Key Elements of the Pathway to Net-Zero Ready Buildings

*Content Courtesy of  Pembina Institute

From the experience of these three jurisdictions (California, Washington and the European Union) and discussions in the literature, some key policy initiatives emerge as promising practices to enable a timely transition to net-zero ready buildings in the Pacific Northwest.  These policies aim to provide both sticks and carrots: setting regulatory requirements for better energy efficiency and increasing market demand for energy efficient buildings.

 

1. Set vision and targets
This includes a clear definition of the desired goal (e.g. net-zero energy, near net-zero energy,
passive house, carbon neutral, percent better than baseline), associated metrics (e.g. site energy,
source energy, carbon intensity) and target years. Target years can differ based on sector, as is
the case in California (commercial vs. residential) and Europe (public vs. private). The vision
could also include plans for the renovation of the existing building stock. Defining a metric
with a fixed baseline is helpful in measuring progress and setting interim targets.

2. Develop an energy code road-map
Setting a transparent and predictable road-map outlining how energy codes will evolve to
meet these targets allows industry and institutional actors to adequately prepare and plan for
code changes, minimize surprises and increase cost effectiveness. It also allows manufacturers
of building components to foresee demand for energy efficient products and prepare to meet
market demand.

3. Develop opt-in stretch codes
Stretch codes offer one or several tiers of performance requirements beyond the current base
code. They are generally used as criteria for incentives or rezoning policies. Stretch codes, such
as California’s CALGreen, the two-tiered Toronto Green Standards or the City of Vancouver’s
Green Rezoning Policy and Higher Building Policy provide consistent guidelines for “beyond
code” incentives. A set of provincial “opt-in” stretch codes would allow local governments
to have a shared basis to set rezoning polices, and possibly to adopt as base codes. This
consistency would decrease development and construction costs and facilitate administration
and permitting processes. By offering incentives to leading developers and builders to set a path for
the rest of the market, stretch codes can increase the pace of base code energy efficiency
improvements. Basing future base-code performance level on levels set and tested under stretch
codes increases the predictability and transparency of code changes.

4. Improve energy code compliance
Because building code compliance has historically focused on health and safety issues,
many jurisdictions acknowledge that compliance with commercial energy codes is seldom
achieved and only enforced sporadically. Recent audits in New York City found that over
90% of building plans examined failed to meet the energy code. Minimum training and
ongoing education for building officials is a central aspect of code enforcement, which is being
addressed in BC by the recently introduced Building Act.lvi As performance-based compliance
using energy models becomes more common, adopting standards for energy modelling
and ensuring third–party verification of energy models can also contribute to improving
compliance and streamlining permitting processes.

5. Provide incentives and innovative financing solutions
Well-designed incentives can offset some of the incremental costs and risks associated with
higher energy efficiency and motivate developers to go beyond code and adopt stretch targets.
Incentives may include cash incentives from utilities, reductions in development cost charges,
accelerated permit processing, rezoning and density bonuses. Alongside incentives, innovative
financing models can help offset some of the incremental costs of higher performance. This is
particularly needed when the developer is not the long-term owner of the buildings, “splitting”
the financial incentive to invest for long-term energy savings. The split incentive barrier could
be addressed through on-bill (or on-property tax) financing through transfer of some of the
12 Pacific Institute for Climate Solutions
incremental cost to the strata council. Both of these financing mechanisms would allow
developers to transfer some of the initial costs to the party who will benefit from the savings.

6. Benchmark, report and disclose building energy performance
Energy bench-marking provides building owners with a platform to track the energy
performance of their buildings over time, and compare them to buildings with similar
function, size and climate. This provides building owners a unique tool to identify
under-performing buildings; the simple act of tracking energy performance on a regular basis
has been shown to reduce energy use on average 2.4% per year.4
Reporting of that data to government agencies provides intelligence on the performance of new and existing buildings,
which is necessary to assess the impact of energy codes and to target incentive programs.5

In addition, public disclosure of bench-marked data, by making energy performance visible to
consumers and real estate actors, can be a key factor in accelerating market transformation for
high performance buildings. A study by the Market Transformation Institute estimated that
implementing a US-wide reporting and disclosure requirement could reduce energy use in
the US by over 50,000 GWh per year, reduce energy costs by $3.8 billion per year and create
59,000 jobs by 2020.

Two states, one county and 13 cities in the United States have adopted mandatory
bench-marking policies for larger commercial (and sometimes residential) buildings.lxi Seven of
these require the bench-marking results to be disclosed on a public website.

7. Require building commissioning
Building codes assume that each system and piece of equipment works as intended. Research
has shown that this is seldom the case. Building commissioning is a quality assurance
process that spans the entire design and construction process, helping ensure that the new
building’s performance meets design expectations. Review by the Lawrence Berkeley National
Laboratory of 649 commissioning projects covering 100 million square feet of floor space
reveals that commissioning identified over 10,000 energy-related problems, resulting in 16%
energy savings in existing buildings and 13% in new construction with a payback time of 1.1
years and 4.2 years, respectively.lxiv In addition to the operating cost savings, the study shows
that significant first-cost savings (e.g. through right-sizing of heating and cooling equipment)
routinely offset a portion or all of the commissioning costs.