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Indifference and Bureaucracy Undermine Conservation Efforts Building Code and Energy Efficiency Standards Scrutinized
November, 2008
The Ontario Power Authority's plan for delivering conservation savings encompasses three approaches: resource acquisition, capability building and market transformation. In this section of his annual report, Ontario's Chief Energy Conservation Officer, Peter Love, outlines some of the barriers now inhibiting the OPA's goals and offers some suggested solutions - Editor.
RESOURCE ACQUISITION
( Conservation Call to Action
The number of electricity conservation initiatives being delivered by organizations throughout Ontario is commendable, given that conservation has emerged as a public policy priority only in the last few years. This alone represents a significant advance in the development of a culture of conservation, as Ontarians from every market sector have options to participate.
A culture represents a shared set of values, beliefs and practices, and the development of a conservation culture requires everyone to do his/her part to use electricity in a responsible manner. Before a culture of conservation can fully emerge, the day-to-day behaviours and choices of a critical mass of Ontarians will have to embrace the need for wise and responsible use of energy. Much more work remains to be done in this area.
To keep the province moving in the right direction, conservation must remain a public policy priority - even in the face of uncertain economic circumstances. This consistency is critical to ensuring the success of resource acquisition programs, as these programs not only reduce short-term demand for electricity, they also raise awareness, help build capability to deliver conservation and prime the market for more energy-efficient products and services. These programs have less chance of succeeding if individuals do not participate where they live, work, study and engage in recreation.
CAPABILITY BUILDING
( Energy-efficient Standards for Public Infrastructure Investments
The Government of Ontario's strategy for renewing public infrastructure involves working with municipalities, hospitals, school boards, universities, colleges and transit systems to manage and maintain existing infrastructure and build the infrastructure needed to meet future demand. Infrastructure Ontario is a crown corporation assigned to deliver these projects on behalf of the province. It uses an alternative financing and procurement model to leverage both public and private sector financing.
It also secures financing for projects of other agencies through the Ontario Strategic Infrastructure Financing Authority (OSIFA) loan program. This program provides Ontario municipalities, universities and other public bodies with access to affordable loans to build and renew local public infrastructure. Many of these projects, such as buildings and public institutions, provide an excellent opportunity to address energy efficiency during the planning and design phase, when it makes the most sense to do so.
Incorporating higher levels of energy efficiency into infrastructure design, especially for buildings, can be cost-effective when the project is evaluated using a life cycle costing approach. Premiums for energy efficiency pay off over the lifetime of the building. In fact, Manitoba has adopted a green building policy in which all government-funded infrastructure must meet a minimum standard for energy efficiency.
In 2006, the Chief Energy Conservation Officer recommended that all new government buildings be built to meet the requirements of Ontario's 2012 Building Code as a minimum standard. The government responded by committing to meet LEED standards for new government-owned building construction and major renovation projects. A similar commitment could be extended to all public sector investments in energy-consuming infrastructure, starting with building related projects. To facilitate this, investment decisions for public infrastructure could extend beyond the traditional criteria of creditworthiness and capital to include criteria for energy performance based on total life cycle costing.
( Call for Energy Conservation Officers in Ontario's Institutions and Businesses
In 2007, the Chief Energy Conservation Officer recommended that Ontario's municipalities appoint energy champions or municipal energy conservation officers to advocate locally for a culture of conservation. To date, 15 leading municipal councils have appointed champions and more appointments are expected in the near future.
Leadership is a key part of motivating others to act. Just as municipalities need more leaders to highlight and promote opportunities to conserve, Ontario's academic and health care institutions and businesses stand to benefit from a higher level of internal energy conservation leadership.
Institutions and businesses could encourage these champions to increase awareness within the organization of available incentives to capitalize on energy efficiency improvements; persuade managers at all levels that it makes social, environmental and economic sense to conserve; empower employees to identify energy efficiency opportunities; and ensure that employees and management alike are made aware of the need to use energy wisely. This does not mean that every organization would need to hire an additional staff member. Rather, accountability for energy efficiency could be assigned to existing staff.
A number of institutions and businesses already have assigned the responsibilities of an energy conservation officer to individuals within their organizations. Examples include the London Health Sciences Centre, Sunnybrook Hospital, Vale Inco and the York Catholic District School Board. These individuals are typically well informed about energy conservation and environmental issues - and the organization gains from their knowledge and enthusiasm.
The benefits of institutionalizing the role of an energy conservation champion in businesses are twofold: it will help ensure that conservation and energy efficiency are considered in decision making at all levels, and also will result in an improved bottom line through reduced energy costs.
( Increasing Funding for Community-based Conservation Initiatives
The number of community-based activities that support a culture of conservation is increasing in Ontario. Typically organized and delivered by local not-for-profit groups, these activities focus on raising awareness of conservation as part of a broader environmental mandate. Some have been active in distributing compact fluorescent lighting, for example.
A number of activities have been funded by the Ontario government's Community Conservation Initiatives Fund. There are also province-wide, non-profit initiatives that play an important role and these could be further supported as well.
Such local, grassroots activities could be expanded upon, but the groups and organizations behind them often lack the necessary funding and resources to do so. In addition, the Chief Energy Conservation Officer has noted that these grassroots organizations often do not have the resources to adequately measure and track the extent of their activities.
MARKET TRANSFORMATION
( Additional Resources to Increase Energy-efficiency in Ontario's Building Code
Ontario's Building Code is a regulatory tool for ensuring that new buildings and renovations of existing buildings must meet safety and technical standards, including requirements for energy efficiency. The energy efficiency provisions in the 2006 Code were a significant improvement and are expected to reduce Ontario's peak system demand by 550 megawatts (MW) over the next six years. Future updates of the Building Code present additional opportunities to improve the energy efficiency of new and existing buildings.
The Ministry of Municipal Affairs and Housing is responsible under provincial legislation for the development of Ontario's Building Code and the Ministry of Energy and Infrastructure is responsible for energy policy. These two organizations could increase their collaboration in developing a long-term strategic vision for the energy efficiency of buildings as regulated by the Building Code. In this regard, Ontario can learn from best practices used in jurisdictions seen as leading in energy-efficient buildings.
California's long-term plan for building efficiency includes a vision, profile and implementation strategy for each economic sector, as well as a plan with near-term, mid-term and long-term goals. A similar plan for Ontario's Building Code would give builders, developers and trades more certainty in knowing when energy efficiency standards will be implemented and allow for timely development of the capability to meet new standards cost effectively.
The cooperation and resources needed to develop a vision for Ontario's buildings also could support ongoing research, public consultation and technical reviews that would help implement the vision through regular enhancements to the energy efficiency requirements in the Building Code. Additional resources should be made available to support these activities and coordinated with the OPA's long-term planning and market transformation activities.
( Additional Resources to Accelerate Energy-efficiency Standards
Ontario's Energy Efficiency Act establishes energy-efficiency standards for a wide range of energy-using products with the objective of eliminating the least energy-efficient products from the Ontario marketplace. The Ministry of Energy and
Infrastructure's recently proposed amendments to the regulation under this Act would create minimum energy performance levels for eight new products and update the reference standard for 11 existing ones. These updates demonstrate the government's recognition of the important role for energy efficiency standards, but, for such standards to best contribute to meeting long-term objectives, they should be guided by a long-term vision and plan.
The OPA is developing such a road map for integrating conservation activities across the province, as well as various tools to transform the market to achieve lasting energy and demand savings. This plan will include interim and long-term objectives. California is undertaking a similar process and California's vision for its codes and standards includes accelerating - ahead of the United States federal government - the deployment of energy-efficient equipment.
There are many players that must act to transform the market into a sustainable, energy-efficient economy. Achieving long-term savings depends upon continued government support for regulations to develop and continuously improve standards under the Energy Efficiency Act. The Chief Energy Conservation Officer therefore suggests that sufficient human resources be allocated within the Ministry of Energy and Infrastructure to undertake the standards development work needed to support these goals. Improved standards should support the implementation of Ontario's long-term conservation plan.
( Sub-metering in Multi-Unit Residential Buildings
In an estimated 90% of multi-unit residential buildings in Ontario, the electricity used by the entire building is metered in bulk and each tenant pays a fixed rate for electricity that is included in the monthly rent. Tenants in these bulk-metered buildings have little motivation to conserve electricity because there is no financial incentive for them to reduce their electricity consumption.
Installing individual suite meters in multi-unit buildings gives tenants responsibility for electricity use in their own units, but tenants do not have control over non-discretionary equipment because landlords own the appliances. Therefore, when sub-metering a building, landlords should be responsible for ensuring that electric appliances are as energy-efficient as possible. The absence of such a requirement for landlords gives rise to the dilemma known as the split incentive or landlord-tenant problem.
Two additional issues that have been identified are the efficiency of the building envelope in electrically heated buildings and electricity use in common areas. Furthermore, new administrative and hardware costs associated with individual metering may challenge the tenant's ability to benefit financially from conservation.
The provincial government can require landlords to meet in-suite energy efficiency obligations and adhere to rent reduction formulas when a landlord unilaterally transfers the costs of electricity over to tenants. However, no rules or regulations have been developed to guide sub-metering practices in rental buildings, even though a smart sub-metering code has been developed to guide these practices in condominiums.
Current sub-metering practices in rental buildings are not subject to guidelines for rent decreases or other mechanisms to ensure that sub-metering is conducted fairly. Despite these challenges, transferring responsibility for electricity use to tenants has demonstrated in-suite electricity consumption reductions of 15 to 30%
Installing sub-meters with smart metering capability will allow tenants in multi-unit rental buildings to benefit further from managing their electricity use once Ontario's time-of-use rate structure is implemented.
( Sub-metering in Commercial Buildings
In most multi-unit commercial buildings, electricity for tenant-controlled and common areas is metered in bulk and electricity costs are charged to the tenants as part of their rent or added on to rents in a net lease structure. Electricity costs passed on to individual tenants are based on their proportion of rented space.
This leads to cross-subsidization among tenants, where tenants with low usage of electricity per square metre subsidize tenants using more electricity per square metre. In this situation, individual tenants have relatively little incentive to conserve electricity.
Individual tenants in commercial buildings need to receive price signals to encourage them to conserve and participate in energy efficiency programs. Sub-metering allows tenants to be billed only for electricity use that is under their direct control. This would provide tenants with both the information they need to manage their electricity use better and financial rewards for conserving. Tenants that are responsible for their electricity costs are also more likely to participate in energy efficiency programs.
The complete text of the 2008 Chief Energy Conservation Officer's Annual Report can be found at www.conservationbureau.on.ca
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