power Systems Inc. developers of SmartGATE voltage management technology. For more information, see the website at https:// legendpower.com. Canadian Property Management | June 2019 17

PASSIVE LIVING LAB UNBC's Wood Innovation Research Laboratory By David Wylie THE UNIVERSITY of Northern British Columbia’s Wood Innovation Research Laboratory (WIRL) in Prince George is proof that an ultra-energy efficient, industrial wood building can be built to withstand the cold climate of northern Canada. The building’s low heating requirement is similar to a standard family home rather than a typical industrial building — due to the high performance of the Passive House design and wood use. “We pulled off something really amazing here. This building is an engineering marvel,” says UNBC Associate Professor of Engineering, Dr. Guido Wimmers. “It has caught the attention of Passive House researchers around the world because it demonstrates how an industrial structure — constructed with wood in a northern climate — exceeds a rigorous, internationally recognized energy-efficient standard.” 18 June 2019 | Canadian Property Management

Its first winter — the project was completed in April 2018 — also provided a timely opportunity for students to study the building’s performance in the cold. UNBC students have been involved from the start, including the design, structural studies and detailed design aspects. Students and other researchers are looking to the WIRL to study novel materials and techniques for the next generation of wood buildings. “Researchers in the Master of Engineering in Integrated Wood Design program at UNBC identified early on that long-term monitoring of the building performance could provide valuable insights into the construction of future buildings,” says Wimmers. “As a result, multiple sets of temperature and humidity sensors have been installed in the exterior walls and foundation to monitor the interior environment and exterior weather conditions.”

The superstructure is composed of mass timber glulam columns and beams on a concrete slab. The external walls are framed with wood trusses fabricated locally by a Prince George company, showcasing mass timber as an alternative structural material to steel, typically used in industrial buildings. “Mass timber prefabrication allowed the trades to do most of the work in a safe and controlled shop environment, particularly advantageous for cold climates like Prince George,” adds Wimmers. The second-level floor is made of prefabricated wood joists and covered with plywood sheathing. All the interior walls are also covered with plywood sheathing. In the lab portion of the building, the OSB (oriented strand board) is left exposed for the interior finishing as an expression of the industrial use of the space.

energystrategies

“Researchers in the Master of Engineering in Integrated Wood Design program at UNBC identified early on that long-term monitoring of the building performance could provide valuable insights into the construction of future buildings.”

DEEP END SAVINGS

Wood Innovation Research Laboratory at University of Northern British Columbia

The weather in Prince George was one of the main challenges for achieving Passive House certification. The average summer temperature is 16 C and the average winter temperature is -6 C, meaning a lot of days with the furnace running. That results in energy savings adding up quickly over time. Heating bills are expected to be 90% lower — about $10,000 per year — than a similar building designed to the current code requirements. With an eye to the future, UNBC offers a Master of Engineering in Integrated Wood Design. Graduates are educated in modern wood construction, and the program aims to actively contribute to the evolution and innovation in the construction industry. zz For more information see www.naturallywood. com. For more information about UNBC’s Master of Engineering in Integrated Wood Design at www.unbc.ca/engineering-graduate.

Indoor swimming pools constructed to the highly energy-efficient Passive House standard have delivered significant savings for two German municipalities. A new handbook from the Passive House Institute (PHI) evaluates pilot projects in the cities of Bamberg and Lünen, and provides recommendations for planning new or optimizing existing pool facilities. "With a good building envelope and a ventilation system with efficient heat recovery, it is possible to reduce the energy consumption significantly, especially in indoor swimming pools," says Søren Peper of the Passive House Institute, which acted as a consultant for the projects. With year-round temperatures around 32° Celsius and technical systems that consume high levels of electricity, indoor pool facilities can pose a financial burden for their municipal operators. For example, circulation air is usually blown onto the glazing in order to prevent water condensing on the glass. The Passive House indoor pool relies on a thermally high-quality building envelope and a ventilation system with heat recovery. In the two German examples, savings were found through the treatment of wastewater from filter washing and utilization of waste heat from a cogeneration plant. Water-saving shower heads and a focus on pressure losses in the pipe network delivered further reductions. Commissioning and optimization are also critical. Notably, adjusting the ventilation system controls curbed electricity consumption by about 60% at one of the pools. During the planning phase for the two pools, which both opened in 2011, the Passive House Institute developed a calculation method for energy balance. As far back as 2009, PHI researchers examined, in a baseline study, the building physics and technical conditions under which the Passive House concept could be implemented in public indoor swimming pools. In 2013 and 2015, PHI published detailed research reports of the monitoring carried out over several years for both pools. The analysis of the energy consumption values has now been incorporated into the new handbook, along with recommendations related to pool water technology, water attractions, showers and other amenities. "Indoor swimming pools are very technology-intensive," observes Jessica GroveSmith, a PHI-based physicist currently providing consultancy for a pool project in the United Kingdom city of Exeter. "Good planning and user-oriented commissioning ensure that the indoor pool performs well. All those involved can then enjoy low energy costs, a high level of comfort and durability of the building." "The knowledge obtained so far has been analysed so that it can be applied in an even more targeted way in future projects," adds Esther Gollwitzer, a PHI consultant and contributor to the new free handbook. The German version of the handbook is available as a free download. For English information, see the Passive House Institute website at https://passivehouse.com

Canadian Property Management | June 2019 19

energystrategies

VITAL SUPPORT Energy Prognosis for the Health Care Space By Kent Waddington ST. JOSEPH’S Healthcare Hamilton is a busy component of a 15-site, regional health system serving a population of more than two million across a broad sweep of southern and southwest Ontario. Approximately 5,000 staff, 700 physicians and 1,000 volunteers oversee 777 acute, non-acute and infant beds and nearly 50,000 yearly emergency department visits at the Hamilton campus. Health is the core mission, but a reputation for excellence in a range of clinical and surgical services also relies on a diverse team of delivery agents with supporting skills. Notably, facility management maintains the spaces where health care happens, and works to ensure that required resources — electricity, natural gas and water — are used efficiently, cost-effectively and with minimal impact on the environment. 20 June 2019 | Canadian Property Management

Mike McKnight is a key part of that team. As in-house Energy Manager, he is responsible for: monitoring and analyzing utility consumption; planning and implementing initiatives such as renovations and retrofits that maximize utility conservation; helping to manage the energy budget; and supporting senior leadership in forecasting energy needs and expectations. RETScreen Expert Energy Management software assists him in those tasks. The made-in-Canada software platform provides health care energy and building professionals and decision-makers with the means to identify and assess the viability of energy efficiency, renewable energy and cogeneration projects, and to measure and verify the actual and ongoing energy performance of buildings such as

hospitals, long-term care homes and energy plants. Energy managers can use it to monitor actual energy performance and uncover other potential energy savings. It can model the technical and financial viability of proposed projects and help plot climate change resilience. “A tremendous benefit to me currently is that I can quickly generate easy-toread graphs that I can share with management to highlight the positive changes that have been occurring at the hospital and provide a clear indication of the value that our energy management initiatives are having at St. Joe’s,” McKnight says. HealthCare Energy Leaders Canada and the Canadian Coalition for Green Health Care are strong advocates of the software, which is the property of the

energystrategies Canadian government, and have been promoting it on behalf of Natural Resources Canada for the past few months. Project lead, JJ Knott, provides guida nce to health ca re facility management staff who are adopting the system and getting familiarized with its capabi l it ies — whet her t hat be benchmarking, consumption/emissions tracking or energy audits. "An energy manager or energy team can quickly analyze cost savings, feasibility and emissions reductions related to proposed energy conservation measures," Knott explains. "RETScreen can help prioritize future projects based on net present value analysis, return on investment, cost-to-benefit analysis and f ut u re ca sh f lows. Hea lt h ca re organizations can also monitor and track energy savings and report on cumulative savings resulting from completed projects, with adjusted baselines based on project completion dates.” At St. Joe's Hamilton, McKnight initially used an Excel spreadsheet to measure and verify the performance of installed conservation measures. In search of a less cumbersome approach, he downloaded a trial version of RETScreen and became an adherent. "It is giving us a good indication of energy performance, particularly when something such as air handlers, boilers or chillers are not operating at peak efficiency,” he reports. "It's very useful if you are working on a behavioural shift in energy consumption as the software can identify the savings that can accrue by adopting conservation measures." It also frees him up to focus on future energy projects, while expending less time and effort analyzing the results from past projects. "If you are working on lots of energy improvements, big or small, or trying to drive a cultural shift to one of a conserver mentality, then you need to create a regression a nalysis a nd CUSUM (cumulative sum chart) to support the savings," McKnight reflects. "The only thing I need to think about is keeping a log of the changes I’ve made so that I can add those annotations to the CUSUM." zz Kent Waddington is Communications Director with the Canadian Coalition for Green Health Care. For more information about RETScreen, see the website at http:// greenhealthcare.ca/retscreen.

ENERGY STAR ACCLAIM

The Canadian Coalition for Green Health Care has been named ENERGY STAR Canada's 2019 Advocate of the Year, marking the third time in the past five years it has achieved the honour. The not-for-profit organization representing large and small health care providers nationwide was among 20 businesses, industry associations and service providers Natural Resources Canada recognized for excellence in practising and promoting energy efficiency. "Investing in the energy efficiency of our homes and buildings is one of the easiest ways to combat climate change while delivering concrete social and economic benefits to Canadians," reiterated Amarjeet Sohi, Canada’s Minister of Natural Resources, as he presented this year's awards at a May ceremony in Ottawa. "I am proud to recognize these organizations for their leadership in improving energy efficiency in Canada." Beyond its role in promoting the adoption of ENERGY STAR products in the health care sector, the Coalition for Green Health Care was commended for its training and outreach efforts via conferences, webinars, newsletters and special events for health care stakeholders. In particular, having developed the Building Operator Certification Training program, it offered it for the first time ever in Canada's remote north — boosting energy management skills and self-reliance for health care building operators in five James Bay communities. "We take very seriously our commitment to improving energy management practices within the sector and our advocacy of ENERGY STAR is a key component in promoting energy efficient and climate change resilient health facilities," says Linda Varangu, the Coalition's Executive Director.

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Canadian Property Management | June 2019 21

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CLIMATE RISK

RISING

ESG Provides Measurable Guidance for Real Estate Investors NEW SURVEY RESULTS highlight how prominent global real estate players are gauging their ability to withstand the physical and economic fallout of climate change through an environmental, social and governance (ESG) lens. The Real Property Association of Canada (REALPAC) and Bentall Kennedy jointly produced the snapshot, released in late March, of 44 institutional investors, property fund and asset managers that collectively hold USD $1.1 trillion worth of real estate worldwide. Findings — meant to inform the United Nations Environment Programme’s Property Working Group (PWG) — reveal that a significant majority of participants scrutinize greenhouse gas (GHG) emissions, energy and water efficiency, and waste reduction efforts within their portfolios. ESG provides a framework to set priorities, steer action and monitor progress toward more resilient assets, with 93% reporting that criteria linked to sustainability, supporting local communities and shunning corruption influence their investment decisions. “It shows the vast majority of respondents are taking ESG considerations into account for acquisitions and using ESG as a lever to 22 June 2019 | Canadian Property Management

lower risk, and that tenants and owners are presently asking and expected to demand more from asset managers to address climate risk,” Eric Usher, head of the UNEP Finance Initiative, observes in a foreword to the survey results and associated analysis. Ninety-one per cent of participants now formally disclose their efforts through mechanisms such as GRESB, Principles for Responsible Investment (PRI) or the Global Reporting Initiative (GRI). Deadlines have been set to achieve a specified level of GHG emission reductions in 59% of the surveyed portfolios and 78% are engaged in building-level collaboration with tenants aimed at lowering carbon footprints. ESG criteria are increasingly aligned with return on investment and risk management — as 85% of survey respondents selfidentify as “highly or very highly motivated” to use ESG for its stabilizing outcomes, which can variously help reduce operating costs, enhance building value, retain tenants, control insurance premiums, avoid stranded assets and/or ensure regulatory compliance. Respondents also report that investors and tenants are demanding more proof that efforts have been made to minimize real

estate’s environmental footprint, and that owners/managers are conducting business in a socially responsible way. Among 18 North American representatives — accounting for USD $468 billion worth of assets under management or 43% of the capital value of the survey base — are Canada’s Alberta Investment Management Corporation (AIMCo), Bentall Kennedy, Healthcare of Ontario Pension Plan (HOOPP), Ivanhoé Cambridge, OPTrust, Oxford Properties, QuadReal Property Group and Triovest Realty Advisors. Fourteen respondents based in Europe and 12 in Asia-Pacific joined them in sharing perceptions on ESG’s role in navigating climate volatility and facilitating the transition to low-carbon practices. The survey follows the winter 2016 launch of PWG’s Sustainable Real Estate Investment Framework. It provided guidance for developing a climaterelated ESG strategy, integrating it into investment activities, then measuring and benchmarking the resulting financial value — with templates for three distinct user groups: institutional asset owners, trustees and investment advisors; direct

transparency real estate; and real estate equity, REITs, bond and debt investors. “The results from this survey reflect a rising global awareness of the financial merits of sustainable investing as a means of risk mitigation and long-term value creation,” maintains Anna Murray, Vice President, Sustainability, at Bentall Kennedy. “Real estate investors and fund asset managers have an incredible opportunity to move to the forefront of sustainable investing and management by reducing the industry’s overall footprint,” concurs REALPAC’s Chief Executive Officer, Michael Brooks. CONTINENTAL VARIANCES Results, drawn from data collected in the fall of 2018, show both global consistencies and some continental variances. North American participants unanimously employ the bigfour sustainability indicators — energy and water consumption, GHG emissions and waste generation — to measure portfolio performance, while Europeans trail the global average for measuring waste generation and Asia-Pacific participants exceed the global average for measuring indoor environmental quality. All European respondents — with collectively USD $354 billion in assets under management — confirm they have strategies in place to address energy use and GHG emissions, while a smaller majority targets water consumption (86%) and waste (71%). All Asia-Pacific respondents — representing USD $280 billion in assets under management — have strategies to address energy and water consumption, waste generation, and human health and well-being. North American and European respondents are somewhat less focused on the latter. Across the boa rd, policies and actions related to embedded carbon in building materials and biodiversity are still gaining traction. Globally, 63% of respondents identify the GHG footprint of materials as an issue of concern and 45% say the same of biodiversity, but t h e p e r c e n t a ge of r e s p o n d e n t s employing targeted indicators within their portfolios drops below 30%. Thus far, Asia-Pacific leads and North America lags in both efforts. All respondents in Asia-Pacific have embedded two ESG criteria into their acquisition strategies to routinely assess the GHG emissions and benchmarked sustainability rating of any potential new asset. In contrast, only a 47% minority of North American participants include GHG emissions on their acquisition checklist and

AVERTING A MINSKY MOMENT

A coalition of central banks and supervisors is urging governments and financial institutions to identify and prepare to respond to the economic risks of climate change. The Bank of Canada is one of the newest members of the Network for Greening the Financial System (NGFS), which released global recommendations on climate related risk assessment, monitoring, and data sharing and standardization earlier this spring. “We recognize that the challenges we face are unprecedented, urgent and analytically difficult,” states an accompanying letter from the Governors of the Bank of England and Banque de France and Executive Director of the Netherlands Bank. “The stakes are undoubtedly high, but the commitment of all actors in the financial system to act on these recommendations will help avoid a climate-driven Minsky moment — the term we use to refer to a sudden collapse in asset prices.” Ultimately, all players in the economy will need guidance and tools to identify climaterelated risks, gauge their risk exposure and plot a course for moving to low-carbon alternatives. In line with their obligation to support financial stability through the oversight of financial institutions, NGFS members have pledged to develop and apply key risk indicators “to size the risks across the financial system, using a consistent and comparable set of data-driven scenarios encompassing a range of different plausible future states of the world.” They will also clarify how that is to be passed through to governance and transparency within financial firms. For their part, governments are called on to support “a robust and internationally consistent climate and environmental disclosure framework” such as the one developed under the auspices of the Financial Stability Board and its Task Force on Climate-related Financial Disclosures. The NGFS suggests governments could play a leading role in defining green and brown assets, and economic activities that are aligned with a transition to a low-carbon economy or are more exposed to climate-related risks. The NGFS has promised to follow up with a handbook to advise financial supervisors and institutions, and guidelines for voluntary scenario-based risk analysis. It will continue to press forward with its mandate to build awareness, develop technical support and share knowledge — an approach that has already seen the network’s membership grow from eight founders in 2017 to a current roster of 36 central banks and six observer bodies. “The prime responsibility for climate policy will continue to sit with governments, and the private sector will determine the success of the adjustment. But as financial policymakers and prudential supervisors, we cannot ignore the obvious risks before our eyes,” asserts the joint letter from Mark Carney, François Villeroy de Galhau and Frank Elderson. “We need collective leadership and action across countries and we need to be ambitious. The NGFS is the core of the response of central banks and supervisors. But climate change is a global problem, which requires global solutions, in which the whole financial sector has a crucial role to play.” - REMI Network

nearly one-quarter (24%) do not weigh sustainability ratings. Asia-Pacific participants unanimously report growing demand from investors to disclose sustainability performance, yet have the lowest adoption rate, at 83%, of formal sustainability disclosure frameworks. All European participants report via a sustainability disclosure framework, as do 89% of North American respondents — rates that currently supersede investors’ expectations since 86% of European and 71% of North American respondents report they’ve faced growing demand to disclose sustainability performance. Survey participants suggest parallel initiatives such as the Task Force on Climaterelated Financial Disclosures — which 15% of survey respondents have already adopted — are bolstering ESG’s profile. So, too, is Mother Nature.

“Respondents also mentioned that the physical risks to real estate assets of climate-related loss from extreme weather events have also sharpened investor focus,” the report notes. Meanwhile, Michael Brooks sees four underpinning reasons. “ Fi r st , t h e b u si n e s s c a s e i s incontrovertible. Second, the expectations from stakeholders, including investors and tenants, will only increase. Third, the pressure from regulators and government will continue to rise. Lastly, it’s the right thing for all corporations to do for their brand, their communities and their continuing social license,” he submits. zz The complete Global ESG Real Estate Investment Survey Results can be found at www.unepfi.org/publications/global-esg-realestate-investment-survey-results. Canadian Property Management | June 2019 23

policyinstruments

NO DISPUTING CLIMATE

CHANGE CONCERN Carbon Price Positioned as Means to Widely Endorsed Goal By Bev Dahlby, Don Drummond, Brendan Frank, France St-Hilaire and Chris Ragan Debate about how to achieve Canada's target to reduce greenhouse gas (GHG) emissions to 30% below 2005 levels by 2030 can be contentious. Yet, there is broad consensus that climate change poses a real threat and action is needed. Economists, policy analysts, business leaders and environmental advocates aligned with the Ecofiscal Commission — an independent think tank based at McGill University — argue that carbon tax is an efficient, cost-effective agent of behaviour change and innovation. The following is an excerpt from the Ecofiscal Commission's recent rebuttal of some common misgivings – Editor. CARBON PRICING IS a practical and meaningful way to shrink greenhouse gas (GHG) emissions. Evidence from around the world shows that carbon pricing can reduce emissions without a significant impact on jobs or economic prosperity. It is also fair because it makes polluters take responsibility for the pollution they create. Even though carbon prices in Canada are relatively low, they are still helping to reduce GHG emissions. Slowing the growth of emissions won’t ultimately be enough, but it is an essential first step. Carbon pricing works because prices change behaviour. Putting a price on carbon 24 June 2019 | Canadian Property Management

creates an incentive for people and businesses to use carbon more efficiently, use less of it, or substitute it for other products where possible. There is also evidence that citizens and businesses respond differently to carbon prices than they do to other price changes. That isn’t surprising. Carbon prices are more visible, more predictable and more permanent than other price changes. Looking to British Columbia, researchers have found: drivers were four times more responsive to changes in gas prices caused by the carbon tax than to price changes caused by other market forces; and

consumers were seven times more responsive to changes in natural gas prices caused by the carbon tax than to price changes caused by other market forces. INNOVATION DRIVER As carbon prices rise, so does demand for more low-carbon solutions. In turn, businesses will have additional incentives to innovate and meet that demand. As carbon pricing drives innovation, these innovations reduce more emissions at lower costs. Innovation often consists of incremental small changes, not of massive breakthroughs. However, these small changes can build on

policyinstruments themselves quite quickly. Recent technological advancements demonstrate that pattern. Fuel economy

For most of the 20th century, the average American car became less fuel efficient. When the oil crisis hit in 1973 and the price of a barrel of oil quadrupled in just six months, a rapid shift occurred. Gover nments put fuel efficiency mandates in place, consumers shifted to smaller cars and fuel economy improved by 42% in just 18 years. Households and businesses demanded more efficient cars, and policy helped to provide an additional push. There is also evidence that the auto industry responds to carbon pricing by innovating, developing more patents for cleaner engines and processes. Patents

Research suggests that carbon pricing in Europe led to an increase in low-carbon patents. One study found that the EU’s carbon price led to a 10% increase in innovation and a 1% increase in the number of low-carbon patents. This innovation also occurred when carbon prices in Europe were less than half of current prices. Renewable power

Clean innovation driven by other types of policy can also offer lessons for carbon pricing. Renewable power, for example, has seen an unprecedented decline in costs over the last several years. Since 2010, the average cost of building a large-scale solar farm declined by 72%; an onshore wind farm, 25%; an offshore wind farm, 18%. Policy support and innovations in supply chains, materials and operations have brought costs down dramatically. Renewables are now cost-competitive with fossil fuels in many parts of the world, including here in Canada. In Alberta, for example, companies are bidding for the right to build and sell wind and solar power at lower costs than many natural gas projects. To be clear, carbon pricing was not the main driver of these specific innovations. But the rapid improvement in technologies highlights the power that innovation can have over time. FLEXIBLE CHOICE Some people will respond to carbon prices right away. Short-term responses might be as simple as adding extra weather-stripping or carpooling. However, some Canadians

will not be able to respond to these incentives right away. For some individuals, taking action might be more expensive than paying the carbon price. That’s okay. After all, the whole point is to let individuals or businesses make their own choices, according to their own unique contexts. It gives emitters control over how and when they change their energy habits. Even those who cannot respond to the price right away are not necessarily worse off. Rebates can help ensure that the carbon tax does not undermine households’ purchasing power if they can’t adjust right away. Carbon pricing aligns what is good for the climate with what is good for the wallet. The objective is to encourage people and businesses to find creative ways to avoid paying the carbon price. Paying less means fewer GHG emissions. Businesses generally have even more opportunities to reduce their emissions than households and more opportunities to innovate. Under a carbon price, it could make sense for a business to choose a more efficient piece of equipment or to switch from diesel to electricity when it comes time to replace an old model. The same is true for a family replacing its car or furnace. Maybe additional insulation on a new renovation makes sense under a carbon price. Over time, these investments will save Canadians money and shrink our emissions. COSTLIER ALTERNATIVES Regulations and programs that subsidize products (like smart thermostats or electric vehicles) are the main alternatives to carbon pricing. Even though the costs of these alternative policies are less obvious to households, those costs are both real and greater than the costs of carbon pricing. Subsidies are funds paid by governments to help businesses or individuals with specific purchases or costs. They generally require governments to pick winners and make decisions about what technologies or activities to support, but in many cases, subsidies reward households or businesses that would have acted with a much smaller subsidy or even no subsidy at all. This undermines effectiveness and increases costs. Moreover, to fund subsidies, governments must also generate additional revenue through higher taxes, lower spending or larger deficits. Some provinces offer electric vehicle subsidies, including British Columbia, Quebec, and, until recently, Ontario. Ecofiscal Commission analysis showed that Quebec’s

electric vehicle subsidies reduce emissions at a very high economic cost — about $395 per tonne of greenhouse gases. But a $30 carbon price drives all actions that reduce emissions that cost less than $30 per tonne. Some circumstances do call for regulations. Regulations make sense when they do something carbon pricing can’t do. For example, carbon pricing cannot cover all sources of emissions in the economy. Those emissions can be targeted with smart, well-designed regulations. One example is the federal rules for methane emissions in the oil and gas sector. Methane leaks from pipes and valves during production. Unlike gasoline or diesel, these “fugitive” methane emissions are difficult to price. Federal regulations will require producers to cut their fugitive emissions by a certain amount. Meeting this target will be inexpensive — about $13 per tonne of greenhouse gas because methane is a powerful greenhouse gas, and fugitive methane that doesn’t leak out can be sold as natural gas. VISIBLE vs. HIDDEN COSTS Carbon pricing is the lowest-cost climate policy, but its costs are also the most visible. This visibility makes it easier to plan and make decisions that shrink emissions and save money. The costs of regulations and subsidies are not always visible, but they are almost always higher. Firms organize themselves to maximize their efficiency and productivity. Regulations require them to reorganize themselves in specific ways — typically by adopting new processes or technologies. These changes will create new costs for firms that they will pass on to consumers as much as possible. To fund subsidies, governments require additional sources of revenue. This means higher taxes, spending cuts, or larger deficits. Households have been shielded from the direct costs of these policies in Canada but have felt them indirectly in terms of higher prices and taxes and lower economic activity. Historically, Canada has reduced emissions at a higher economic cost than necessary. Relying more on carbon pricing and less on regulations and subsidies will help Canada achieve its emissions reductions while maintaining its economic prosperity. zz More information about the Ecofiscal Commission and the complete text of 10 Myths about Carbon Pricing in Canada can be found at https://ecofiscal.ca. Canadian Property Management | June 2019 25

energyinvestment

FEDS FUND ENERGY EFFICIENCY Green Municipal Fund to be Delivery Point of $950 Million THE 2019 federal budget allocates $950 million to underwrite retrofits and energy-efficient new development in the municipal, not-for-profit, private homeownership and affordable housing sectors. The investment is to be channelled into three streams of the Federation of Canadian Municipalities’ Green Municipal Fund, which now has a 19-year track record as a delivery agent of funds for infrastructure and community-building projects that support clean air, clean water, waste reduction and brownfield rehabilitation. The federal energy efficiency spending will be divvied three ways with a pot of $350 million earmarked for upgrades in “large community buildings” owned by municipalities or not-for-profit operators. The $600 million remainder will be split evenly between municipally sponsored programs to offer grants and incentives to homeowners, and programs targeting affordable housing. Local governments will use existing mechanisms for applying to the Green Municipal Fund to tap into the new funds. The budget document cites on-site energy generation for multi-residential affordable housing complexes as one example of a potential qualifying project, and suggests some municipalities may use the money to demonstrate innovative technology or launch pilot projects. Targeting homeowners, municipalities are urged to leverage a funding model that Toronto is already using, which allows property owners to repay retrofit loans via a surcharge on their property tax bills. An additional $60 million, to be disbursed over five years, will go into FCM’s Municipal Asset Management Capacity Fund, which provides smaller municipalities, in particular, with training and guidance to establish and maintain asset management programs. “This program has proven to be popular and has demonstrated results to assist communities in developing accurate data around local infrastructure for budgetary and investment decisions,” the budget document states. The funding announcement is proving popular with energy efficiency advocates. “This is money that will be invested to help cities cut energy waste and reduce costs for households, schools, hospitals and social housing,” projects Corey Diamond, Executive Director of Efficiency Canada, a national organization that promotes the economic development potential inherent in fostering energy efficiency and transitioning to a low-carbon economy. FCM calculates that the 1,250 projects thus far undertaken with Green Municipal Fund support have created 9,905 person-years of employment and spurred $3 billion in spinoff investment in the host municipalities, while also resulting in 2.5 million tonnes of avoided greenhouse gas emissions — all from $862 million of seed capital. “Energy efficiency is a job creation powerhouse, capable of creating more than 118,000 jobs annually,” Diamond asserts. “Investment like this directly leads to strong, local job creation for small businesses in cities across Canada.” zz 26 June 2019 | Canadian Property Management

BUILDING TUNE-UP

The Building Owners and Managers Association of British Columbia (BOMA BC), with support from Natural Resources Canada, has launched a new service for buildings to identify low-cost energy and emissions savings through recommissioning. The BOMA BC Building Tune-Up Program provides a free detailed assessment of operational energy conservation measures, a fixed value amount to implement the identified measures, along with the full cost to verify the measures after implementation. BOMA BC endorses recommissioning as a tool to analyze building equipment and control systems to ensure they perform together effectively and efficiently. “We are supporting BOMA members’ efforts to make their buildings more efficient and show our industry’s commitment to reducing emissions,” says Damian Stathonikos, BOMA BC’s President. “Efficient buildings are a key element of the CleanBC and Federal Sustainable Development strategies, and BOMA members are leading the way.” The program is geared toward Class B and C buildings that are older than five years — a market segment projected to have significant opportunities for energy savings. ESC Automation, a long-time BOMA BC member, was selected to conduct the assessments after a competitive bidding process. “Energy efficiency saves money, creates jobs and reduces pollution,” says Canada’s Minister of Natural Resources Amarjeet Sohi. “It also improves the comfort of our living and workspaces. We are proud to support BOMA BC’s efforts to help building owners save energy and support our energy system transformation.”

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atlanticinitiatives

SAVINGS BEYOND LIGHTING

Nova Scotia Prepares Conservation Strategy for 2020-22 DIMINISHING ADDITIONAL saving from energy-efficient lighting are both a happy milestone and a future challenge for Nova Scotia conservation strategists. To date, a significant proportion of achieved energy savings are attributable to relatively inexpensive lighting upgrades. However, with the largest share of these easy fixes completed, the next steps get more complicated and costly. In keeping with the provincial electricity efficiency plan and associated legislation, the Nova Scotia Utility and Review Board (UARB) will be considering a proposed three-year demand-side management (DSM) plan at public hearings in June. If approved, Nova Scotia Power will shift spending away from lighting incentives and into new program areas. Following this year's $1-million pilot project, approximately $10 million of the envisioned $129 million budget would be earmarked for demand reduction. Other new programs would offer added support for the small business and affordable 28 June 2019 | Canadian Property Management

multifamily housing sectors. An expanded range of products and technologies, including electric thermal storage and drain water heat recovery, would garner more funding or be newly eligible for rebates. "Our plan is consistent with our mandate from successive governments to help Nova Scotia residents and businesses reduce their energy consumption and costs," says Stephen MacDonald, Chief Executive Officer of EfficiencyOne, the not-for-profit agency licensed as the delivery agent for energy conservation programs. "For every dollar customers invest in energy efficiency, they get back almost $5 in savings." This third three-year plan since the enabling legislation was enacted in 2014 sets out a strategy aimed at achieving approximately 422 gigawatt-hours (GWh) of electricity savings and 20.7 megawatts (MW) of demand reduction in the 20202022 period. As proposed, it will place more emphasis on water and space heating, the building envelope and program support to guide homeowners and commercial

building owners/managers to deeper savings. It would also adopt a new performance metric to gauge energy savings over the complete lifecycle of the investment. "While measures may have identical annual energy savings, they may have significantly different lifetime energy savings. Ratepayers should be aware of these differences," EfficiencyOne reasons in its submission to the UARB. Projected lifetime energy savings figure in the rationale for an increase in upfront program costs, particularly in tandem with fewer saving opportunities related to lighting. Envisioned measures are projected to equate to $0.31 per kilowatt-hour (kWh), up from an average of $0.23/kWh in 2016 to 2018. Although lighting incentives will continue to be available, primarily via retail-level product rebates and the small business program, non-lighting measures are targeted to deliver 55% more than their historical contribution to savings.

atlanticinitiatives "Implementing lighting measures is relatively inexpensive. Accordingly, as lighting measures decrease as a percentage of the DSM portfolio, a higher investment is required to achieve the same level of savings," the plan states. "Further, the nonlighting measures are more complex and in order to stimulate the market for these measures, it is expected that higher levels of customer engagement and information sharing will be required." Significant paybacks are expected. For example, demand reduction presents commercial customers with a fairly immediate opportunity to reduce the peak demand charge the utility applies to their monthly bill. However, even greater benefits are expected from the longer-term opportunity to avoid flow-through rate impacts of investments in more generating capacity.

EfficiencyOne projects the threeyear costs of implementing the plan will represent about 3% of revenue from customers for the period, but should ult i mately del iver $622.7 million in customer savings over the lifespan of adopted measures. When v iewe d f rom a l i fet i me sav i ngs perspective, 2020-22 program costs drop to 0.022 cents per kWh. "While DSM investment is one factor among many that impact NS Powe r 's c o s t s a n d r a t e s , D SM investment is the only expenditure by NS Powe r t h a t d i r e c t ly a l lows customers to reduce their power bills," the plan asserts. "DSM is an investment, not a cost." zz For more information about EfficiencyOne, see the website at www.efficiencyone.ca.

NEW BRUNSWICK CELEBRATES ENERGY EFFICIENCY LEADERS

Six newly named recipients of New Brunswick’s 2019 Energy Efficiency Excellence Awards include early adopters of energy and water-saving technology, long-time conservation advocates and service providers steering clients to power and cost savings. The honours were bestowed in conjunction with NB Power’s annual energy efficiency conference, held in Moncton in May. “We are pleased to recognize the best of this province’s energy efficiency leaders and highlight the tremendous work they are doing,” affirms Gaëtan Thomas, President and Chief Executive Officer of NB Power. This year’s winners demonstrate how energy efficiency can support business strategy and consumers’ quality of life. The Innovation Award winner, ski resort operator, Crabbe Mountain, achieved both objectives through technology that injects a biodegradable corn by-product into the water used for making snow. The resulting increased volume of snow resulted in four million gallons in water savings and a 98-megawatt-hour (MWh) electricity saving attributable to reduced operation of energy-intensive pumps and compressors, while also extending the ski season, as ski runs could open earlier and better withstand milder temperatures. Education Award winner, EOS Eco Energy Inc., literally delivers energy efficiency in a party setting. Draft-proofing work parties are part of the Sackville-based community organization’s portfolio of programs, offering up a certified energy advisor to facilitate the three-hour instructional and hands-on events. EOS Eco Energy supplies the materials to draft-proof the host venue and, equally importantly, teach homeowners and their guests how to do it. Tobique First Nation, the Community Award recipient, has integrated energy efficiency and green energy into its economic development and future growth strategy. The award recognizes the implementation of a community energy plan underpinning the goal of total reliance on renewable power by 2050. That includes plans for solar and wind generation to replace diesel-fired power supply, and a complementary focus on energy-efficient housing through retrofits and energy-efficient new construction. The Conservation Council of New Brunswick received the Legacy Award in acknowledgement of 50 years of advocacy for environmental protection. That’s recently been channelled into the Climate and Energy Solutions program, an initiative to inform New Brunswickers about the repercussions of an increasingly volatile climate and the opportunities the low-carbon economy presents. Renewable energy developer, Naveco Power Inc., and energy service provider, MCW Maricor, rounded out the slate of award winners. Naveco Power received the Rising Star Award, which recognizes newcomer companies or individuals younger than 30. MCW Maricor received the Partnership Award for its work with NB Power in delivering energy efficiency programs.

PEI SEES RESULTS OF REBATE BUDGET BOOST

efficiencyPEI has been named ENERGY STAR Canada's program administrator of the year for its work with residents and businesses on Prince Edward Island. The provincial agency, which marked its 10-year anniversary last year, champions energy audits for both the commercial and residential sectors. It also oversees rebates for home energy upgrades and the dispersal of a range of free energy and water-efficient products to lowincome homeowners and renters. Last year, PEI made a significant extra investment in rebates for ENERGY STAR certified air-source heat pumps, boosting the dollar value from $500 to $1,200, thus achieving a 400% gain over 2017 program participation. Consumers also responded to the introduction of in-store rebates for ENERGY STAR certified products such as lighting, appliances and smart thermostats, with approximately 29,500 claimed a the point of sale. While efficiencyPEI's programs are predominantly for the residential sector, owner/managers of commercial and institutional buildings can tap into funding to cover 25% of the cost of an energy audit, to a maximum of $1,000 for buildings that are 75,000 square feet or larger. Through ENERGY STAR Canada, the Canadian government encourages the public, private and not-for-profit sectors to practice and promote energy efficiency. The annual awards, which were announced in early May, recognize innovation and leadership from manufacturers, utilities, consumers and industry and community-based associations. In handing out this year's awards, Canada's Minister of Natural Resources, Amarjeet Sohi, also connected recipients' efforts to the bigger picture. "Using less energy is not something that affects climate change on the margins — it is something that strikes at its very heart," he reiterated.

Canadian Property Management | June 2019 29

costallocation

SHOCK POLITICS

B.C. Exemplifies Governments Grappling with Rising Electricity Costs

COMMERCIAL ELECTRICITY customers in British Columbia will continue to pay disproportionately for the power they use. The B.C. government confirmed it will entrench an uneven split of hydro system costs among the residential, commercial and industrial consumer classes — which currently redistributes about 9% of the residential burden to commercial ratepayers — when it unveiled a slate of new directions for BC Hydro and the British Columbia Utilities Commission (BCUC) earlier this year. “A near-term rebalancing of BC Hydro’s rates could conflict with the government’s commitment to keep life affordable for British Columbians. The decision to prohibit rate rebalancing is a matter of public policy,” reiterates a report summarizing the first phase of a planned two-part review of BC Hydro. Many of the points highlighted in the government’s associated communications relate to independent reviewer Ken Davidson’s critique of existing provincial contracts with third-party electricity producers, issued one day earlier. However, it’s the latter document that outlines policies and actions. Those include: a cumulative 8.1% increase to electricity bills over the next five years; cancellation of BC Hydro’s standing offer program, which contracted with independent producers for biomass or clean energy generation; and returning some authority to the BCUC that the previous government had assumed for itself. “Following this review, it’s our government’s job to fix what’s broken, put BC Hydro onto a sustainable path and make sure rates stay as affordable as 30 June 2019 | Canadian Property Management

possible for customers,” asserts Michelle Mungall, B.C.’s Minister of Energy, Mines and Petroleum Resources. Touting Davidson’s conclusions that the previous government overpaid for much of the power contracted from independent producers and purchased too much of it, Mungall links rising electricity prices to those decisions. Even so, she notes that the 8.1% increase, proposed to begin with a 1.8% escalation this spring, is nearly 40% lower than the 13.7% increase the previous government had projected for the same five-year period. DISPROPORTIONATE COMMERCIAL SHARE Commercial electricity customers will experience climbing costs more keenly. As the report reveals, their allocation of overall costs is roughly 23.5% greater than the cost of providing services to them, while 1.8 million residential accounts collectively contribute about 91% of the cost of their service. Industrial customers pay a share that’s largely equivalent to their actual cost of service. Thus far, the B.C. government has enacted regulations to prevent the BCUC from more evenly reapportioning the burden for the fiscal years of 2017, 2018 and 2019. It has now promised similar regulatory intervention for 2020 and 2021 and an amendment to the provincial Utilities Commission Act “ to per manently prevent the BCUC from rebalancing rates unless otherwise requested to do so by a public utility.” It’s e st i m at e d t h at e qu it a ble apportionment could push residential rates 2.2% higher than the proposed 1.8% increase for fiscal year 2020, stretching

from April 1, 2019 to March 31, 2020. “At the same time, rates for commercial customers would decrease and industrial rates would remain approximately the same,” the report advises. Nor will there be an opportunity to look for better deals elsewhere since a prohibition on retail contracts with thirdparty electricity distributors will remain in place. That decision is linked to BC Hydro’s surplus energy supply, which is projected to continue into the 2030s, and which the current government attributes largely to the previous government’s procurement from independent power producers. “In a surplus situation, allowing retail access increases the amount of surplus that BC Hydro must export, possibly at a loss, increasing costs borne by ratepayers who do not or cannot opt for retail access,” the report maintains. “The prohibition will continue until or unless a public utility, in this case BC Hydro, requests otherwise.” In contrast, industrial customers may get a n oppor t un it y to pu rchase discounted power — aligned with a priority to increase domestic demand that could take up some of the surplus generation typically sold for export. “BC Hydro is exploring the option to offer current industrial customers year-round access to real-time, market-based pricing for incremental energy purchases,” the report states. zz F o r m o re i n f o r m a t i o n a b o u t t h e Comprehensive Review of B.C. Hydro, see the website at www2.gov.bc.ca/gov/content/ industry/electricity-alternative-energy/ electricity/bc-hydro-review

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