status quo stymies innovative retrofit options

Status quo stymies innovative retrofit options

Climate crisis lens urged to widen the scope of perceived costs and paybacks
Friday, June 25, 2021

Canada’s commercial building sector will need innovative retrofit options, centralized project management and more ambitious policy drivers to realize its emissions reduction potential, concludes a newly released report from the research and advocacy group, Efficiency Canada. Entitled Canada’s Climate Retrofit Mission, it outlines scenarios for achieving net-zero emissions in the existing building stock within the next 15 to 30 years through fuel-switching and associated deep retrofit measures, and contrasts that to an estimated 70-year timetable at the current pace of capital investment.

Co-authors Brendan Haley and Ralph Torrie model costs and benefits for retrofit schedules that would see Canada’s existing building inventory achieve net-zero status by 2035 or 2050 then explore why neither scenario is likely to unfold through prevailing approaches for incentivizing, financing and implementing retrofit projects. In turn, they call for a climate crisis lens and a resulting perspective that entrenches net-zero emissions as a societal priority and primes the conditions for the market to respond.

“Rather than making each retrofit a single project and the responsibility of individual building owners, policymakers must understand the energy efficiency and GHG savings potential from treating buildings as public infrastructure. This perspective invites us to value the national level systemic and societal benefits of retrofitting buildings on a scale and at a pace that is responsive to the climate emergency,” Haley and Torrie submit. “These solutions will require reshaping the structure of existing retrofit markets to create economies of scale and learning. They will involve the use of new technologies. However, new business models and organizational systems are likely to be most important.”

Bridging the market development gap

They point to a program originating in the Netherlands, dubbed energiesprong, as one such example of a transformative mass retrofit rollout. It brings several buildings under the umbrella of one project to create an effective scale for purchasing and coordinating the installation of standardized high-efficiency wall assemblies and mechanical pods. Participating building owners simultaneously qualify for long-term financing and performance guarantees.

“There are a variety of innovation pathways that could increase the performance of building retrofits. These include the use of integrated design and project delivery, prefabrication of building facades and HVAC systems, mass customization tools that manage distinct building characteristics with greater ease, aggregation of retrofit projects into single portfolios, the increased use of digital technologies and better ways to meet building user needs,” Haley and Torrie urge.

However, they identify a “market development gap” hindering the uptake of these retrofit options and the further spinoff innovations they might engender. In response, they recommend a dedicated national agency to help set and promote a climate retrofit agenda, along with an accompanying troop of market development teams to facilitate, troubleshoot and watch for processes and results that could be replicated in still more projects.

Low-hanging fruit hangover

While much of Haley and Torrie’s treatise is focused on existing residential stock, which has been advancing to the net-zero target even more languidly than the commercial and institutional sector, their critique of the current compartmentalized approach to energy upgrades — with its the dominant focus on “low-hanging fruit”, quick returns and incentives tied to prescriptive measures — applies across the board.

That’s not to say that they are disdainful of what energy efficiency programs and incentives have achieved thus far. Rather, they argue it’s now critical to stretch the scope beyond conservation and demand management (CDM) and reframe the purpose of lowering energy-use intensity.

“In North America, the bulk of building retrofit funding is provided by energy efficiency or demand side management programs, where energy savings are considered as a resource for electricity and natural gas utility system planning and operation. These regulatory institutional environments fail to consider many important benefits of energy efficiency, such as improved indoor environmental quality, building durability, resilience against extreme weather, energy poverty reduction, and GHG reductions,” Haley and Torrie state. “This situation produces a bias towards traditional techniques, short-term, measurable results over dynamic efficiencies, and risk aversion under a regulatory mandate to prudently use ratepayer funds. Within existing energy efficiency portfolios there is little room for experimentation with system-changing innovations, other than limited budget carve-outs for small pilot projects.”

They warn that a continued focus on incremental or “shallow” improvements could actually undermine Canada’s goal to reduce GHG emissions to 30 per cent below 2005 levels by 2030 and its even more aggressive pledge to attain net-zero emissions by 2050 if it delays project timing and/or erodes the cost-effectiveness of the deep retrofit measures that will be required. “Given the need to retrofit nearly the entire building stock in the next 15-30 years, each retrofit must be consistent with climate policy objectives,” Haley and Torrie assert.

Unprecedented costing exercise

Looking to the potential energy savings and greater benefits, the report’s modelling indicates that deep retrofits to achieve net-zero emissions would slash fuel and electricity consumption in the existing commercial building inventory from the current 1,000 petajoules (PJ) or 1 billion gigajoules annually to about 400 PJ by 2050. That includes, of course, a complete elimination of the fuel load that currently accounts for about 600 PJ of consumption annually. Even so, projected gains in efficiency would reduce electricity consumption in provinces like Quebec, Manitoba and British Columbia that are already more reliant on electric heat.

The costs and paybacks of that outcome would depend on the speed of the retrofit rollout, translating into higher upfront costs but more expeditious paybacks with the accelerated 15-year timetable. Using low- and high-cost assumptions, the report pegs required capital investment in the range of $250 to $350 per square metre ($23.23 to $32.52 per square foot) at the low end and $400 to $500/m2 ($37.16 to $46.45/ft2) at the high end for most types of commercial/institutional buildings. Costs in healthcare facilities would be higher.

“There is a wide variation in the literature on the capital costs of commercial building retrofits, partly because they are very often done simultaneously with other building improvements, making it difficult to isolate those costs uniquely associated with energy efficiency improvements,” Haley and Torrie note. “A retrofit program of this magnitude, proceeding at this pace, has never been undertaken, and there is no precedent for estimating what it would cost. Similarly, while some of the benefits can be quantified (e.g. fuel and electricity cost savings, avoided carbon costs), there are many intangible or difficult-to-quantify benefits from making buildings more comfortable, productive and healthier environments. Finally, notwithstanding the pricing of GHG emissions, the value of maintaining a healthy global atmosphere is too big to measure.”

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