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NRCan programs ending: funding insufficient for eligible applications


By: Sonja Persram, BSc. MBA, LEED AP - Monday, February 26, 2007
Source: Sustainable Alternatives Consulting Inc.

A senior NRCan official has disclosed that funding for two government programs that have provided incentives to enhance buildings' energy efficiency is insufficient for all eligible applications submitted before December 1, 2006.

These programs are being terminated as of March 31, 2007 and as proposed programs starting April 1, 2007 regarding new commercial and institutional buildings' energy efficiency will not be incentive-based, many building projects that spent money up front to achieve the program's targets won't be receiving the incentives they expected and are eligible for.

These plans are causing serious concern within the industry.

Canadian buildings’ operations contribute up to 40 percent of the nation's greenhouse gas emissions and use about one-third of total energy production
[1] and two-thirds of total electricity consumed nationally.[2] And, these figures don't include the greenhouse gas emissions and energy costs related to the transportation and industrial energy used for manufacturing and producing building materials.[3]

Programs aimed at reducing buildings' energy consumption represent a huge opportunity to decrease Canada's GHG emissions and consumption of fossil fuels via energy efficiency and renewables.  The cancelled programs' target was to reduce new commercial, institutional, multi-unit residential and industrial buildings' energy consumption by at least 25 percent compared to the voluntary building standard, the Model National Energy Code for Buildings (MNECB).  Fair evaluation of whether a design accomplished the objective required additional expenses such as for a computer simulation of the building's energy use.  Consequently, buildings that achieved the target and other program requirements were eligible for a total possible grant equal to twice the annual energy savings, to a maximum of $60,000. Under the program, projects must file an "expression of interest" then incur modeling and design costs and once final working drawings are complete, submit a final application for CIBP review to determine the funding eligibility.

In a response to an email enquiry about the programs’ demise, Pierre Guèvremont, Chief of NRCan's New Buildings Program stated: "The Commercial and Industrial Building Incentive Programs (CBIP and IBIP) have been in place since 1998.  The Programs have contributed $43 million in incentives to more than 900 new building projects, successfully improving the knowledge and competencies of more than 3000 architects, designers and builders over the last eight years.  These projects have demonstrated the technical and financial feasibility of designing energy efficient new commercial, institutional and industrial buildings throughout Canada.  While CBIP and IBIP will be wound up by March 31, 2007, there will be new and ongoing activities related to the energy efficiency of new buildings starting April 1, 2007.  These activities are part of the $60 million ecoENERGY for Buildings and Houses Initiative announced January 21,2007.  This Initiative will encourage the construction, operation and retrofit of more energy efficient buildings and houses using complementary activities such as rating, labelling and training.  Further details on the new activities will be available by April 1, 2007.

"The Program web sites indicated files would be accepted until December 1, 2006.  By that date, the Programs had approximately 275 files which had to be reviewed for compliance to CBIP or IBIP.  CBIP/IBIP will be reviewing all of these files for compliance.  We anticipate completing these reviews by September 1, 2007. Available funds will not cover all of the applications submitted by December 1, 2006.  However, all submissions received have been placed in a priority queue.  They will be evaluated for CBIP/IBIP compliance, and eligible projects will be funded subject to the availability of funds as of March 31, 2007.

"There will be new and ongoing non-incentive activities related to the energy efficiency of new commercial and institutional buildings starting April 1, 2007, as part of the ecoENERGY for Buildings and Houses Initiative."

In response, Stephen Carpenter, a professional engineer and President of Enermodal Engineering Limited, one of Canada's leading firms that consults on sustainable design projects, had this to say:

"In my opinion CBIP was one of the most effective programs ever at getting [Commercial and Institutional] buildings to use less energy and combat carbon emissions. The cancelling of the program will be a serious blow [to] this sector.  Frankly the proposed building energy labelling program doesn't save any energy and is a poor substitute for the CBIP program.  Second, there are going to be a lot of disappointed people who did all the work required by CBIP (energy modelling, completing forms etc.) who will get nothing because the government never officially said they were out of money until after the program closing date. A poor job of communication."

CBIP projects in 2005 represented 18 percent of Canada's new construction in commercial and institutional floorspace.  Proponents often sought greater energy savings than targeted, and data from 2004 indicate that CBIP buildings' energy efficiency was 35 percent better than the MNECB, that is, 10 percent better than the target.
[4] Removing the incentive after eligible organizations have paid up front to achieve this measurable building performance has caused an uproar.

In a building energy labelling program, if there are no targeted incentives to reduce energy use, and if ratings are assigned without the kind of rigorous proof now required by CBIP, there is concern that such a system is open to false claims and significant reductions in national energy use and in GHG emissions will not take place.

The Canada Green Building Council (CaGBC) has also expressed disappointment at seeing CBIP come to an end.  "The (CaGBC) calls on Minister Baird and Minister Lunn to recognize the crucial role buildings can play in reducing greenhouse gas emissions," says Thomas Mueller, President of the CaGBC.  "The government should build on the demonstrated success of CBIP rather than canceling it and not putting anything new in its place.  We urge the government to entrench a stronger federal role in green building development and support the momentum of the Canadian building industry."  More than 500,000 square meters of energy efficient floorspace have been constructed with CBIP support, that concurrently meet requirements of the CaGBC’s Leadership in Energy and Environmental Design (LEED) program.  LEED-certified buildings are not only 44 percent more energy efficient than other conventional buildings; they also provide a variety of other environmental, social and economic benefits.

Under the LEED and other green building rating systems, in comparison with conventional buildings, green buildings: conserve energy and water use indoors and out; employ daylight more than artificial lighting; reduce water flows to storm sewers; have naturally ventilated, cleaner and fresher air; use efficiently-functioning equipment and (are more likely to use) a renewable energy supply; support the development of local, non-toxic sustainably-harvested materials and local transportation options for occupants; have native vegetation which provide animal habitat and plant diversity; and, divert waste from landfill.  How many of these benefits are current environmental concerns within all levels of government? All of them.

Green buildings are beneficial to owner operators in that they have lower operating and maintenance costs, are faster to lease, are linked with reduced occupant turnover, enable occupant changes more easily, and - for a nation suffering from productivity concerns - green buildings have been credited in studies with enhancing occupant productivity, for instance via daylighting and greenspace access which have been related to reduced absenteeism and fewer experiences of allergies and asthma.  Certified green buildings in the U.S. are subject to better insurance rates from Allianz’ Fireman’s Fund.  These enhance building value to owners.

The CBIP programs were incentives to achieve the LEED ratings because they helped support the modeling and design costs. And, the resultant buildings simultaneously provided the kinds of environmental "services" that Canadian governments, at all levels, seek.

Nils Larsson, Architect, Executive Director of the International Initiative for a Sustainable Built Environment, who had working experience within NRCan during the 90's, puts the announcement into the context of government transition:

"The manner in which the CBIP program is being terminated carries on a grand Canadian tradition, regardless of which party is in power.  I did consulting work during the 1980's for the Remote Community Demonstration Program (RCDP).  One day I came into the RCDP office and found the professionals raging and support staff in tears because staff had been told to terminate the program virtually overnight, leaving projects hanging in mid-stream.  Those who made the decision took no consideration of the economic and professional damage this would cause within RCDP or in the field.

"During the 1990's, I worked on contract inside NRCan, where I developed and managed a small demonstration program called C-2000 (precursor of the CBIP program).  When I went out to meetings across the country to elicit views on what exact shape the program should take, a frequent comment was that it would be critically important for NRCan to support the program for a considerable period of time and to give plenty of advance warning of program changes or termination.  The reason, of course, was that the development of a commercial building project involves long time frames and lots of money, and that unanticipated and abrupt changes destroy the credibility of the program and of those who deliver it.

"It is a safe bet that the wizards who made the CBIP decision did not consult with the industry before acting.  The pity is that it will make the launch of a new program very difficult and this, it seems to me, will not benefit the Government, NRCan or the industry."

To protect against dwindling fossil fuel supply as well as the ravages of global warming, and to become competitive in global renewables markets, Canada needs to achieve significant reductions in energy consumption and GHG emissions, and increase investments in renewables.  The CBIP/IBIP programs successfully provided new commercial, institutional and industrial construction projects with incentives to do just that. Industry proponents actually wanted similar kinds of supports for all existing buildings as well, because their numbers are far greater.  And, these supports need to be long-term and reliable, in recognition of the long planning and investment horizons within the building industry.

Regarding the CBIP/IBIP incentive programs' termination, Larsson concludes: "It’s never too late to reverse a bad decision."

Sonja Persram, BSc. MBA, LEED AP, CEO of Sustainable Alternatives Consulting Inc., is author of Green Buildings: A Strategic Analysis of North American Markets for Frost & Sullivan, addressing Energy, Water and Facilities Management, published by Frost & Sullivan Aug/06.

The Canada Green Building Council is the leading national industry organization advancing green building practices for livable communities. Through its membership and chapters, the organization reaches more than 500,000 professionals involved in the design and building industry across Canada.

[1] Pembina Institute, CANMET Energy Technology Sector - Buildings Group, January 2004, and Riconnes, Dianna, The Green Buildings Resource Guide, U.S. EPA Region 5, 2000, cited in Mark Lucuik, Wayne Trusty, Nils Larsson and Robert Charette, A Business Case for Green Buildings in Canada, Canada Green Building Council, 2005 submitted to Industry Canada.

[2] Manitoba Environmental Industries Association, November 6, 2006: http://www.meia.mb.ca/WeeklyFYIforNovember62006.html

[3] Pembina Institute, ibid.

[4] The State of Energy Efficiency in Canada, Office of Energy Efficiency Report 2006: http://oee.nrcan.gc.ca/Publications/statistics/see06/buildings.cfm?attr=0#graph11



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