Building Green: Fixing Canada’s Leaky Homes

Speaker 1 [00:00:01] Hi. Is John here. I want to start with a big thank you to our listeners. You’ve helped make us one of Canada’s top listened to podcasts. We recently cracked the top 15 on the Apple charts, and we’re the most listened to podcast in the business and entrepreneurship category. So to all the disruptors out there, thank you. This episode we’re talking about something close to home, really close to home. Our houses, shopping malls, office buildings, the so-called built environment, and the challenge and opportunity it presents for disruption in our collective journey to net zero. Fortunately, Canada is a nation of builders. For generations, we have led the world in the built environment, and we now have to turn that brainpower, that creativity and that hard work to the net zero challenge. Many of us don’t realize that next to the cars we drive and the flights we take, buildings are the third biggest source of greenhouse gases in our lives and for decades, the most important buildings in our lives. Our homes were built with a focus on affordability, not climate, as a guiding priority. We’ve got to start to change that. As we found in a recent report from the RBC Climate Action Institute called High Rise Low Carbon. Canada’s existing buildings release some 90 million tonnes of CO2 annually. That’s a little more than 10% of the national footprint. So what’s the solution? Part of it lies in creating what’s referred to as a retrofit economy. Think about converting 57 million square meters of residential space to low carbon heating each and every year. That’s about 400,000 units roughly the size of the city of Ottawa every year for the next 25 years. So how do we get there? It’s going to take the right mix of financial investment policy incentives, design, technology, reskilling and scale. And most importantly, it’s going to take all of us to lean into the challenge. This is Disruptors, an RBC podcast. I’m John Stackhouse. Welcome to the first in a special two episode series on Greening Canada’s built sector. In Part one, we’re exploring the question How can retrofitting old buildings help us get to net zero? And I’ll be speaking with several building experts today, including our first guest, Ken Peterson. Kent is the owner of P2S, which is a California based engineering consulting firm. He’s also a distinguished fellow at Asprey, the American Society of Heating Refrigeration, Air Conditioning Engineers, and is chair of the Decarbonization Task Force. Kent, welcome to Disruptors.

Speaker 2 [00:02:51] John, it’s great to join you today and your listeners.

Speaker 1 [00:02:54] Can I wonder if we can start with some ground floor questions, pardon the expression. Help us understand where emissions come from in our buildings.

Speaker 2 [00:03:03] Primarily, people are mostly familiar with the emissions that come from the energy that’s used by the building sector, and I’ll put that in perspective. Buildings are responsible for roughly 40% of the global greenhouse gas emissions related to energy related emissions, but that’s only where it starts. We also have emissions from refrigerants, whether we’re talking about air conditioning units, chillers, heat pumps. We also have what we refer to as embodied carbon emissions. And embodied carbon is the carbon that’s emitted and the extraction, the manufacturing, the production, the construction of the buildings and any of the renewals of the buildings themselves. And so we’re starting to get that big picture of where all these emissions are coming from. And that really takes the whole lifecycle of the building for us to really address this issue.

Speaker 1 [00:03:47] When I hop in an old fashioned car and maybe turn on the ignition, I think this may not be good for the planet. I don’t have the same mental connect when I walk through the door of a house or a building. How do I know when I kind of turn the handle, whether it’s a green building or not that I’m walking into?

Speaker 2 [00:04:03] I would probably start with a number one and our loading factor when we’re looking at existing buildings or even new buildings, and that’s energy efficiency. So if you were walking into a building and you had a really good envelope, have excellent windows, good thermal insulation, it’s going to use the least amount of energy and it’s going to produce the least amount of carbon from an operational standpoint. And sometimes when we talked about energy efficiency, people always looking at payback, when am I going to get my investment back on? But operational savings and not everything in decarbonization has payback. Taking those fossil fuel-based systems, pulling the furnaces out of the house and replacing it with the heat pump may not have a great payback by itself. It’s really that efficiency component that gives us that payback.

Speaker 1 [00:04:45] And using the car analogy, again, if I buy an electric vehicle today, I’m probably spending more. But I save money over the long term by relying on electricity rather than gas to run it. Is it the same equation for a house?

Speaker 2 [00:04:58] It is the same equation for a house as long as the electric cost is going to be low. So as I go across the United States and Canada, electric costs can vary substantially depending on which state or which province you might actually be in. And so it would be much more viable to go all electric where you have lower cost of electricity. In fact, buildings account for roughly 70% of all the electricity that gets use off the electric grid. And as we begin to decarbonize buildings, we have to decarbonize the electric grid in order to see the overall savings. If I have an electric vehicle feels really good, if I draw the boundary around the vehicle, But if I actually use a coal powered power plant to generate the electricity that charges the vehicle, and I draw the boundary around the vehicle and the power plant, now it’s not so good anymore. So it takes both the building down the grid to work together in order to get us to zero.

Speaker 1 [00:05:51] Let me for a moment draw a boundary around our buildings and particularly our homes. Many of us grew up in an era where conservation was a key word. And when we hear energy efficiency, our minds probably go to, certainly in Canada, turning the heat down a little bit in the winter and maybe wearing a sweater. How far does conservation get us in terms of getting our own footprint closer to net zero?

Speaker 2 [00:06:13] It gets us a long way. The International Energy Agency has a really good report on getting to zero and it looks at the building sector and says, what are the things that we need to do? And they look at the loading order and energy efficiency gets us 40% of the way there from what we call direct and indirect. So directives were burning fossil fuels, and indirect is the energy that’s coming from the electric grid. You said turning the thermostat down is one of those examples we used to think about. We don’t have to really do that, to be honest with you. There are a lot of other energy efficient things we can do and heat reclaim and trying to not have waste heat leave buildings to recover that waste heat and reuse it in some form with the pump technology. So we’re going to see much more heat pump technology being used that allows us to use electricity and what we call a coefficient of performance, which is somewhere between 250 to 300% efficient. And getting out of that device using refrigerants.

Speaker 1 [00:07:10] Can you explain what a heat pump is and what it does?

Speaker 2 [00:07:14] A heat pump. There’s nothing more than an air conditioner that has a. Reversing bulb, they can actually move heat either direction. So an air conditioner extracts heat from a building and that’s how it actually cools when you make it a heat pump. They put a reversing building that unit and now I can extract heat out of the air. We now have technology that can extract heat out of the air when it’s minus ten degrees Celsius outside. And that’s pretty amazing.

Speaker 1 [00:07:40] What about -30?

Speaker 2 [00:07:41] -30? We haven’t gotten quite there when we’re talking about using air source technology. We could do ground live technology and has no problem depending on what the outside air temperature is. In fact, I’m right now just building a cabin up in Idaho, in the Rockies, and we do get the -30. And in that system, I’m actually putting in a ground forces pump in order to do my heating of that cabin.

Speaker 1 [00:08:03] Technology adoption is always both fascinating and challenging, even more so for big pieces of hardware like this that tend to run in the thousands of dollars. How do you convince people.

Speaker 2 [00:08:14] It takes education at the educational materials going to be different depending on who it is? We’re trying to communicate well, and by no means are we recommending people to take something that happens ten years of life left and change it out today. And Lester happens to be other benefits like energy efficiency and you’re going to get some type of payback. And the reason is the embodied carbon part of that equation that we talked about earlier. I don’t want to spend a lot of upfront on body carbon. I’d rather use my equipment to the end of life and then have that alternative of what I can put in. That’s going to be the best alternative. And then on the technical side, we have to educate contractors with educate engineers on how to actually design these systems. There’s a big workforce development issue that we don’t have enough people that can actually install these type of systems. And so that being undertaken by ASHRAE and other organizations out there working together.

Speaker 1 [00:09:03] Kent, as we wrap up, I wonder if you can share some insights on what governments need to come to grips with in the near term, whether it’s subsidies for heat pumps or more aggressive approaches to decarbonizing the grid or other measures that can be taken in the next couple of years.

Speaker 2 [00:09:20] I think we need to look at the whole picture. So all circle back to my opening comments and that is whole life. Carbon really makes a difference. And so just as we did when we were having problems with the ozone layer, this goes back into the 1990s and the activity in our industry really responded positively and we got rid of those CFC refrigerants that were burning a hole in the ozone layer. We now have to deal with the same thing on these high GHG refrigerants that are being used in HPC in our business and we’re moving in that direction. But this is something that’s part of the overall picture. So it’s about energy efficiency. I think anything we can do to help incentivize or get tax incentives for people to do things that are energy efficient and lower the greenhouse gas emissions, I think are going to help us shift the industry on the retrofit market forward. The retrofit market is the big lift for us to get to 2050 and beyond zero.

Speaker 1 [00:10:12] And what can we all do as building occupants or homeowners in the coming months to make more progress?

Speaker 2 [00:10:18] You know, one of the easiest things to do right away is to make sure you have a smart thermostat in your house. Smart thermostats are really good about understanding when you’re home and when you’re not home. And that alone saves energy and saves carbon emissions. The first thing we should do on this journey is try and make our buildings as efficient as possible.

Speaker 1 [00:10:35] That’s great advice. Ken, thanks so much for being on disruptors.

Speaker 2 [00:10:38] Thank you, John.

Speaker 1 [00:10:42] It’s no secret that Canada’s construction sector has a lot to do in terms of our collective net zero challenge. To help us better understand that. I’m joined next by Jody Becker, the chief strategy officer and executive VP of Infrastructure Services and Technology at Ellis Dawn Ellis Dion is one of Canada’s largest construction firms, and it completes more than $5 billion of volume each year. Jody, welcome to Disruptors.

Speaker 3 [00:11:06] Thanks very much. Pleasure to be here.

Speaker 1 [00:11:09] Jody We’ve just formed something called the Climate Smart Buildings Alliance, which is Ellis Don, Mattamy, and RBC, and a lot more will join us. Can you give us a quick sense of the ambition of the alliance?

Speaker 3 [00:11:22] Absolutely. It’s interesting to see these three companies come together. And I think the real power behind that is we have three strong leaders with their sights set on changing the industry. And the hope is really that we can start to move the needle. We know that we need support from government at all levels to really change the way we approach the built environment in terms of decarbonization. But we know that the private sector has its role to play as well, and that we can really move the needle if we work together.

Speaker 1 [00:11:55] We’ve been talking on this episode about leaky buildings, and a lot of the leaky buildings out there are the big ones. They can be all the hospitals, old university buildings, but also old office towers and older apartment blocks. Do we need to come to grips with tearing them all down and building more efficient buildings, or can we fix them as they are?

Speaker 3 [00:12:16] Absolutely. Have to look at all options. Right? It’s not always practical to just tear down and start over again. So we have to think strategically about how we approach those buildings. And retrofits are a big part of that, obviously. But we need to do that in a way that makes sense, particularly in active operating environment. So we operate a number of health care facilities across the country and we’re using technology and we are using the capital plans that exist for those buildings to think about how we can strategically upgrade those facilities while still maintaining a healthy operating environment.

Speaker 1 [00:12:55] Can you give us a couple of examples of how that works?

Speaker 3 [00:12:57] Sure. One of the things we’re using right now is technology that will scan the existing facility and create a digital road map of the existing infrastructure so we can see all of the piping, where it’s going and what some of the potential problems are. You can imagine that within a hospital, for example, if you turn off the water because of a leak and you’re turning off the water that’s running to the renal lab, you can cause a great deal of problems. So we have to be very careful and understand the facility really well before we touch anything. And with all the infrastructure, that can be a real challenge. So we use that scanning technology. We’ll turn that into an actual digital twin so that we understand the connections between all of the equipment and systems.

Speaker 1 [00:13:41] So retrofitting is about much more than double painting a window or putting weather stripping around the doors.

Speaker 3 [00:13:47] Absolutely. We have to look at retrofitting from a number of different respects, and we’re always looking at improving the functionality and the performance of the building. But we’re also now thinking about how we decarbonize that building as well. So if there’s an opportunity to change a boiler or to a heat pump, if there’s an opportunity to change an electrical system to an led system, all of those things have to be taken into consideration at the same time that we’re doing the retrofit.

Speaker 1 [00:14:15] It’s always nice to think technology can save us, but of course, humans are part of the equation and you can retrofit a building in the most tech savvy way, but someone is literally turning on the lights and turning up the temperature or turning it down at the beginning or end of every day. How are you working on that human side of the equation for building owners and operators?

Speaker 3 [00:14:37] Well, so I have to challenge you on what you just said, because it isn’t always people that are turning on the lights or changing the temperature and now the building can do that itself. Now, that doesn’t mean that we’re going to eliminate the people from the equation, but I think we’ll be looking at different kinds of people to operate our buildings. And we have to think about where we source those people and how they’re trained, because we are moving much more from technicians to technologists as buildings become more intelligent.

Speaker 1 [00:15:06] You’ve got a neat group, at least on that I think you call the Geek Squad and people may not think of techies working in the construction industry. Tell us a bit about what the Geek Squad is and what it does and what it reflects about maybe where construction is going.

Speaker 3 [00:15:22] So officially they’re called our Construction Sciences and Energy and digital Services teams, but unofficially, the Geek Squad. They’re looking at everything from construction technology in terms of low carbon concrete, mass timber construction and virtual design and construction, for example, through BIM models. But also our Energy and digital services team builds bespoke platforms for our clients, whether it’s around energy management or whether it is that full digital twin that I was talking about. We also have a great team that is developing construction dashboards that will provide key metrics for clients through the construction process so they can have real time visualization of how well that project is moving.

Speaker 1 [00:16:09] At the end of the day, someone’s got to pay for all this, and I’m guessing this can make things more expensive, not less, at least in the short term. How can we better come to grips with the cost pressures of greening buildings, whether they be new or old?

Speaker 3 [00:16:23] Yeah, I think that there’s no one solution to this. It’s great to see the federal government moving to projects where net zero is a focus, and I think that creates a nice sandbox for us to try new things and helps us to build some momentum around reducing the premium around green technologies. So if we can get governments to think about changing their specifications to use a low carbon concrete and create supplementary cementitious materials, those types of things, then that becomes an easier sell when we go to the private sector and say, Look, we’ve already done this on three projects before, we can do this on your projects as well.

Speaker 1 [00:17:02] So where are we going to get all the people to take this on? This sounds like a massive national construction project, all this retrofitting, and maybe that’s what it is. You’ve talked in very inspiring ways about the technology, but that’s also going to take a lot of people with new skills.

Speaker 3 [00:17:17] We really do have to think differently about where we are sourcing the people for our projects. We are starting to look at tapping into some schools that are training folks that weren’t traditionally in our trades, right? There’s a whole ESG requirement to look outside of our traditional pools of talent. So we’re working with groups that are retraining black, indigenous, bipoc people, women who have no training in the construction industry but have some skills and talent to bring. I think immigration is also going to be a key factor for us. There just aren’t enough people in Canada right now to fulfill the needs that we have, particularly on some of the mega projects that we’re building. So we need to be working with government to think about the types of people that we need to bring to Canada to help us accomplish this.

Speaker 1 [00:18:07] Judy, I wonder if I can wrap up this segment with a global question. Ellis on works in all parts of the world. What are you seeing in other countries, other markets that Canadians should be aware of?

Speaker 3 [00:18:19] I think the biggest difference in some of the markets where we work internationally is the speed at which projects can be achieved. We tend to run a bit slowly here in Canada and we’re a bit slower to adopt those new technologies. Some of the work that we are doing in the MENA region, MENA.

Speaker 1 [00:18:37] Middle East and North Africa, if I’m correct.

Speaker 3 [00:18:39] Yeah, that’s right. So some of the work that we’re doing there, they’re very ambitious projects, but when they decide to make a project happen, it happens very quickly. And there’s a boldness to their embracing of innovation and new technologies. I think we can learn from that. And I think if we can move projects to market faster, it’s to the benefit of the economy and all of us working in it.

Speaker 1 [00:19:04] Be fast, be bold. What a great message. Jody, thanks so much for being on disruptors.

Speaker 3 [00:19:08] Thank you.

Speaker 1 [00:19:17] Our last guest today knows a thing or two about consumer behavior when it comes to how we use and sometimes abuse our home and office energy. Jaime Gray Donald is senior vice president of sustainability at Quadrille Property Group. That’s a global real estate investment operating and development company based in Vancouver. Jamie, welcome to Disruptors.

Speaker 2 [00:19:39] Thanks, John. Great to be here.

Speaker 1 [00:19:41] Jamie, Let’s start with QuadReal. Not a household name to a lot of people, especially away from British Columbia. Give us a sense of the company and also what is driving it with sustainability.

Speaker 2 [00:19:54] Yeah, so QuadReal is wholly owned by a BCI that represents the public employee pensioners of B.C.. One of the ways that we help secure long term returns is the real estate investment. So we invest in office residential, retail and industrial in Canada and globally. And one of the things that we hear very regularly from the pensioners is how important sustainability is.

Speaker 1 [00:20:19] That’s a perfect point to kick off with, because real estate is by definition a long-term investment and climate is both a near-term and long term challenge. How do you explain to pensioners that you’re going to meet the pension obligations? That’s probably first and foremost in many of their minds and help the planet over a decades long journey?

Speaker 2 [00:20:39] Yeah, we’re in a very fortunate position that the pension obligations are met, so we’re above where we need to be on returns. But the next is really looking at long term risk and long-term returns. And what we see is that you need to invest in keeping buildings up to date. You need to invest in making sure they’re appealing to tenants. And carbon is just another way, both from a risk avoidance mitigation standpoint to make sure the buildings aren’t prone to flooding so they can handle extreme heat. And then also, more recently, tenants are looking to be in buildings that align with their net zero obligations.

Speaker 1 [00:21:18] And our tenants, I’m sure this varies by category, but generally willing to pay more for that.

Speaker 2 [00:21:24] Tenants are very rational. And so if we can time things so that this is, hey, we had to replace the roof anyway. Here’s a perfect time to put solar on it or in an office building. Hey, the domestic hot water needs to be replaced. It’s a little incremental charge to go for low carbon. They’re fully onside. The other is that the carbon tax helps. So while we might be paying a bit more now, we know that over the lifetime of that boiler, the numbers are going to pencil out pretty close. And we find people are very reasonable when you engage in the conversation saying, hey, the next two, three years you might be paying a little bit more, but six years from now you’re going to really thank us both from a values perspective and from a cost perspective.

Speaker 1 [00:22:14] I wonder if you can take us into a couple of examples. Jamie, Maybe we can start with Vancouver’s Park Place, which has gone through a retrofit. What were the key learnings from that?

Speaker 2 [00:22:24] So in Park Place, it’s a 700,000 square foot office building or had offices there. We done LEED, we’d done, you know, 30% energy reduction. We’ve done a lot of the low hanging fruit. We keen to do heat recovery. So instead of taking excess heat and cleaned up to the cooling tower, we put in the heat recovery chiller, which basically redistributes the excess heat within the building. It was anticipated to save, you know, 50 to 80% of our natural gas-powered steam that we use. It’s probably closer to 30 or 40%. And the big learning here is before you electrify, you need a lot of data.

Speaker 1 [00:23:05] I’m not sure I can recall a Disruptors episode where the word data didn’t come up, and it’s great that it’s coming up in one about construction and buildings. Jimmy, can you give us a deeper sense of both the data challenge and opportunity for a building’s investor and operator like Quadrille?

Speaker 2 [00:23:21] Typically, when you have no data for a building, you’re just paying your monthly utility bill and that’s it. And you move to interval meter data where you see the live data for your main electricity account. We usually see about a 10% reduction in energy when you move to sub meters. So each tenant in an office building or each tenant in retail paying their own bills, you get another 10%. And then when we add in live building automation system data and emerge that with really granular energy data, you can save another 10%. So you’re looking at 30% really from how engaged are you in managing the building and have you lined the incentives of everyone in the building towards conservation?

Speaker 1 [00:24:07] I imagine this immediately leads you into AI conversations. And Jamie, I’m curious where Quadrille is thinking in terms of the. Power of I and what I can do in this space.

Speaker 2 [00:24:19] Yeah great question about I. So we think that’s the future for now. Buildings are quite complicated and each building’s a bit different. A.I. works really well when you’ve got the same thing happening over and over again. So we found it very effective to get a lot of data and then have an engineer look at it. But we haven’t, with success, handed over the keys to an AI system and said, Do it for us. We imagine that future and we’re getting all the pieces in play to get there. But I think it’ll be another 5 to 10 years before we really get AI in buildings. I think there are lots of other applications that come first.

Speaker 1 [00:24:58] In the meantime, we’re going to rely heavily on human behavior. What sort of tricks are you seeing in terms of nudging different kinds of behavior, whether it’s tenants in an apartment or occupants in warehouses or shopping malls?

Speaker 2 [00:25:12] Yeah, my background is I have a Ph.D. in environmental education. So I had this belief that if you just gave people the knowledge, their behavior would change. But really, it’s social norms play a major part of it. And so we’re really focusing on reinforcing that. Sustainability in all its forms is a social norm. Conservation, recycling, turning lights off. I think that really creates the groundwork. What we see on energy is if people see the impact of their actions, they tend to do something about it, particularly if the impact is financial. So we see in residential units when the lease turns over and there’s a new person in the space, they’re using typically 40% less energy than the person who was in that suite before. They know they’re paying the bill and so they’ll turn the lights off. They won’t leave the windows open all the time in the middle of winter. There’s just a real personal responsibility that takes hold. And I think people want to do sustainability stuff, but you need feedback. And if you don’t have feedback, it’s hard.

Speaker 1 [00:26:21] That’s remarkable. The power of pricing. We started the podcast talking about the footprint of the build sector. It’s significant, but it’s really exciting to hear about the progress that’s being made, but also the opportunities right before us as we move towards close. Jamie I wonder, recognizing the scale of this challenge, what message you would want to leave Canadians with?

Speaker 2 [00:26:44] I think we’re at a very exciting time where we have 20 years of work on sustainability. That is really just the groundwork we’ve made 2030 present progress, but we’ve created capacity, industry and innovation. I think we’re going to double that progress by 2030 and it’s exciting. It’s a fun place to be. And then the last I’d say is there are a lot of really good jobs coming in, retrofit of real estate. These are good paying middle class jobs that are accessible to a range of people, and it’s going to be a really big employer. And I think that’s going to be exciting for Canada. A lot of good jobs and good places that people can feel great about.

Speaker 1 [00:27:31] What a great message to end with. Jamie, thanks for being on Disruptors.

Speaker 2 [00:27:35] Thank you, John. My pleasure.

Speaker 1 [00:27:40] I’d like to thank our guests Ken Petersen of P2S, Jody Becker of Ellis Don and Jamie Gray-Donald of QuadReal. What a great conversation. As Jody said, we need speed and we need to be bold, but we also need to be mindful about the fact that this is a transition. There’s no single technology, no single change that is going to get us there, frankly, in any sector, but particularly in the buildings sector. Ken laid out the challenges, but also the choices we’re all going to need to make and we can make as consumers in the years ahead. But we need to make them thoughtfully. And as Jamie said, we need to make them data informed. We don’t have enough data in terms of how we operate our buildings, whether it’s our houses or apartments or offices or shopping malls. They give us real time information that lead to smarter decisions, both in what we’re doing in the moment and what we’re investing in for the future. This is truly a national challenge and it’s also a household challenge. There’s opportunity for us all to do more today or this summer where we work, where we live, where we play to help Canada move closer to net zero, particularly with the buildings that are such critical parts of our lives. Who knows? Maybe this can be the great Canadian Rainbow Project. Join us next time for part two of our special series on Greening Canada’s build sector. We’re going to look at new builds and the new technologies, techniques, designs and innovative materials that are going to help us build a more sustainable future. Until then, I’m John Stackhouse. And. This is disruptors, an RBC podcast. Talk to you soon.

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