Policy Series #3 – Build The Future We Want

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“Build Back Better” and a “Green New Deal” are but two of the labels adopted by governments and citizens to ensure Canadians do not miss the historic opportunity offered by pandemic inspired stimulus spending. With time to reduce emissions running out, we have few other chances to catalyze the changes required to support human life on our planet. Within Canada this recognition is evidenced by the broad cross section of Canadians, elected officials and organizations urging us to ensure this opportunity is not missed. Passive House Canada has been one of those voices and, in addition, written to federal ministers urging stimulus spending be targeted as described in this article.

Generally, the call in relation to buildings is to invest public funds in energy efficient, low carbon new buildings and deep energy retrofits. The case for investing stimulus funding in buildings is particularly strong. Construction is one of the most effective employment generators and buildings are responsible for a substantial share of emissions, as outlined in earlier articles in this series. As enduring assets, their impact is long lived; what we build today either creates an enduring asset to mitigate and adapt to climate change or a persistent liability generating high emissions for decades. Furthermore, the construction sector has not experienced a high level of innovation and is ripe for innovation to drive down costs and ensure Canadian industry remains competitive.

“What we build today either creates an enduring asset to mitigate and adapt to climate change or a persistent liability generating high emissions for decades.”

Although historical practices are entrenched, industry leaders such as our members are delivering highly efficient, zero carbon buildings with today’s technology and skills. Canadians are building millions of square feet of new and retrofitted Passive House and low embodied carbon buildings, often Passive House buildings with low carbon materials. It is not a question of whether it is feasible to deliver such buildings, but rather of how their numbers can be scaled up.

“It is not a question of whether it is feasible to deliver such buildings, but rather of how their numbers can be scaled up.”

Public sector spending is recognized as central to all successful building transformation policies. Both Build Smart – Canada’s Buildings Strategy and the Investing in Canada Plan illustrate how public spending can support the process. If stimulus spending is to support our broader policy goals, which specific program characteristics are important and what outcomes can be anticipated?

Government has the capacity to trigger scale in three ways, all of which are identified in Build Smart:

  • purchasing power,
  • communications, and
  • regulations.

Stimulus funding has the ability to engage all three of these triggers, harnessing and coordinating purchasing power, supporting a communications strategy to catalyse market transformation, and enabling the timely implementation of effective regulations.

Let’s take a look at specific program characteristics and how they trigger the desired outcome of transforming the market. To harness the potential of public sector investment in buildings, procurement and funding policies and programs must:

1. Fund the buildings we want, and need

Public funds must be invested only in buildings delivering the long-term outcomes climate change requires and Canadians demand – buildings that not only mitigate climate change but deliver the multiple benefits of highly efficient buildings including comfort, health, affordability and resiliency.

The first two articles in this series outlined the international norms and expectations for buildings and the outcomes Canada has targeted. Specific, measurable and verifiable outcomes measured in terms of energy use intensity, air quality, comfort, etc. are not only needed to achieve our climate goals, but are required by industry and project proponents to plan their projects, product development and professional development. Without a commitment to suitable targets and QA processes, project proponents will offer and deliver less.

“Public funds must be invested only in buildings delivering the long-term outcomes climate change requires and Canadians demand”

Public procurement & project funding are particularly effective catalysts because they enable a leap to the end state buildings need to achieve. As a purchaser or investor, government has an accepted ability to specify criteria. The array of companies able to deliver such projects enables competitive bids. Although some companies are not able to deliver highly efficient, low embodied carbon buildings, their competitors not only can, but want to do so. Those unable to supply the products or services specified either invest in gaining that capacity for future contracts, or focus on other market segments. The volume of projects currently being delivered, the number of trained industry professionals, and the ease with which more can be trained, provides assurance the capacity to deliver public sector buildings at scale exists.

Defining clear outcomes also clarifies the requirements for project proponents and their suppliers, resulting in a vastly increased number of proposals offering those outcomes. The Pennsylvania Housing Finance Authority is one of several examples of an agency triggering market capacity and demonstrating affordability, even in a region with little prior capacity to deliver such buildings simply by favouring Passive House projects in funding decisions.

2. Engage all ministries & agencies

As the key to market transformation is generating a large number of projects, funding criteria must be consistently applied across ministries and programs to catalyze market transformation. The impact can be amplified if additional organizations such as the Federation of Canadian Municipalities Green Municipal Fund, CMHC and others align eligibility criteria. Alignment of purpose in this manner ensures thousands of highly efficient, low carbon projects will be constructed across the country, normalizing these buildings, their components and design requirements.

3. Communicate with industry

Communicate the clear funding criteria and the probable volume of projects to industry. This information provides confidence a market for the required components and skills exists. Nothing drives capacity development and innovation like awareness of upcoming RFP’s. Nothing. Clear, ambitious RFP’s drive more capacity development and innovation than the best policies, incentives and communications. Incentivizing innovation in the absence of a clear market is difficult, time consuming, expensive and ultimately ineffective.

As an example, Passive House Canada has been working with the Toronto Community Housing Corporation to support their multi-billion dollar deep energy retrofit program. As part of that process, we have engaged with Fenestration Canada and their members to inform them of the anticipated market for hundreds of thousands of high quality windows not currently manufactured in Ontario. It is anticipated the windows will need to meet Passive House performance levels for the Toronto climate and be designed for the retrofit of affordable mid and high rise housing. It has been interesting to observe how ready Canadian companies are to rise to the challenge when a market for a product is identified.

Having established and communicated a market for such buildings, industry participants will invest in the required training. Such buildings are not, in fact, complex and most workforce members engaged in a project do not require new skills. Most elements of the construction process remain the same regardless of building performance and materials choice. Those who require additional skills are readily trained by Passive House Canada, the Embodied Carbon Network and educational institutions. With a growing market, accredited training opportunities will be offered by additional training institutions. Passive House Canada has trained thousands of practitioners across the country who are successfully delivering excellence in buildings, demonstrating workforce development is readily achieved when a market exists.

4. Leverage procurement to drive innovation

Drive construction innovation through modern procurement practices. Public procurement often does not accommodate emerging practices such as integrated project delivery, prefabrication and energy performance guarantees, all of which are important in reducing costs while improving results. If procurement is done well, Canada should experience similar efficiencies and cost reductions realized in other jurisdictions.

The Energiesprong program in the Netherlands is a well-known example of a successful market innovation program. It has targeted per unit deep energy retrofit cost reductions of almost 70% and, part way through their program, has achieved cost reductions of approximately 50% by defining clear outcomes and harnessing public resources to foster innovation in project delivery and building components. The New York State Energy Research and Development Authority (NYSERDA) is embarking on a RetrofitNY program for low and mid-rise affordable housing in the state, targeting a 40% reduction in total project costs by establishing clearly defined goals and then harnessing purchasing power to foster innovation. Canada can achieve similar outcomes by triggering the innovation so overdue and desperately needed in the construction sector.

5. Know challenges can be overcome

Meaningful goals are not achieved by waiting for all the solutions before beginning. Do not be deterred by the initial absence of solutions for the most difficult projects. Instead, build momentum while developing capacity. Many publicly funded buildings such as government offices and affordable housing have relatively simple building typologies and value the multiple benefits of such buildings, increasing the interest in high standards. The affordable housing sector has been a leader in developing Passive House projects as housing agencies are responsible for long term operating costs and are often motivated by a desire to provide their clients with the multiple benefits such buildings offer. Civic buildings such as swimming pools, educational facilities, museums, emergency service facilities & art galleries have a variety of reasons to prefer a highly efficient building due to considerations of resilience, better perseveration of exhibits, improved learning, reduced operating expenses, etc. There may be some projects, particularly in the early years, where solutions are elusive, but the vast majority of publicly funded projects can demonstrate the affordability and feasibility of the best buildings. With time and experience, solutions can be found to resolve the greatest challenges.

6. Communicate with consumers

Communicate the benefits of these buildings to Canadians and offer the opportunity to experience them through project tours. The scale of public procurement, when combined with private sector projects, is sufficient to enable many Canadians to experience them first hand, increasing public demand and support for better regulations. Celebrating excellence through effective communications, as the BC Energy Step Code has done, not only supports social change but shifts the culture of the industry.

Canada is currently challenged to develop and implement effective new building codes and regulations in a timely manner. Change is difficult and the status quo has a big voice. Those resisting change raise concerns about cost, capacity, feasibility, etc., slowing down development of regulations and diminishing their level of ambition. As a result, Canada’s future building codes are not on track, and the ambition identified in Build Smart and other high level policies is being eroded. By generating a large volume of the buildings we require and communicating their benefits to the market, regulatory changes can more readily be adopted. Government, having observed and funded the successful development of thousands of projects will have gained the confidence required and industry will know arguments of cost, capacity and feasibility are no longer tenable. It is difficult for the private sector to argue they cannot deliver such projects if government is already doing so. Conversely, it is unrealistic to expect effective regulations to be politically feasible if government has not been building to the desired standard in advance of regulations being implemented.

Following through on these six elements of a successful program leverages the three ways in which government can trigger scale in highly efficient, low carbon buildings, accelerates similar private sector projects and transforms a significant portion of the market, laying a foundation for future regulations.

The members of Passive House Canada, representing the thousands of Canadians delivering high performance buildings, have and will continue to urge government to take advantage of the historic opportunity pandemic stimulus spending offers by implementing these six steps. Only by committing to clear, measurable and verifiable outcomes for buildings in which public funds are invested can Canada meet its commitments and offer Canadians the healthy, comfortable, affordable and sustainable homes and buildings they desire, and our species requires.