Canada is facing an affordable housing crisis, global economic uncertainty, strained trading relations with the United States, rising material costs and intense pressure to deliver homes faster. In that context, it is easy to see environmental building standards as another cost, another delay, another barrier to affordability.
Some social housing providers have run the numbers and reached a different conclusion: affordability is linked to sustainability.
“We saw very early on that sustainability can play an important role in long-term affordability, particularly when you look at operating costs over the life of a building,” said Daniel Dicaire, OCH’s senior manager of conservation and sustainability.
In Ontario, the province’s Bill 98 removed “sustainable design” from site plan control, which now prevents municipalities from imposing mandatory green building standards through local approvals. In British Columbia, the province suspended their major affordable housing fund that required proponents to meet the upper levels of the BC Energy Step Code. In Vancouver, the mayor gutted the sustainability department and now wants to end the city’s building code and reintroduce gas back into new builds.
Build Canada Homes, the federal government’s flagship affordable housing delivery agency is not required to follow greening government requirements and has released no clear mandatory performance floor. Meanwhile CMHC’s affordable housing programs with robust sustainability requirements through the Trudeau-era National Housing Strategy have either been chopped or are winding down.
It was just those CMHC energy-performance targets that kick-started OCH’s path towards high-performance building standards as part of its broader development strategy.
Mosaiq Phase 1 in Ottawa, Ontario, by Ottawa Community Housing.
OCH, the city-owned housing provider, manages more than 15,000 units and over seventeen million square feet of residential property across Ottawa, much of it older stock that must be maintained, renewed and, in some cases, replaced.
OCH modeled the same building under five different scenarios: to code minimum, to progressively higher energy-performance levels, to Passive House, and to a near-net-zero scenario. Based on analysis, the near Passive House scenario added less than five per cent to capital cost, cut energy use by roughly 50 per cent compared with Ontario Building Code, and produced the lowest total cost of building ownership over the long term.
“Our modelling showed that, in certain scenarios, the additional upfront investment can be offset over time through lower operating costs,” said Dicaire.
Cost case is not automatic
Brightside Community Homes Foundation, a Vancouver-based non-profit with about 1,100 homes for seniors, people with disabilities and families, offered a more cautious version of the same argument. The organization is pursuing major growth, with two new sites under construction, a goal to double its homes by 2030, and a net-zero plan targeting 2035.
Wesley Everaars, Brightside’s director of community real estate, said high-performance construction can improve long-term operations, comfort and resilience, but the business case does not work in every project without the right funding stack.
For Brightside, Passive House has been viable on new builds and retrofits when federal, provincial, and municipal funding could be layered together. On one Passive House project, Everaars said the premium was closer to eight per cent, not five, and was shaped by the building footprint and site conditions.
The Hawthorn building in Vancouver, BC, by Brightside Community Homes Foundation.
Two Visions of Affordability?
With governments pulling back from environmental requirements, is it perhaps two different visions of affordability? One treats affordability as the lowest possible upfront cost. The other measures what a building costs to own, operate, maintain, repair, heat, cool, insure and live in over decades. So if you want to reduce the cost and time to build and the up-front cost to home buyers or renters, then cut these extra eco add-ons to make it cheaper and built faster.
Well not necessarily. Just because it is green doesn’t mean it has to cost more up front. BC Housing’s review of 38 projects found no clear relationship between higher performance and higher construction cost, concluding that high-performance buildings can be delivered at or below the cost of lower-performance buildings when performance is integrated by an experienced design team from the start. While other studies have found that the higher up-front costs, still between 1 to 8 percent over baseline, was partly due to learning curves and those learning curves declined as project teams gained experience.
Nevertheless, for organizations that own and operate housing for generations, the building’s total cost of ownership is critical to consider when the full cost shows up in utility bills, capital repairs, maintenance calls, insurance, and renewal. According to Jim Nostedt of Seefar Building Analytics, Passive House projects can reduce total cost of ownership by 30 to 40 percent by lowering energy demand and reducing long-term operating exposure.
For OCH targeting Passive House adjacent metrics in Ontario, the total cost of building ownership they modeled was a thinner margin than Nostedt’s reductions but still covered the cost.
“Our experience and modelling suggest that higher-performing approaches, including Passive House, can support lower operating costs over the life of a building compared to code-built developments,” Dicaire said.
CityHousing Hamilton’s experience echoes that point. The agency retrofitted Ken Soble Tower to the Passive House EnerPHit standard and has since applied Passive House or high-performance lessons to other projects.
The Ken Soble Tower, now known as 500 MacNab, in Hamilton, Ontario. Photo Credit: Codrin Talaba
For Sean Botham, CityHousing Hamilton’s chief portfolio officer, the affordability case is rooted in operations over time.
“The financial sustainability of affordable housing is determined by the cost to operate over generations,” Botham said in a statement. “Passive House strengthens long-term affordability by reducing energy demand, limiting exposure to utility costs, and delivering homes that are healthier, more resilient, and more efficient to maintain.”
In B.C, where baseline efficiency code requirements are higher than Ontario, Brightside, which targeted full Passive House certification on some new builds, found the total-cost story more conditional. Everaars said the long-term value of high-performance housing is real for owner-operators, but non-profit providers still need funding tools to bridge the gap between upfront cost and future savings, especially when rents are deliberately kept below market.
That funding stack to do that is now less certain.
Funding uncertainty threatens housing pipeline
Everaars said key federal CMHC and BC Housing’s Community Housing Fund programs are now paused, which has left projects ready to go but unable to move.
“We’ve invested a lot of pre-development,” Everaars said. “They’re shovel-ready projects.”
For Brightside, the concern is not only that individual projects stall. It is that the sector loses capacity during the pause. The organization has a goal of doubling its homes by 2030, but Everaars said the withdrawal or uncertainty of funding programs makes it difficult for non-profit providers to keep development pipelines moving.
“When you close these programs, that capacity is often lost,” he said.
Unfortunately, it’s exactly that capacity that improves over time that helps drive down high-performance project premiums.
That concern is echoed by Ya’el Santopinto, a principal at ERA Architects, whose work focuses on existing multi-unit housing, affordable housing and deep retrofit. She said the barriers to renewing aging housing assets are often not technical.
“The technical solutions were well known and well understood,” Santopinto said. “The problem, the reason people were not doing it was not because it was technically challenging, but because there was no money to do it.”
For Santopinto, the non-profit housing sector has become one of the places where high-performance retrofit and adaptive reuse are actually moving because funding programs have required providers to meet deeper energy, carbon, and affordability outcomes together.
Retrofit works best when repair is already unavoidable
Santopinto, who worked on the Ken Soble retrofit project, said the business case for deep retrofit is strongest when an owner is already facing major capital repairs. Ken Soble Tower had a significant capital backlog, so the choice was between replacing aging systems like-for-like, or thinking differently, said Santopinto.
“You’re going to spend 90% of your dollars getting it there,” Santopinto said. “Why not spend this extra… to get it to the performance level it needs to be, let alone all the payoffs you’re going to have down the road on your operational savings.”
For Brightside, Everaars said the first major retrofit projects only became financially viable once CMHC funding came into the picture. Grants and forgivable financing changed the risk equation, allowing Brightside to pursue deeper work without pushing costs back onto residents.
That is why aging social housing towers are such important candidates for deep retrofit. Much of Canada’s older multi-unit housing was built in the 1960s, 1970s and 1980s, and many of those buildings are now reaching the point where the buildings need renewal.
Social and Passive House Dividends
The evidence is clear that investing in housing will have cascading benefits for at-risk communities and society more broadly.
The recently published Public Housing Dividend report estimates that renewing and expanding public housing across the GTHA could avoid $1.8 billion in health-care and justice system costs by reducing emergency room visits, hospital inpatient days, and justice system events.
Passive House buildings can add to those benefits through better indoor air quality, reduced noise, greater thermal comfort and improved resilience during heat, cold, smoke and power disruptions.
“If ever we find ourselves in an emergency scenario, we know that those Passive House buildings are going to be able to withstand extreme heat as well as our extreme cold for longer periods, so we’ve got that resiliency, for sheltering in place for a longer amount of time,” said Dicaire.
Air pollution kills about seven million people every year, according to the World Health Organization, with 99 percent of the global population breathing air that exceeds WHO guideline limits. The World Health Organization ranks noise pollution as one of the most damaging environmental threats to human health, exceeded only by air pollution, reports a 2022 CBC news article.
