Current Green Building Policies Aren’t Enough to Stem Climate Change

By on April 18th, 2019 in Blog Posts

In January, The Economist published a provocative article suggesting that rules on “zero energy” or “zero carbon” buildings do not go far enough to stem climate change. This debate is hardly new to us “energy connoisseurs” (to borrow a term from Dave Woodson at the University of British Columbia), but I’m heartened to see the attention from general media outlets. It’s an important topic.

Buildings account for one-third of global GHG emissions and about 17% of Canadian GHG emissions. The contribution from buildings is likely much higher if emissions embodied in building materials or released in construction and demolition are also considered. As Sustainable Buildings Canada notes, the operational emissions attributed to buildings are also likely underestimated because of the practice of allocating upstream emissions to the industrial production of natural gas rather than end-use combustion.

Even with a price on carbon, there will still be a need for regulations, incentives and policies to reduce emissions from the building sector. Buildings are long-lived infrastructure – much longer lived than cars – and a large portion of the buildings that will exist in 2050 have already been built. Upfront design decisions are major determinants of their lifecycle emissions. And upfront decisions can create “carbon lock-in” or inertia that make future reductions more difficult or costly. Even where carbon pricing exists, current prices rarely reflect the cost of emissions over the full life of a building, and if they did, builders and purchasers would most likely significantly discount future prices given uncertainty in government commitments based on historical experience. There are many market failures in the building sector that also limit efficient responses to pricing mechanisms alone (e.g. split incentives, information asymmetries, and capital constraints to name a few). Other factors like size or location tend to be much more important in design and purchase decisions than energy, reducing the responsiveness to carbon or energy prices alone. 

Unfortunately, most green building policies (building codes, standards, and/or third party certifications) aren’t yet up to the task of achieving deep reductions in emissions from the building sector as a whole. In addition to tightening these policies, more attention is required to tailoring these policies to local conditions and trade-offs (e.g. urban, suburban and rural forms of development). More importantly, green building policies need to be better integrated into a larger framework of policies that look beyond individual buildings to also consider the broader systems of energy provision for buildings.

The Energy Performance Gap

The Economist highlighted three problems with current green building policies. First, most green building policies focus on new buildings and do nothing to cut emissions from existing buildings, which will remain a much larger source of emissions from the building sector for the foreseeable future. Second, policies may not be as watertight as they sound. For example, they typically exclude certain energy uses such as plug loads. If a reduction in regulated lighting loads is accompanied by an increase in floor lamps, not much has actually been gained.

The Vancouver Zero Emissions Building Policy and the Toronto Green Standard both include maximum Thermal Energy Demand Intensities (TEDIs) for new buildings. Over time, TEDIs for new buildings are supposed to decline. But these TEDIs only account for space heating, not domestic hot water (DHW) use.  The latter is supposed to be captured by an overall Total Energy Use Intensity (TEUI) requirement, but the TEDI metric leaves the impression among some stakeholders that total heating demands are much smaller in new buildings, which is not the case if DHW is also considered.

Finally, The Economist points out that green buildings rarely perform as well as expected.  Most green building policies only require building designers to produce an energy model showing that the building should achieve a given level of performance under specific input assumptions. Actual performance is not confirmed. Models, as any junior analyst knows, can be gamed. If business managers were rewarded for having spreadsheets claiming they should make money, and never had to achieve actual earnings, how realistic would you expect their models to be?

To be fair, the discrepancy between models and real-world outcomes is not all attributable to gaming. Modellers have to make simplifying assumptions which rarely account for variability in site conditions or real-world human behaviour. While models are useful for comparing different designs under common assumptions, we should be careful about relying on their outputs for making investment decisions concerning alternative energy supply systems or for projecting the effects of green building policies on GHG reduction targets.  It is analogous to vehicle fuel economy. The stated fuel economy of cars is based on standardized tests. We know actual fuel economy is often higher in real world conditions and driver behaviour. The stated fuel economy can be useful to consumers when comparing between different vehicles. But policy makers shouldn’t rely solely on these idealized values to estimate the benefits of increased fuel economy standards.

More often than not, building energy consumption is higher than modelled consumption. In February 2018, our client, Sidewalk Labs Toronto, engaged our colleagues at Urban Equation to investigate energy use in multi-unit residential buildings (MURBs) in Toronto. According to their study, only 5% of the analyzed MURBs in design or construction would meet the Toronto Green Standard Tier 1 standard (version 3). More disturbingly, there is no clear improvement in energy efficiency among the MURBs analyzed since 1998. The overall energy use performance gap is 13%. The GHG performance gap is actually 28%. The difference is attributable to the fact that a large portion of the energy performance gap is for space heating (39% higher than modelled) and domestic hot water (21% higher than modelled), both of which are supplied primarily by natural gas (see discussion below on the difference between energy and carbon performance).

It’s a useful study, but I confess I had some déjà vu. About 10 years ago, BC Hydro and others commissioned a similar study by RDH of 39 MURBs in Greater Vancouver and Victoria. That study found a modest trend towards increasing energy consumption among buildings constructed over a 30-year period, and they found much higher natural gas use than expected in design models as a result of the heavier-than-anticipated reliance on gas-fired make-up air and gas fireplaces for space heating.

A more recent study published last week by BC Hydro shows another disturbing energy performance gap. While apartment and condo dwellers have lower average electricity use than those living in single-family homes, the total electricity usage in high-rises marketed as energy efficient has nearly doubled since the 1980s. These buildings also use almost four times more electricity than new low-rise buildings. This increase is attributable to growth in electricity use for common areas and the addition of luxury amenities. It seems these uses were not captured in models, and the additional loads could also be an example of what economists refer to as rebound (efficiency gains offset by an increase in other uses).

I do think the design community is getting better at making buildings more energy efficient. Efforts have also been made to tighten energy modelling guidelines in some green building policies. But, history suggests the rate of progress averaged over many new buildings may be slower and the gains smaller than we would hope. That’s no reason to abandon the pursuit. But we should be realistic about the gains, particularly when evaluating and comparing with other strategies for reducing carbon emissions from buildings. 

The Data Availability Gap

In our experience, the gap between modeled and actual building performance is a bit of an open secret within the green building world, but it is rarely appreciated by policy makers. The studies by RDH and Urban Equation are useful because they consolidate and compare comprehensive data across multiple buildings. These studies can be used to identify patterns or trends that are not possible from anecdotes or single building studies alone. However, it is still surprisingly difficult to get data on actual energy performance and carbon emissions for buildings on a large scale.

Despite the importance of buildings to climate protection, reporting requirements are scarce. A recent article by Brian Barth provides an overview of the evolution of green architecture and current evidence on the impact of standards such as LEED on actual energy. Barth notes that in response to growing pressure to prove its performance claims, starting in 2009 the US Green Building Council began requiring the owners of LEED-certified buildings to provide annual energy use data for the first five years post-occupancy. However, this data has not been widely released. Other data sources have started to emerge. There are many voluntary benchmarking programs, but voluntary programs introduce bias, as good performers are more likely to report than poor performers.

As illustrated in the map below from the Institute for Market Transformation, a handful of US cities and one state (California) now require public disclosure of energy consumption data from public, commercial, and in a few cases, multi-family buildings. Many of these requirements are still relatively new. Mandatory reporting is rarer in Canada. To our knowledge, Ontario is the only province to have mandatory reporting requirements – a requirement that is still very new.

More public data on actual building performance could prove (or disprove) the efficacy of policies, help improve the design of future buildings, and facilitate more outcome-based regulations. Mandatory reporting will help but is also not a substitute for more in-depth and comparative studies. These are required to discern the sources of good or poor performance – i.e., what end uses are driving fuel use and the relative contributions from envelope design, equipment selection (boilers and heat pumps), occupancy rates, and occupant behaviour.  

The Carbon Performance Gap

The gaps in energy performance and data are concerning. However, there is a more critical issue overlooked by the Economist article: low energy buildings are not necessarily low carbon.  

The BC Step Code has received much attention recently and has been touted as a key tool in BC’s fight against climate change. It is definitely a step forward, but as my colleague Gerard MacDonald and I have written elsewhere, the BC Step Code does not directly regulate GHG emissions. Higher steps can be achieved with no change in carbon emissions and even increases in carbon emissions because the code is fuel neutral and does not have any explicit requirements to reduce carbon emissions.  

We’re not the only ones to point this out. A 2018 report prepared for BC Housing and the Energy Step Code Council, with support from Natural Resources Canada notes the same issue and offers similar solutions:

“… implementing the Step Code can result in an increase in GHG emissions in some buildings, even where those buildings achieve the stringent energy efficiency requirements of higher steps. A means of mitigating this issue is the addition of a GHG intensity (GHGI) target …” (p. 48)

“One of the objectives of this report is to identify any possible unforeseen impacts to adopting the Step Code that could be identified using the data generated by this project. One issue that local governments should examine is the level of GHG reductions being delivered by each step of the Step Code. In some cases, particularly at lower steps, achieving the Step Code does not yield GHG emissions reductions, or results in only small reductions. GHG emissions are not significantly reduced until Step 3…. the parametric analysis revealed that it was even possible to have higher GHG emissions than a BCBC building by adopting Steps 3, 4, and even 5. This outcome is counter to the primary interests of the local governments who are interested in adopting the Step Code and counter to the Province’s own climate policy.” (p. 73)

The cities of Vancouver and Toronto have introduced zero emission building policies that include explicit requirements for reducing GHG emissions. These policies still suffer from some of the same issues noted in The Economist article, but they are an improvement over the Step Code given that they move closer to directly regulating GHG emissions. Unfortunately, both Vancouver and Toronto have also introduced alternative compliance paths that are not based on carbon emissions. We have anecdotal evidence from our own projects and discussions with other consultants that developers in Toronto are pursuing these alternative compliance paths more often than not. This is not a criticism of developers; they are merely pursuing the most cost-effective and expedient strategies they are offered. It is clear, however, that offering alternative compliance paths reduces the efficacy of achieving carbon reductions. Toronto plans to eliminate the alternate compliance path.  We are not aware of any plans to do so in Vancouver.

Other jurisdictions have introduced minimum requirements for renewable energy supplies. For example, both Austria and Germany prescribe a certain use of renewable energy systems in their building regulations. It isn’t quite the same as directly capping GHG emissions, but is more likely to have an impact on emissions than a policy focused only on the amount of energy used, and not the source.

The Systems Perspective Gap

Once fact-based, emissions-focused building policies are in place, policymakers’ next challenge will be to aggressively reduce emissions from existing buildings, not just new projects or buildings undergoing major renovations. This larger challenge also points to another gap, which I call the systems perspective gap. 

Buildings may be a large source of emissions, but not all of the solutions will reside within those buildings. Increasing efficiency and on-site energy sources are commendable. However, building energy-efficient and self-sufficient buildings is easier in low-density areas characterized by lower land costs, lower built forms, fewer constraints on building orientation, and a large ratio of on-site energy sources to building size. It’s an entirely different challenge in dense urban areas with costly land, less space, greater constrains on orientation, and a lower ratio of energy sources to energy uses. 

According to projections from the UN, nearly 70% of the world’s population will live in cities by 2050. We live in cities to share resources. The value of cities is their ability to achieve economies of scale and integration. Urbanization actually offers some of the best opportunities for reducing global GHG emissions at scale. Yet, most green building policies turn their backs on the promise of urbanization, encouraging instead oases of self-sufficiency even in the densest of cities. These oases are set to become islands of deep green in a rising sea of brown. And more often than not it seems these oases turn out to be a mirage. They give a false sense of progress and security in the face of a climate crisis that demands much bigger and coordinated solutions. Deep green buildings aren’t enough to fend off the climate crisis, and they also won’t insulate their occupants from the wider ravages of climate change.

We need to tackle the climate crisis at scale, which requires systems-level thinking. Cities are more than the sum of their individual buildings. 

Here are a few examples of the kinds of system-level issues we need to consider:

  • We have made remarkable progress globally to decarbonize existing electricity grids – actually a testament to the value of coordinated policies at large scales. But decarbonization of buildings and transportation will require even greater investment in green power supply and distribution grids. Cost-effective solutions will require coordinated approaches at multiple scales. How can we design new buildings and retrofit existing buildings in whole neighbourhoods or cities in a manner that supports green electric grids at lower costs?  
  • Heating, which is still primarily supplied by fossil fuels, is one of the largest sources of GHG emissions from buildings. Electrification is one tool for lowering GHG emissions from heating, but electrification is not the only tool. We produce numerous wastes that can be used to produce heat (more readily than electricity and better) including food waste, wood waste, other non-recyclable solid wastes, and sewage sludge. Additionally, we produce waste heat (from industry, cooling, and in sewage) that can be used to satisfy heat demands in buildings. Energy production and re-use are an important part of the circular economy, but they receive far less attention than materials recycling. 
  • How we electrify heating is also important. Heat pumps are a great tool but they could wreak havoc on electricity grids if we do not also give consideration to smart controls and complementary tools such as thermal or electric storage systems. In some cases, these technologies can be implemented more easily and cost-effectively in the scale of neighbourhoods or cities than individual buildings, particularly in dense urban areas. 
  • The gas grid remains the elephant in the room when it comes to decarbonizing buildings. There are efforts to power green gas grids through renewable natural gas and electricity-to-hydrogen. I think these approaches have an important role to play in our energy transition. But, I think this will also require careful consideration of the future extent and use of gas grids. Green building policies must be placed in this larger context. The Netherlands (home of Royal Dutch Shell and a greenhouse-based agriculture industry that has reached global dominance on the back of cheap natural gas) has recently announced plans to phase out natural gas entirely, starting with new buildings and neighbourhoods. Similar calls have been made recently in the UK. Countries like Denmark have long employed heat planning to establish the optimal mix of grids for individual neighbourhoods. Canada is far behind on these kinds of conversations.
  • It’s not enough to just retrofit existing gas and electric grids. Decarbonizing buildings (along with other sectors) will require modifications to existing infrastructure, and in some cases, the addition of entirely new types of infrastructures. In some cases, local thermal networks and microgrids can act as a bridge between better performing buildings and traditional gas or electric networks. These localized energy networks would permit sharing of on-site resources and integration of neighbourhood-scale energy sources. They would allow for better integration of electric and thermal storage systems to absorb intermittent sources of energy at multiple scales and optimize investments required in upstream grids. They would also support efforts to develop the circular economy and integrated resource recovery. 

Green building policies can help or hinder progress on these issues. They are more likely to hinder progress when they are not rooted in and coordinated with broader plans and policies. Coordination also requires cooperation among different levels of government and among stakeholders in the building sector. Road networks, sewage networks, electric grids and gas grids did not emerge from thinking of cities as collections of self-contained buildings. Cities are more than the sum of their individual parts. Low carbon energy systems and buildings of the future will require more systems thinking. 

A Way Forward

There’s nothing wrong with wanting to make buildings better, and the passion of green building advocates and policy makers should be commended. But, in the ever-widening gap between emission targets and progress, it’s time to think (and act) more holistically and at much bigger scales. We need green building policies that directly tackle emissions. We also need policies that address existing buildings and consider the relationship between existing and new buildings (common energy supply systems). And we need to transcend individual buildings to consider the larger systems of energy supply and sharing, particularly in our growing cities. Green building policies must be integrated and coordinated with other policies to green and strengthen the electricity grid; decarbonize, and in some cases roll back the gas grid; and establish entirely new forms of low-carbon energy production and sharing such as heat networks. My hope is that the green buildings community will encourage and support the evolution of new policies and approaches to better tackle climate change. I’ll explore these broader policies and approaches in future posts.

Trent Berry

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