Making the case for better building code adoption

Building energy codes that reduce energy use and emissions in new buildings are urgently needed to avoid locked-in inefficiencies and emissions that place Canada’s climate neutrality objectives at risk. They also offer an opportunity to:

Despite the many benefits available to all, the benefits building energy code adoption can deliver aren’t clearly understood. As a result, misunderstandings or poor perceptions about the advantages of building energy code adoption can be a significant barrier to building support for model code adoption.

The section serves to highlight common objections to the adoption of more stringent building energy codes, including the 2020 model codes, and how to counter those objections. 

Capturing the multiple benefits of energy efficiency

Buildings as climate action

Canadian residential and commercial buildings have seen significant reductions in reducing energy use over the last several decades. Despite these gains, energy demand and buildings related emissions are expected to rise. Over the next 40 years this would account for half of the remaining 2°C carbon budget and twice what buildings emitted between 1990 and 2016.

Clearly our buildings, the energy they consume and emissions they produce, are affecting our changing climate. A massive reduction in GHG emissions is needed to mitigate the future impacts and costs of an increase of this scale. The buildings sector has a large role to play in achieving these reductions.

The role building energy codes play in climate resilience

Improved air quality

Improved air quality

By protecting occupants from airborne particulates and using controlled ventilation practices better building codes lead to reduced levels of air pollutants indoors and keep occupants sheltered and reduce incidents of illness like asthma.

Adaptable and resilient communities

Guided by stringent building energy codes, communities can use public buildings with energy efficiency measures such as envelope and ventilation strategies to keep occupants safe in the event of wildfires and other disasters.

Energy security

Energy security

Passive design strategies offer owners energy security by providing a level of protection against rising energy costs in the future

Workforce development begins with building energy codes

Today, industry leaders are delivering NZEr buildings across the globe with existing technology. In cold climate countries such as Austria, zero-energy buildings (ZEBs) and even positive-energy houses now make up upwards of 25% of new construction.

Nonetheless here in Canada technical capacity, the term used to describe the knowledge, training, experience, and systems needed to construct NZE/NZEr buildings, or to apply various energy efficiency measures, is an oft-cited barrier to national model code adoption.

Building workforce capacity is, however, a chicken and egg problem. Rather than slow adoption of stringent building energy codes because of concerns related to capacity, we need stringent energy codes upon which businesses and individuals can make investments in innovative products, processes and workforce up-skilling.

Workforce development begins with building energy codes

In this way, better building codes are the primary tool by which we build capacity. As advocates, we need to push for the adoption of the proposed model codes. Doing so will lay out the schedule for moving to NZER and provide industry the roadmap needed to prepare the buildings sector workforce.

Call on your province to build capacity

Advocates can help to reduce concerns related to technical capacity by calling for clear and consistent guidance materials from the federal and provincial/territorial governments. 

The tiered approach to the proposed 2020 model codes provides ample time and opportunity to set a schedule that will prepare the workforce to deliver NZEr buildings at scale. Following the example of the BC Energy Step Code, plain-language technical requirements and code compliance requirements are an ideal way to prepare those in the sector to better understand their part in delivering better performing buildings.

This also includes training and knowledge sharing systems for designers and trades in areas such as energy modelling and airtightness testing as well as demonstrating how increased performance requirements are to be achieved. Many municipalities have approached the need to increase technical knowledge and competency for builders through Builder Breakfast series and partnerships with organizations such as Passive House Canada or local Zero Emissions Building Exchanges that help deliver training on ultra-low energy and zero emissions construction. 

Tailoring training to each specific audience will help foster an understanding of the expectations of the code prior to code adoption and after the code is in place.

Building a high-performance economy

Both the owners and occupants of efficient buildings benefit from greater comfort and a healthier environment, higher appraisal value, and energy related savings for the life of the building. Nonetheless, the costs of energy efficiency and the impact those measures may have on affordability is often used to fight against the adoption of building energy codes.  

The BC Energy Step Code is Canada’s first implementation of a tiered code, and as the region having mandated the highest levels of performance compared to other Canadian provinces and territories, the BC Step Code provides an illustrative example regarding the costs of better performing buildings. 

In a recent review of ten costing studies of all building types they found that cost estimates varied considerably. Considering construction costs alone (versus upfront costs such as land and development costs for example) they found a range of incremental capital costs of:

      • Between 0% and 1.5% for Step 1, which includes modelling energy performance and measuring airtightness to ensure that the building will meet or exceed the minimum energy-efficiency requirements in the base BC Building Code, and 
      • Between 3% and 10% for Step 4, a 40% increase in building energy performance over the BC Building Code.
Incremental capital cost estimates by step (all buildings, Climate Zones 4&5)

Cost differentials are due in part because the estimates of improved building energy performance are often based on making energy efficiency an add-on rather than an integrated part of the building. Nonetheless, it illustrates that even in the early stages of a market transformation to NZEr, high performance buildings can be delivered at similar costs to today’s code-minimum buildings. Particularly, when using integrated project delivery and other optimization processes. Increased energy performance mandated within building energy codes, especially within tiered codes, can help make these practices the market norm.

Moreover, stringent building energy codes – backed by compliance enforcement that verifies designed energy performance – helps to ensure that building owners and homeowners are not left with higher operational costs, structural issues related to moisture, and other issues affecting occupant comfort and health. Solving these problems through retrofits is more difficult and costly. Building codes ensure that those who actually use the buildings are not stuck with higher cost and lower quality homes and businesses.

Costing studies: Variables that must be considered

When costs are brought forward to argue against building codes, one strategy is to suggest an evidence-based costing study – but the study must have the right methodology. Here are some guidelines for how such a study should be designed.

At minimum, an effective building costing study should include

      • Comparable building archetypes and design,
      • Region and climate zone conditions as well as specific local conditions,
      • The regulatory context, i.e. the building code tier or required level of performance,
      • Define how efficient the proposed building is compared to a reference building
      • Use metrics for comparison such as TEDI and TEUI for comparison.
      • Identify the incremental capital costs (e.g. $ / square meter).

Other questions to ask include: 

      • Did the study optimize building design for lowest capital cost? GHG abatement? Lifecycle energy and carbon costs?
      • Did the study apply integrated design principles or integrated project delivery?
      • Were there other relevant assumptions?

Beyond energy efficiency, other variables may include: the cost of labour in your local markets; whether or not those with the appropriate technical capacity were available; whether or not local and global supply chains can deliver the needed materials; the state of regional construction practices; and, the price of commodities, for example copper, a material commonly used for electrical wiring and in copper pipes used for the plumbing or HVAC. These factors change as markets change. They can be higher in the short-term and changed through policy, and thus should not be used as a rationale for more efficient buildings costing more.

Efficiency measures: baked in or clamped on?

The best time to enhance the performance of a building is in the design stages when energy efficiency measures can be built into each and every aspect of the building. When energy efficiency measures are baked into the design process, rather than as post-hoc add-ons, the cost of these measures is greatly reduced. This means that when comparing the costs of a code-minimum building and a high-performance building, energy efficiency must be a primary consideration from the outset. 

This will be reflected in the simplicity of the building’s form and shape, the orientation of the buildings, optimally placed and sized windows, enhanced insulation levels and more. And, as designers and builders become more familiar with new technologies and processes, those measures will become standard features that no longer demand a premium.  

Consider real returns and reject traditional payback periods

Energy efficiency measures, such as those within the national model codes, are often expected to pay for themselves within a relatively short payback period. This payback period can be as short as 5 years even if the energy efficiency measures considered have a much longer useful life. For instance, building envelope measures like enhanced airtightness or increased building insulation levels demand a longer payback period as they can be expected to maintain their designed performance levels for decades to come with little or no degradation.

In this way, short payback periods and a limited financial perspective of energy efficiency measures in new buildings, including many found in the national model codes, become undervalued despite the benefits they deliver.

To better evaluate the feasibility of energy efficiency measures contained within the building energy code, the following approaches can be taken:

1. Re-evaluate typical simple payback calculations used to calculate the number of years required to pay back the cost of an energy efficiency measure.

    • The payback of a given measure is determined by dividing total capital expenditures by annual cost savings. 
    • Generally, this includes savings realized via lower monthly energy costs. 
    • A more robust simple payback method can include any capital costs associated with business-as-usual processes. For example, if insulation levels are to be increased only the additional insulation materials and the resources associated with its installation would be added to the cost of the conventional wall assembly. 

    2. Make use of robust financial metrics such as Life Cycle Cost Analysis (LCCA) 

      • LCCA is the financial analysis of all costs and benefits over the life of the project, in this case, the lifetime of the specific energy efficiency measure. 
      • LCCA  can be presented using common financial metrics such as Net Present Value (NPV) – the difference between the present value of cash inflows and the present value of cash outflows at a future time.- and Internal Rate of Return (IRR) – the annual rate of growth an investment is expected to generate.
      • A more accurate LCCA includes all benefits that can be monetized, including energy cost savings over an appropriate time horizon.

      3. Include non-energy benefits where appropriate

        • Non-energy benefits can include reduced maintenance costs, lower mortgage premiums, as well as lower insurance costs for specific energy efficiency measures that reduce risk while increasing resilience to climate impacts.

      4. Apply the Total Cost of Building Ownership (TCBO)

        • Evaluate the whole building and its performance. This holistic approach includes evaluating the useful life of the building, and includes all the costs of building ownership such as mortgage interest, utility costs, maintenance, GHG emission tax, property tax, insurance.

      Don’t stick building owners with high operational costs

      Whether or not an energy efficient building in and of itself costs more than one built to the code-minimum standard is the source of much debate. However, it is important to remember that how much a given energy efficiency measure might save must also be considered. 

      For example, increasing insulation levels in the building’s walls and moving from a double pane window to a triple pane window will increase the cost of constructing the building envelope. Nonetheless, these measures drastically reduce uncontrolled air flow and heat loss. This means that the building’s heating and cooling equipment can be reduced leading not only to more affordable capital costs, but also long-term reductions in the energy used, and paid for, to heat and cool the building over its entire lifetime.

      Avoid costly retrofits down the road

      Another consideration that makes energy efficient residential and commercial buildings more affordable than those not constructed to current codes is future retrofits. Building to stringent energy standards today, means costly retrofits can be avoided down the road.

      Within the 2020 model codes there is an emphasis on passive measures such as increased insulation levels and improved thermal resistance of windows. These can be considered long-lasting measures that are difficult and costly to make after a building is constructed. Taking advantage of passive measures that improve the building’s core systems helps building owners avoid costly future building retrofits and maintain affordable operating costs in the face or rising energy costs.

      Tiered codes: Clear regulation versus more regulation

      Stringent building energy codes may be perceived as increasing the regulatory burden for those in the buildings sector thereby making it more difficult and more costly to do business. However, Canada’s 2020 model codes are a tiered code that increases the level of energy performance required at each progressive tier. The end-goal of the tiered code is to have all new buildings constructed to the NZEr standard by 2030. 

      This clearly defined roadmap creates a new level of consistency and predictability across provincial and local governments. With a stable and predictable regulatory environment that provides clear timelines for future updates businesses can confidently invest in and develop products and skills to meet the next steps in requirements

      In effect, the regulatory path for new buildings will be set for the coming decade. This is an incredible opportunity for:

          • Governments to focus their social, environmental, and international trade investments over a longer time-horizon. 
          • Developers and builders and others are able to make long-term investments in their workforce and equipment that capitalizes on a foreseeable and predictable set of future regulatory requirements. 
          • Manufacturers can re-tool existing product lines or innovate new products and technologies based on sound forecasts backed by a predictable regulatory path.
          • New workforce opportunities as those already in the sector up-skill and new entrants join the sector.

      A clear example of how building codes can stimulate the Canadian economy is provided by BC’s Energy Step Code (adopted in 2018). A recent study by the Vancouver Economic Commission found that increased market demand for high-performance building products and technologies – a direct result of the new Code –  is forecasted to be a $3.3 billion market for the Metro Vancouver region alone between 2019 and 2032

      Building energy codes such as Canada’s NZEr model codes are an ideal vehicle by which governments at all levels can deliver immediate benefits and prepare long-term clean-economy growth. They help drive energy efficient new construction and create market demand for a range of high-performance building products and innovative products and assemblies. This will, in turn, attract investment and create new opportunities and skilled jobs in Canada’s clean-growth economy.

      Model codes: Paving the way for the retrofit economy

      Building energy codes that improve the performance of new buildings are an ideal way to introduce the skills, techniques and processes needed to retrofit Canada’s aging building stock. Stringent energy codes for new buildings, together with building energy labelling, workforce training, and a robust compliance regime can set the stage for the retrofit economy, backed by the Alterations for Existing Buildings code.

      Canadian buildings are expected to last for 50 years or more. New buildings constructed to stringent building energy codes help to avoid locking in decades of inefficient building performance. All the same, it will not be possible to achieve the deep emissions reductions needed to achieve Canada’s mid-century climate ambitions without addressing existing buildings. 

      Connecting the dots between model codes for new and existing buildings

      The adoption of stringent energy codes for new buildings can accelerate the development and adoption of a model code for existing buildings. This is because, a model code for existing buildings will follow much of the same path as its new building counterpart. And, although it can be expected to encounter many new challenges, the development of a model code for existing buildings can be expected to take advantage of the people and processes guiding our current model code development process. 

      These advantages include:

          • A streamlined development cycle.
          • A more comprehensive understanding of the building science and the appropriate levels of energy performance.
          • Informed networks of building code practitioners ready to deliver training, capacity building and the sharing of best practices and lessons learned.
          • An effective compliance regime that places energy on par with building code priorities.

      Overcome politics with a broad coalition

      Model code adoption can become quickly politicized. Too often this makes building broad support for measures that reduce energy use and emissions as well as minimize the environmental impact of the building sector unnecessarily challenging.  

      To counter such resistance, model code adoption advocates should consider advocating their provincial or territorial government to create a Model Code Adoption Council to encourage multi-stakeholder collaboration to support code adoption. This group can follow a model similar to the approach taken in BC with the Energy Step Code Council. The council takes a “big-tent” approach that represents stakeholders from a variety of backgrounds and focuses on the “how” to transform the buildings sector rather than the “why.” 

      You can build a similar coalition of stakeholders that is invested in the successful adoption and implementation of the model codes. An effective council can act in the following ways:

          • Bring together all involved in the building sector, including elected and government officials, developers, builders, building professionals and trades, municipal building officials, climate activists, municipal staff, and anti-poverty organizations.
          • Create and share tools for training and knowledge sharing to demonstrate that the public and industry wants their provincial and territorial governments to adopt the model codes.
          • Serve as a technical resource to facilitate model code adoption and to resolve technical issues.
          • Share the perspectives of all stakeholders and demonstrate the connections between better building codes and stronger, healthier, and economically competitive communities.

      Your Model Code Adoption Coalition can help to minimize resistance to the adoption of more stringent building energy standards based on technical capacity, as well as affordability and cost concerns and demonstrate that your municipal, provincial, or territorial market can capably design, construct and verify the performance of high-performance buildings. 

      This project was made possible with funding from The Atmospheric Fund (TAF)

      © Efficiency Canada 2021

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