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Towards Carbon Neutral & Net Zero Energy for Residential Buildings in BC Sub-Committee Meeting – Financial Tools and Incentives May 21, 2014 John Madden Director of Community Planning and Development 1

Acknowledgements 2

Sub-Committee Members Alan Sung Vancity Brendan McEwen City of Richmond David Hutniak Landlord BC Jordan Fisher FRESCo Katherine Rossokha BC Hydro Nigel Protter BCSEA Svend Andersen GHG Accounting Services Project Team Tracy Casavant Executive Director, Light House John Madden Project Director, Light House Joanne sawatzky Project Manager, Light House Joy Chen Building Analyst, Light House Souri Riazi Research Analyst, Light House Wayne Ward Technical Director, BRE UK Svend Andersen GHG Accounting and Protocols Advisor 3

Agenda Time Discussion Items 9:00 – 9:10 Welcome & Introductions • Study Objectives 9:10 – 9:30 • Process and Timelines • Preliminary Research Findings • Challenges and Opportunities 9:30 – 10:30 Expert Working Sessions 10:30 – 11:00 Summary and Next Steps 4

Study Objectives Engage governments, utilities, building and the real estate industry across the Province to develop a cohesive and strategic road map to advance carbon neutral and/or net zero energy for residential buildings* . * with a focus on BC Building Code Part 9 buildings 5

Study Approach 6

• Carbon Neutral Building Definitions – A building which significantly reduces energy consumption combined with the increased use of low carbon energy sources to meet the remaining demand. • Net Zero Energy Building? – A building which significantly reduce STEP� 1:� energy consumption combined with Squeeze� energy� demand,� usually� to� a� the use of renewable energy pre-defined� target � generated on-site to meet the remaining demand. CARBON� NEUTRAL� BUILDING� NET� ZERO� ENERGY� BUILDING� STEP� 2:� STEP� 2:� Meet� remaining� Meet� remaining� energy� demand� with� energy� demand� with� no� (or� low)� carbon� renewable� energy� energy� generated� on� generated� on-site� or� off-site� 7

Advisory and Sub-Committees Subcommittee - Financial Mechanisms & Incentives Advisory Subcommittee Committee Subcommittee - Policy, - Technologies Codes & (Expert Round Regulations Table) Subcommittee - Education, Awareness & Capacity Building 8

Sub-Committee Objectives  Policies, Regulations & Codes  Technologies  Financial Tools & Incentives What is the financial cost / benefit to meeting established - targets? Where the costs were considered to be incrementally - significant higher than business-as-usual, or where challenges regarding distribution of benefits existed, were incentives required? If so, what type of incentives? What incentives were used to drive market-level strategies? -  Education, Awareness & Industry Capacity Building 9

Select cities in different Climate Zones • Zone A: ≤ 3500 HDDs ➠ Vancouver, HDD 18max (1971-2000) : 2960 • Zone B: > 3500 to ≤ 5500 HDDs ➠ Kelowna, HDD 18max (1971-2000) : 3869 • Zone C: > 5500 to ≤ 8000 HDDs ➠ Fort St. John, HDD 18max (1971-2000) : 5893 • HDD 18max - The standard method for calculating the Degree Day Daily mean; Daily mean = (Daily max + Daily min) ÷ 2 • • HDD 18max (1971-2000) – The average of HDD 18max value from 1971 to 2000 10

Residential Building Typologies  Structural Type of Dwelling and Collectives Reference Guide, 2011 Census: • Detached Houses: Single Family Dwellings Detached Houses • Attached Houses: Duplex, Semi-Detached and Row Houses Duplex (horizontal division) Semi-Detached (vertical division) Row House (vertical division) • Multi-Unit Residential Buildings: Apartments Apartment < 5-storey Apartment ≥ 5 -storey (horizontal & vertical division) (horizontal & vertical division) • Moveable Dwellings: Mobile Homes 11

Define Characteristics of Housing House Characteristics Typical Rating Building Standards / Codes Unimproved Older house 0 to 50 Pre 1970’s Building Code Partially improved Older House 51-65 1970’s – 1980’s Building Code Fully improved Older House 66-75 1990s Building Code Typical New House 68-82 Current Building Code Energy Efficient House 80-90 R-2000 House Super energy-efficient House 91-100 Net Zero Homes 12

Matrix of Climate Zone & Typologies  Statistics Canada, 2012 • Single detached houses are the most common housing type except in BC. • The average occurrence of single detached houses across BC is 47.7%. Climate Zone A B C House Types BC Average Vancouver Kelowna Fort St. John 47.7% 33.8% 56.5% 59.0% Single-detached Distribution of housing types Semi-detached house 3.0% 2.2% 4.6% 5.4% in BC climate zones, Row house 7.4% 9.0% 5.4% 7.8% by # of buildings 10.4% 14.2% 7.2% 1.4% Duplex Apartment, < 5 storeys 20.5% 25.6% 19.9% 13.9% Apartment, ≥ 5 storeys 8.2% 14.5% 1.6% 0.9% 2.8% 0.7% 4.7% 11.7% Moveable and other houses 2.8% 2.7% BC Distribution, BC Distribution, Total # of units Total Floor Area 19.4% 28.7% 47.7% Detached 10.0% Attached 67.9% Apartments 20.8% Mobile Homes 13

Matrix of Climate Zone & Typologies NRCan database, 2011  • Almost 74% of dwellings were constructed after 1977. • About 25% of all types of residential buildings were built in 1984 -1995. • The age of the house may reflect different construction types and hence determine the building characteristics and performance. 100 90 80 70 Percentage 60 50 40 30 20 BC dwellings Age Distribution, 10 by # of buildings (%) 0 Before 1946 – 1961 – 1978 – 1984 – 1996 – 2001 – 2006 – 2011 – 1946 1960 1977 1983 1995 2000 2005 2010 2011 Single Detached 4.3 5.6 18.9 13.6 24.5 12.2 7.4 11.9 1.6 Attached 2.2 2.3 7.7 12.7 29.7 10.4 12.9 18.9 3.1 Apartments 3.9 4.1 14.7 10.2 24.8 12.1 8.1 19.6 2.4 Mobile 5.2 3.9 23.3 9.7 20.5 12.5 9.5 13.2 2.1 14

Why is energy efficiency for buildings important?  Electricity is a growing operating cost Inclining block rates; average increase of 4.4%/yr* -  Major source of greenhouse gases 55% of Vancouver GHGs - *2010 forcast; pre-BC Hydro-review 15

Setting Targets and Step Changes SET SETTING TING TAR ARGET GETS & PERFORMANC S & PERFORMANCE E > > OUT OUTCOM COMES ES  Adopt baseline performance based on similar climate zones and building types  Define quantitative targets for carbon and energy performance  Define “step changes” and recommendations 16

Matrix Baseline Baseline Type Physical Characteristics Example Type Site EUI Total Energy (Age, Floor area, Units) (kWh/m2) (GJ/household) • Less than 4,200 sf Detached • Two-storey with basement • 2x4 or 2x6 exterior walls, 178 81.2 • R12, R20 or R28 batt insulation • Attic insulation: R28 or R40 • Size from 800-1,200 sf Attached • Two to three storey • 2x4 exterior walls, R12, R20 or R28 175 81.2 batt insulation • Attic insulation: R20 • Size from 1,600 sf, newer units Row House with finished basements 2,400 sf (NRCan data combine these two • Two to three storey housing types in one category) • Exterior Walls: 2x4 stud walls with R12 batt insulation • Attic insulation: R-21 Apartment Up to 3 stories (Part 9 only) 153 49.8 17

$ Barriers to Retrofitting Buildings Source: Institute for Building Efficiency Survey, 2012

$ Financial Tools and Incentives 1.Property Assessed Clean Energy (PACE) 2. Energy Service Companies (ESCO’s) 3.Toronto Atmospheric Fund (TAF) 4.On Bill Financing and On Bill Repayment through utilities

$ Property Assessed Clean Energy (PACE)

$ Toronto Atmospheric Fund (TAF) Energy Saving Performance Agreement

$ Energy Service Companies (ESCO’s)

$ On-Bill Repayment Financing

$ On-Bill Financing Benefits Challenges No up front capital cost for the owner Limited availability at this time Often the first mortgage lender’s approval is necessary to alleviate the primary debt holder’s concerns in the Very competitive interest rates event of default In some cases (tariffs) investment and Utilities may limit the loan amount, so repayment link to the property not the more expensive retrofits may be owner precluded Utilities may be reluctant to embrace on-bill financing as it shifts the loan administration burden to them

$ Innovative Financial Incentives and Mechanisms Key Principles for Success • Minimize risk to those undertaking the energy efficiency capital investments • Induce the market by making the ROI shorter by lowering the costs associated with the investment • Generate on-going dividends after the capital expenditure is paid off • Bundle incentives with regulatory /code changes to balance the “carrot and sticks”

Sub-Committee: Working Sessions 26

Discussion Questions  What incentives should be used to support market-level transformation?  Where should financial tools and incentives be focus to achieve greatest impact?  What level of financial support is required to achieve Carbon Zero/ Net Zero Energy within residential sector? * with a focus on BC Building Code Part 9 buildings 27