There’s a new kind of building going up in an old East Vancouver neighbourhood. An eight-storey, 85-unit rental housing development is nothing new for a city that is constantly being torn down and built higher, but an apartment here comes with a perk.

“You could technically heat that apartment with a hairdryer,” says Ed Kolic, the developer behind The Heights, the new Passive House-certified development. When completed, it will be the biggest of its kind in Canada; globally, second only to a new building in New York.

Low-energy houses like this could make a serious dent in Canada’s carbon emissions, cutting up to 2.7 per cent from the total, while simultaneously becoming an engine for economic growth.

“In all of the climate change literature globally, the quickest and fastest way to take action on climate change is to look at the energy use in buildings,” says Charley Beresford, director of the Columbia Institute.

The federal budget, released Tuesday, provides nearly $750 million for investments related to energy efficiency.

“It’s quite a refresher from a Harper budget,” says Karen Tam Wu, director of the Pembina Institute’s buildings and urban solutions program. “What we want to see is, how will the government take the dollars that have been allocated to energy efficiency in buildings and actually incentivize uptake of green buildings at an accelerated rate?”

The largest single pot of money to come out of the budget for these improvements is a $573 million commitment to improve the energy and water efficiency of social housing over the next two years.

“We’re going to have to scale this to major energy upgrades across the country, so by focusing on a social housing initiative, it’s a great way to pilot this idea at a smaller scale,” Tam Wu told DeSmog Canada.

The government has earmarked $128.8 million for Natural Resources Canada to ramp up its energy efficiency standards for products, buildings and vehicles.

A further $40 million will go towards improving the climate resiliency of buildings — meaning buildings like Kolic’s, with their insulation-focused design, may come into fashion in places that are facing intensified winter storms, such as Eastern Canada.

Provincial Governments Lag Behind in Regulations

But provincial governments, with a few exceptions, haven’t yet provided the mechanism that would allow municipalities to push their residents toward more efficient homes.

The Columbia Institute released a report last week calling for provinces to make it easier for municipalities to provide up-front cash for homeowners to retrofit their homes.

If home energy retrofits sound like an un-sexy way to fight climate change, wait until you hear the name of what could be the best shot at achieving that: Local Improvement Charge (LIC) enabling. Despite the name, though, it’s a powerful tool.

Basically what LIC means is that municipalities can loan homeowners the money to improve the insulation in their homes, then gradually make the money back through increased property taxes. It’s an existing system that local governments use to make other improvements, like fixing a sidewalk, then recouping the cost from the people who benefit.

In Halifax, where an LIC program has been piloted, 388 homeowners saved an average of about $14,000 over the lifespan of their new systems (about 25 years). A similar program in Nelson, B.C., (albeit with repayments going to the electrical bill rather than property taxes) resulted in 35 per cent less energy use for the retrofitted homes; nearly 40 per cent of them took advantage of loans to do it. And Manitoba Hydro claims to be on track to retrofit a whopping 86,992 homes by the end of the year under its 15 year-old Power Smart Residential Loan program.

Retrofit Investments Deliver Bang For Buck on Jobs

In return, the municipalities get to help meet their climate targets — but there’s evidence for another benefit to supporting green building projects. Depending on which study you read, for every million dollars invested in building retrofits, somewhere from between 13 and 17 jobs are created. That’s compared to about five jobs created for every million dollars invested in fossil fuel projects.

A report commissioned by Natural Resources Canada, Energy Efficiency: Engine of Economic Growth in Canada, found that savings on heating costs meant that for every dollar invested in energy efficiency, another $3 to $5 would be added to the economy. Overall, the report says, this could mean hundreds of thousands of new jobs in multiple sectors as the savings make their way through the supply chain.

There’s another way all levels of government can take advantage of efficiency gains, Tam Wu says.

“What all levels of government should be doing is leading by example,” she says. “And that’s what we want the provincial government to do, by setting a bold target for what level of emissions reductions we can achieve through our buildings.”

Municipalities Lead the Way on Efficiency

Regulations have been moving faster at the municipal level. Vancouver, for example, requires that to rezone a lot for a new development, the proponent has to build the new building to demanding LEED Gold or Passive House standards. Even remote Bella Bella, where most of the electricity comes from diesel generators, a new modular building Britco built in the Lower Mainland and shipped to the Central Coast community takes the energy equivalent of six light bulbs to heat.

“[Britco] had never done that before,” says Tam Wu. “That kind of energy savings just totally makes sense in remote communities.”

The private sector overall seems ready to respond to increased demand, and that demand has shown to be easily created by incentives from all levels of government.

In Brussels, which developer Kolic cites as inspiration for his Vancouver development, new EU regulations forced the city to get serious about efficiency. With new funding and the spin-off businesses that created, Brussels quickly went from hopelessly inefficient and outdated to having 5,000 new buildings meet the Passive House standard.

“It went from having the worst standard of energy efficient buildings to becoming a world success story within a period of ten years,” Tam Wu says.

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The Canadian Association of Petroleum Producers (CAPP) is asking the Harper government to consider reclassifying liquid natural gas (LNG) terminals as ‘manufacturing assets’ to provide tax breaks to companies struggling to develop costly facilities in the current oil market.

The oil and gas industry requested similar measures for both previous federal budgets but has so far been unsuccessful. The upcoming budget, however, is under the control of finance minister Joe Oliver, know for his strong support of the oil and gas sector during his time as the former minister of Natural Resources Canada.

In a budget submission to the House of Commons Standing Committee on Finance, CAPP requested “improving Canada’s taxation and regulatory regimes” and noted the federal government can assist industry “by establishing a competitive tax climate to attract investment [and] maintain an effective and efficient energy regulatory regime,”

If granted, the tax breaks – which would allow companies to forego paying 30 to 50 per cent of capital costs per year – could cost the federal government hundreds of millions of dollars.

A Natural Resources Canada memo released to Reuters through Access to Information legislation says the department “understands the need for clarity on the fiscal environment for LNG facilities to support final investment decisions.”

“We have examined CAPP’s proposal…and continue our discussions with the department of finance on the matter,” the memo reads.

The department of finance is expected to release the next federal budget this spring. Major budgetary decisions are made in consultation with the Prime Minister’s Office.

According to Reuters CAPP estimates the tax breaks would add roughly $3 billion to Canada’s gross domestic product from 2015-2035.

B.C.’s fight to fulfill LNG promises

The B.C. Liberal government and premier Christy Clark have made the development of natural gas and the export of LNG a key part of the province’s clean energy platform and economic strategy.

In 2010 the province committed to having one LNG terminal on line by 2015 with three more to follow by 2020. The province eventually updated that commitment to three LNG facilities in operation by 2020.

There are at least 18 LNG terminals proposed for the B.C. coast although a new report recently speculated only two plants will be built due to an “anxiety attack” resulting from plummeting oil prices.

None of the proposed projects has secured full and final investment from sponsors leading firms to predict B.C. may only manage to bring one project on line by 2021, followed by a second in 2023.

Despite the challenges, the B.C. government says they are still on target to meet their current 2020 goal.

B.C.’s minister of natural gas and development, Rich Coleman, admitted in October that his office, along with officials in Alberta, is pushing the federal government to approve the LNG tax breaks. “We’re cooperating with Alberta to try and get this issue raised,” Coleman told Bloomberg.

Colman indicated that B.C. has been vying for a more favourable tax regime for LNG since 2012, but has increased its efforts in the lead up to the 2015 budget because of an increasingly open federal environment.

“There’s nothing concrete, although there is more interest in having the conversation around this tax than there’s ever been,” he said.

B.C. has already introduced two provincial tax breaks for LNG companies. In October the B.C. Liberals announced an LNG income tax rate of 2.5 per cent, down from the former 7 per cent. In addition the province also introduced a new program that will allow companies to drop their corporate income tax rates to 8 per cent, down from 11.

In December Malaysia’s Petronas and its Asian partners, backed away from a proposed LNG terminal, citing low oil prices and high building costs.

The company is part of the B.C. LNG Developers Alliance along with Royal Dutch Shell, BG Groups and Chevron. The Alliance recently petitioned the federal government to support the tax break.

According to federal lobby records, Petronas has been actively lobbying a number of federal departments to solicit support for the new tax regime. Records show Petronas lobbyists engaged in discussions related to the “competitiveness of Canadian LNG projects” and “the appropriate tax policies to support LNG development in Canada.”

Petronas has been pushing the federal government to relax LNG taxes for months.

Given the poor economic environment and B.C. late entry to the LNG market, companies like Petronas – and their main investors – appear to be waiting for a friendlier financial environment.

In a recent report the risk-management consultancy firm Eurasia Group said, “monitoring both oil prices and cost mitigation in coming months will be crucial to determine whether Petronas could still take its investment decision in 2015.”

“If not, it will be unlikely that B.C. would see major LNG production from a mega project before 2020.”

Cuts will cost taxpayers

According to Kin Lo, associate professor at the UBC Sauder School of Business, the change in tax law will ultimately end up costing taxpayers.

“The significance from the federal budget and the taxpayers’ point of view is that [these tax breaks] really can lead up to a lot of money coming, really, out of taxpayers’ pockets.”

“I think companies are pushing for this because they are in a way obligated to in terms of maximizing value for their owners and shareholders,” Lo said. “From their point of view they should try to get this beneficial change in the tax law that would favour them.”

“As to whether it’s justified – that’s a completely different question,” he added.

Reg Plummer, a senior economist recently retired from Natural Resources Canada, told Reuters the tax breaks would mean major losses for the federal treasury. He added the push for LNG development may also raise questions about Canada’s commitment to phase out fossil fuels.

“Finance (department officials) would be looking hard at that because these are serious bucks we’re talking about,” Plummer told Reuters. “It’s sort of helping out (companies) a little bit with some risk, but it’s not going to be a make or break for them.” 

Image Credit: Province of B.C. via Flickr

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Finance Minister Jim Flaherty’s 2013 federal budget might be heavy on jobs, but critics say it’s light on detail and almost silent on climate change.

The only real mention of the issue of climate change in the 450-page Economic Action Plan comes in the form of a grant of $325 million over eight years to Sustainable Development Technology Canada "to continue support for the development and demonstration of new, clean technologies that create efficiencies for businesses and contribute to sustainable economic development.”

Clare Demerse of the Pembina Institute points out that the investment is less than half the amount “recommended by a coalition of environmental groups, including the Pembina Institute, but this long-term commitment is still good news for the more than 700 clean technology companies that Analytica Advisors estimates are operating in Canada today.”

Indeed, the budget presents a rather sunny description of last year’s controversial changes to environmental assessment and protection but doesn't provide any detail regarding how it plans to move forward. 

To maximize the value that Canada draws from our natural resources, Economic Action Plan 2012 introduced significant system-wide improvements to achieve the goal of ‘one project, one review’ in a clearly defined time period, streamlined the review process for major economic projects, enhanced consultation with Aboriginal peoples, and strengthened environmental protection and pipeline and marine safety.

One big loser in this year’s budget is Fisheries and Oceans Canada, which will suffer “targeted savings” rising to $33 million per year by 2015-2016. The budget promises to focus more on local organizations to take up the slack with budget hike of $10 million over two years. 

Policy critics Scott Clark and Peter DeVries write that the budget “like most of the budgets since 2006, is remarkable for its lack of vision and boldness. There is no narrative that sets out the longer-run economic and social challenges, and there is no discussion of how these challenges are interrelated.”

Clark and DeVries criticize the document’s “clear lack of transparency and accountability” and predict another omnibus bill like the one that introduced last year’s Bill C-45 and C-38, prompting nation-wide protests.

“When a budget says, ‘the government will introduce legislation as needed to consolidate operations and eliminate redundant organizations’ best to be nervous,” they say.

In his Huffington Post blog, Liberal leader Bob Rae called the budget a “political smoke screen, replete with gimmicks designed to convince Canadians that the Conservatives, somehow, are in fact balancing the books.”

Meanwhile, Green Party leader Elizabeth May told the CBC, “I want to see the final budget numbers, because this strange document doesn’t actually give us the budget. It doesn’t show us the base budget for departments. It doesn’t show us what happens to the bottom line, so announcements that are made are in something of a vacuum.”

Image credit: Joshua Sherurcij via Wikimedia

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