By Michael Assal
Special to Ontario Construction News
Addressing climate change due to carbon emissions, now a national as well as international priority to save the planet, we must change how we live in numerous ways. Expanding renewable energy generation capacity to replace fossil fuels and switching to electric vehicles immediately come to mind, however there is one major area of energy consumption representing close to 40 per cent of Canada’s energy consumption and 13 per cent of our carbon footprint1 that needs more attention – building high-performing energy efficient or “green” buildings that should be considered a “low-hanging fruit” target.
The problem is that implementing change in buildings is slow due to the glacial pace of implementing higher energy performance standards (particularly in North America) via the Building Code. There is an inherent inertia in the construction sector that is by nature slow to innovate and well known to be “late adopters” of new materials or methods. Even more frustrating to advocates of high-performance buildings is the fact that the slow pace of change is compounded by the extended time it takes to design, permit, and build.
Innovation in new construction experience – Passive House Karen’s Place
In 2013 Ottawa Salus Corporation, a non-profit dedicated to providing life changing housing and support services to people living with serious mental illness, invited me to attend a concept design session for their new residence that was in the conceptual stage of development.
My firm’s experience in completing the innovative EcoCite on the Canal, a 26-unit apartment building that was built to LEED Platinum standard in 2009, gave me valuable insights into the kind of planning and builder engagement necessary for successful realization of a high-performance building. EcoCite was unique in that it included fourteen 600 ft deep geothermal wells as part of the heating/cooling strategy in combination with a high-performing envelope.
During the session, a broad discussion about the desired program and sustainability of the building to support Salus’ long-term goals ensued. When I suggested focussing on the building envelope to achieve a higher performance, the director Lisa Ker raised the idea of building to Passive House standard.
I had heard of the term, but admittedly was not properly up to speed on the philosophy and practices. Fortunately, the participating architects, CSV Architects, were, and their description of the envelope performance-centric approach mirrored the advice I had been giving my clients to getting the “best bang for the buck” to make their new buildings more energy efficient and to capture the resulting improved operational cash flow.
We went on to build Salus’ Karen’s Place project in Ottawa that was the first large-scale apartment building to achieve Passive House International certification in Canada and received national recognition from politicians, the press (CBC News Article) and industry awards.
“No, after you!”
The construction industry, particularly in North America, is well known to be slow to adopt new building technology and practices. This is partially explained by the fact that any building component considered for construction must have longevity and perform over many decades, if not centuries.
Another reason is that building codes, which are regionally and jurisdictionally fragmented, evolve gradually. To their credit, the design community generally responds to these changes by introducing new configurations and products.The problem is that there is significant inertia in adopting change because of the professional risk in specifying new products and then relying on the tradespeople to install it correctly. In North America, most tradespeople are “bootstrap” self-educated and have invested in learning how to install products from their preferred manufacturers and are wary of shifting to something new and untested unless they must (because the building code says so) or the benefits are compelling.
Most of the construction industry can be described as conservative and resistant to change. They prefer to stay back and allow early adopters to make their mistakes and follow once a new product or system has been proven in the field. This instinctual aversion to risk is a significant source of inertia against innovation in our industry.
Unless a client developer has specifically requested a particular new product or system be adopted for a project, builders are disinclined to offer anything other than what is specified or “tried and true”. Often clients request that a builder find “value engineering”, or cost saving alternatives AFTER the design has been completed and then only from the construction cost perspective, instead of considering a life-cycle cost analysis that would show that the cheaper method is not the best value.
This points to the glaring fact that builders are not often engaged in the design phase of the project where true value engineering can occur and options evaluated from a constructability and cost perspective BEFORE design has progressed. Most design consultants are admittedly uninformed with cost estimating and assessing implementation risks.
If a builder is not engaged in the design phase they may consult ad hoc with a limited group of trusted builders and subtrades who may or may not be knowledgeable with, or motivated to use, innovative products and systems. Once a design has advanced into the construction details phase, it is more difficult and costly in terms of time and redesign fees, to revise the design mid-stream to incorporate innovative alternatives.
Architectural professional liability insurance: A brake on innovation?
In our litigious society, if a new product or system does not perform as required, or installation details fail, it can unleash a torrent of expensive litigation whether the designer is at fault or not. In response, the professional liability insurance that architects carry generally discourages risk-taking in design to avoid the risks. This represents another structural aspect of the industry that dampens innovation.
Despite this undertow, some architects and engineers do adopt new technologies and systems, but in these cases, they often include significant caveats and liability pass-throughs to the manufacturers and installers.
HVAC engineering: Slowpokes to change?
One of the more significant laggards in the transition to high-performing buildings are the North American mechanical system designers and equipment manufacturers. High-performing buildings are super-insulated, airtight, and incorporate orientation and external shading strategies to achieve fundamentally lower heating and cooling loads compared to the current minimum standards.
This approach requires that the engineers abandon the prescriptive method of design and embrace a design based on energy modelling requiring a significant shift in thinking/planning for many practitioners. This also requires investment in new skills and software – in turn leading to more inertia.
Even when designers adopt and implement a shift to high-performance design, the resulting heating and cooling load requirements are too low for the available Heating, Ventilation, and Air Conditioning (HVAC) equipment from North American manufacturers that are sized for the typical energy hungry, leaky, and under-insulated buildings.
Designers are then forced to choose from the available equipment resulting in significant overcapacity in the systems leading to imbalances in managing building space conditions and unnecessary energy inefficiency. Fortunately, the European and Japanese HVAC equipment manufacturers are bringing their “low-flow” and high-performance technologies to N. America, however the rate of adoption of these products is slow.
We’re moving slowly……. but picking up speed!
While I have outlined some of the design industry impediments to innovation, many architects and more engineers are adopting new technologies and systems into their designs, albeit often with significant caveats and liability assignments to the manufacturers and installers. As the experience and related confidence grows, the necessary shift to high-performance building design and component manufacturing will accelerate.
Builders are challenged to answer the “Cost” question
The first questions that comes out of any developer or builder’s mouth when presented with new technology is, “So, how much more will it cost to build to the higher performance standard?” or “What’s the payback period/Return on Investment (ROI)?”. My favourite reply is, “It depends on what you are comparing to and how you measure!” which of course causes consternation of those asking.
The question is of course referring to the direct, or first cost of construction, which is important, although it is only a fraction of the overall cost of ownership, otherwise known as life-cycle cost. For most builders this is the only question that is important because they need to know the cost to construct. Ask them to confirm how much a higher-performing envelope design (i.e., more insulation, high-performing windows, and doors, etc.) would cost and they would be able to calculate the resulting “energy efficiency premium” – yet that is only the first step.
The next important practice would be to calculate the life-cycle cost/benefit for expending the premium and determine the recovery point in time when the ROI is attained. Unfortunately, most builders are not asked, and would not be able to perform this essential calculation. Only experienced or motivated owners will engage energy modeling and cost consultants to prepare an evaluation to confirm the value of building to a high-performance standard.
Even when such an analysis is performed, there is often wrangling over what length of time to be used. While a building may last 60 years or more, many owners have difficulty accepting a ROI inflection point beyond 3 to 5 years. This is extremely short-sighted. A more reasonable timeframe of 15 to 20 years is needed to demonstrate the operational benefit for the cost.
Unfortunately, this “short-term investment” paradigm is baked into the current valuation of properties. It is only when developers, builders and owners shift to a longer horizon of ownership mindset that our society and building industry will properly understand and appreciate the value of high-performing buildings.
How much more will it cost? (Energy efficiency or “Green” Premium)
While every project is different, high-performing buildings require that more be spent on the envelope (i.e. thicker wall and roof insulation, triple-paned windows, high-performance insulated doors, better taping and envelope membranes). Some of this cost can be offset by much smaller HVAC equipment which have reduced energy loads that come with higher building envelope performance.
The energy efficiency or “green” cost premium for a Passive House standard was at 9% to 12% four to five years ago due to the limited availability and high cost of high-efficiency HVAC equipment, inefficient envelope assemblies and learning curve costs of the installers. Fortunately, the premium has come down to around 5% to 8% today. Due to higher building standards, HVAC technology is gradually shifting to high-performance in conjunction with the adoption of super-insulated envelope assemblies by progressive developers and builders. Further innovation and efficiencies will certainly contribute to reducing this “premium” until a point in time is reached when these innovations/efficiencies push building standards to require all buildings to achieve a high-performance.
First Cost vs. Life-cycle cost – Consumers need to ask the right question!!
Building developers, both commercial and residential, pay the most attention to the construction cost, or “first cost” of a building. To date, only the motivated and experienced developers will consider the long-term costs, or “life-cycle cost”, of a building depending on their perspective of ownership. If they intend to build and immediately sell the home or building, then the cost of operating the building over its lifetime is rarely considered. Adding insulation or higher performing windows, doors or HVAC only increases the cost to the building in their calculation because they will not immediately reap the benefit of lower operating costs.
It is notable that most high-volume residential housing developers are unable to, not good at, or simply uninterested in selling the improvements to consumers that they cannot see versus the “bling” of premium finishes, appliances, etc. Conversely, home buyers have not been demanding that the housing be high performing even though it would be in their long-term interest.
Nevertheless, this situation may be finally changing with the industry’s and general public’s growing awareness of the impact of energy consumption by buildings on the environment as well as the implementation of carbon taxes on energy (particularly carbon-based fuels), and the accelerating adoption of other clean technologies. A very salient example is the shift from internal combustion motor vehicles to electric vehicles where many consumers are accepting a higher initial cost with the knowledge that they will have a lower carbon footprint and benefit in the long-term from lower cost of ownership (e.g. less fuel, maintenance, longevity, etc.).
Unfortunately, in the residential market most consumers can only buy what developers decide to build and this is often motivated by the short-term profit for the developer rather than the long-term ownership cost to the consumer/home-owner.
The multi-year gradual implementation of the Greenhouse Gas Pollution Pricing Act (or Carbon Tax) that started in 2019 has already begun affecting the building operating cost calculus for consumers and building owners. Although the full impact has been delayed by a politically motivated temporary rebate for residential consumers in some provinces to ease the transition.
As the rebates expire and the tax increases over the coming years, the embedded and operating carbon costs will become a more salient factor in the decision about whether to build to a high-performance standard or not. This will be reflected in the life-cost analysis that I predict will eventually become a part of the design process to demonstrate not only building code conformance, but net present value of cost of ownership of the building over 20 to 25 years.
Opportunities – Stricter Building Code, infrastructure funding to pay for the “Green Premium”.
While progress in the shift to higher-performing buildings has been slow to date, the good news is that it is accelerating. One of the most important drivers of change that cannot be avoided by developers, designers and their builders is the higher performance required by the evolving standards of the building codes.
Previously, designers had only to use prescriptive or boiler-plate assemblies or elements that were typically “cut and pasted” from one project to the next, contributing to the slow pace of innovation in high performance building design and new products.Recent changes require that not only the building design achieve a higher energy efficiency using more insulated and air-tight envelope assemblies, doors and windows, the code now requires that designers employ energy modeling software to verify the building’s theoretical performance as part of the building permit submission.
Designers must now evaluate each building’s holistic energy performance considering location, orientation, envelope, and occupancy to calibrate the design to achieve the specified minimum or better. I foresee the time interval between raising the energy efficiency bar in our building codes shortening as societal urgency to address climate change intensifies. This will put pressure on the construction industry to respond with innovative solutions, but there will still need to be some “greasing of the wheels” to reduce the inherent lag in delivery.
Fortunately, we do not have to reinvent the wheel because the shift has been underway in other jurisdictions similar to ours climate-wise. In 2010 our European friends implemented European Union Energy Performance of Buildings Directive (EPBD) to promote the improvement of the energy performance of buildings.
We can leverage their experience, as well as support similarly focused organizations such as The Canadian Green Building Council (www.cagbc.org ). CaGBC has been working since 2003 to “Lead and accelerate the transformation to high-performing, healthy green buildings, homes and communities throughout Canada” by promoting governmental policies and creating a Canadian framework to promote and support the achievement of Net-zero carbon projects.
Better financing rates to reflect lower cost of ownership.
When one compares the operating cost of a building home or building built to a higher-performance standard (i.e. Passive House, Net-Zero) with standard construction, there is currently up to 80% to 90% reduction in energy consumption. This represents a clear cash flow advantage and supports the business case to build to high-performance standards and should be recognized by lenders and the real estate industry with reduced interest rates (less expense = lower risk) and higher property valuations, respectively.
Energy costs to heat and cool our buildings are currently artificially low for many reasons, however with the introduction of carbon taxes, these costs will inexorably rise as the full “environmental pricing” is factored into our cost of ownership. The disparity in operating costs will expand and finally give more impetus to build high-performance buildings.
“Honey, let’s brainwash the kids!!”
Those of us of a particular vintage who have benefitted from carefree, cheap energy consumption for most of our lives are now realizing that there is an expensive price to pay for this “free lunch” after all: correcting anthropogenic climate change. Some societies and jurisdictions have recognized the human impact on our environment earlier than others. The European Union, in particular Germany, has been at the vanguard of addressing climate change for decades and has manifested in their energy generation policies and ever stringent building codes to achieve high performance and reduce their national carbon footprint.
One important aspect is education. Not only do adult consumers need to be educated and informed for today’s decisions, but the future generations also need to understand that the links between their actions and what generates the most carbon emissions. We need our youth to be informed about the benefits of choosing current options that reduce their carbon footprints and empower them to demand better options as future consumers.
One personal poignant example of such “brainwashing” of children through education is a long-time popular children’s television show “die Sendung mit der Maus” (The Show with the Mouse) that combines “how it works” segments with classic style cartoons. In 2015 an episode was broadcast that featured the construction of a prefabricated house built to Passive House International standards, highlighting the differences between it and a more conventional house. (https://kinder.wdr.de/tv/die-sendung-mit-der-maus/av/video-passivhaus-100.html).
Without overwhelming the young audience, the episode talked about numerous technical aspects of the construction as well as the underlying building science and design principles applied in building the passive house. This video very much impressed me, and I wish it were in English so I could use it to help explain to youth here in Canada what Passive House construction means. Producing and broadcasting similar videos here in Canada and other North American countries should be part of a national strategy to engage our youth (and their parents and grandparents) into acting on climate change by demanding energy efficient buildings.
The future: Education of consumers, developers, builders
The evidence of our role in climate change is clear. The urgency to change and reduce our carbon impact dependence on carbon-releasing building design and practices has escalated as we experience the effects locally, regionally, nationally, and worldwide. While governmental commitments to support, even mandate, carbon consumption reduction is important, the more difficult task is changing the norms and habits of enough people, and by extension enough industries, to make substantial strides in reducing our national carbon footprint. The task at hand is to raise the consumer’s expectations of how our buildings should perform will do the most to accelerate the shift and adoption of high-performance building design.
This requires a concerted governmental and industry campaign to educate consumers and provide them with standardized tools to aid in their decision making. Such an example is the Energy Performance Certificate, adopted/implemented in the United Kingdom, that assesses and rates the energy performance of a building. In some European jurisdictions such as Germany, they have gone so far as to require all advertisements of property for rent or sale include third-party assessments of energy performance and if the property falls below the minimum level, the owner must upgrade before being allowed to rent or sell it.
This regime has resulted in an acceleration in the adoption of a high-performance standard of construction by developers, builders, and suppliers who must respond to this market signal. The interesting irony is that by doing so, the buildings will be cheaper to run over the life of the building, and provide a higher comfort level, all the while reducing the carbon footprint.
Michael Assal is president of Taplen Commercial Construction, an Ottawa general contractor. He is a member of the Canadian Construction Documents Committee (CCDC), representing the Canadian Construction Association since 2012.