OPPORTUNITY SCREENING STUDY: BUILDING ENERGY REPORTING REQUIREMENT

Transcription

1 CITY OF TORONTO OPPORTUNITY SCREENING STUDY: BUILDING ENERGY REPORTING REQUIREMENT Issued by Halsall on November 24, 204 4Y Prepared For: The City of Toronto Prepared By: Halsall Associates 2300 Yonge Street Suite 2300 Toronto, ON M4P E4 Tel: (46)

2 Table of Contents EXECUTIVE SUMMARY... INTRODUCTION...3. Purpose Methodology BENEFITS OF MANDATORY BUILDING ENERGY BENCHMARKING COMPLEMENTARY PROGRAMS LESSONS LEARNED FROM OTHER JURISDICTIONS Energy Star Portfolio Manager is the Tool Used by All Existing U.S. Programs Stakeholder Engagement Program Scope POSSIBLE IMPLEMENTATION SCENARIOS... 6 KEY ASSUMPTIONS IMPACT OF AN ENERGY REPORTING REQUIREMENT IN TORONTO Program Scale and Market Penetration Energy and Water Conservation Greenhouse Gas Emissions Reductions Financial Impact Social Impact Staffing And Budget Requirements CONCLUSIONS APPENDICES Appendix A: Existing Benchmarking Programs in the United States Appendix B: Key Model Inputs and Assumptions Appendix C: Summary of Research and Interviews Appendix D: Details of Building Types Assessed Appendix E: Limitations Appendix F: Endnotes Appendix G: Tables of Potential Program Results City of Toronto 4Y22-074

3 EXECUTIVE SUMMARY A successful city-wide energy and water reporting requirement by-law has the potential over the next 20 years to avoid over 6 million tonnes of equivalent CO2 greenhouse gas emissions and nearly 40 million equivalent megawatt-hours of electricity and natural gas use combined, while saving over $3 billion for building owners, occupants, and tax-payers and generating as much as 8,000 person-years of employment. While a mandatory energy benchmarking program will create energy savings, Toronto s population is expected to continue growing, causing an increase in energy use. Energy savings from this program may be great enough to balance population growth until at least The program is expected to save 0% or more of Toronto s commercial, industrial and multifamily building energy use after 20 years. The program s success relies on a wide scope of influence, impacting many large buildings (e.g. buildings over 25-50,000 ft 2 ), easy-to-access data, and effective education and compliance support. The sooner this program can be implemented, the sooner Toronto will start to see the benefits it provides. An energy reporting requirement is a program or by-law under which building owners are required to: Consider their building s energy and water consumption and compare it to that of their peers ( benchmarking ), and Disclose this information to the City and/or publicly ( disclosure ). An energy reporting requirement program presents a unique opportunity for Toronto to lead Canadian jurisdictions in becoming an environmentally, economically and socially competitive 2 st century city. The City of Toronto has set ambitious energy use and GHG reduction targets for the year 2020 and 2050 (30% reduction in GHG emissions levels from 990 is targeted by 2020, and by 2050, an 80% reduction from 990 levels is targeted ). Benchmarking is an important next step in Toronto s path to these goals. As of September 204, eleven U.S. jurisdictions have implemented a program like this, and there are many valuable lessons learned that both show the many benefits of an energy reporting requirement and the best practices related to structuring a program for success. The City of Vancouver is currently considering a similar program. The benefits of an energy reporting requirement are well understood and documented. Research (for example, by the US Environmental Protection Agency) has shown that benchmarking that is, requiring owners to consider the energy use of their buildings and their performance relative to that of their peers can produce energy savings. The benchmarking aspect supports conservation through the data it provides both to individual building owners, as well as to the market, the City and utilities. Further savings will come from disclosure, which is relevant to one subset of the data analyzed by the US Environmental Protection Agency. Toronto s Race to Reduce shows that buildings tend to reduce their consumption once their performance is made public Early success from jurisdictions that have implemented such a program show that the City, utilities, and service providers can use the data collected to tailor new and existing programs and policies 3. City of Toronto 4Y Page

4 Additional benefits stem from energy conservation: greenhouse gas emissions are reduced and utility cost savings, projected at $7 billion by 2030 in NYC for example 4, allow owners and occupants to invest in other areas. Research by the Institute for Market Transformation suggests the social benefit of up to 5.32 personyears of employment can be created per $ million saved 5. Other jurisdictions that have implemented such a program have learned that effective communication is important to their programs success, as is making compliance easy for building owners. Building owners and affected stakeholders must be engaged early during the development of a by-law. An appropriate feedback period appears to be between 6 and 2 months long. Effective outreach, education and support during the implementation of the program will also be important. Program success (measured in compliance rate) depends on ease of compliance. New York City boasted an 84% compliance rate in 204 and Seattle boasted 93% compliance in 20/202. Most successful jurisdictions work with utility companies to facilitate easy, automatic uploading of energy-use data, and easy aggregation of whole-building data in multi-tenant buildings. All U.S. programs use the Energy Star Portfolio Manager tool for benchmarking, and it would be an obvious choice for Toronto as well. Portfolio Manager is already in widespread use in Canada, free, public, and easy to use. Most jurisdictions of comparable size, population, and density, have targeted large buildings for program inclusion, since they make up the majority of building gross floor area and energy use (35% of Gross Floor Area and 25% of electricity consumption in Toronto 6 ). City of Toronto 4Y Page 2

5 INTRODUCTION. Purpose The City of Toronto is exploring the possibility of implementing a building energy reporting requirement. To this end a study has been conducted to evaluate the opportunities, benefits, and potential costs to the City of Toronto..2 Methodology This study was completed in two phases. The first phase involved investigating similar programs implemented in jurisdictions in the United States. The second phase involved estimating the potential impact of a building energy reporting requirement on energy and water use in the City of Toronto. To this end, possible scenarios (labelled Scenario A and B ) were modelled. The analysis was based on information collected from the research and interviews conducted in the first phase, as well as information on Toronto s building stock from the MPAC database provided by the City of Toronto. 2 BENEFITS OF MANDATORY BUILDING ENERGY BENCHMARKING Mandatory building energy benchmarking is a fairly new concept in North America. As of September 204, only nine cities and two states in the U.S. had implemented an energy reporting requirement ordinance and of those only three had two or more years of information available: New York City, San Francisco, and Seattle 7. Toronto as a Canadian Leader Globally this type of program has been implemented on the national scale; many countries in Europe currently require Energy Performance Certificates for residential, non-residential, and public buildings. The buildings in the program scope vary slightly by country. These certificates must typically be disclosed at the time of any retail transaction 8. Reduced Energy Use and Greenhouse Gas Emissions The benefits of benchmarking include direct energy savings, GHG emission reductions, and job creation, coming from a combination of increased awareness and market forces. Benchmarking provides building owners and managers with an easy-to-understand measure of their building s performance and allows them to see where they stand compared to similar buildings. This information can inform changes to building operation that can result in appreciable energy savings. An Environmental Protection Agency study has found that as much as 7% energy savings over four years (2.4% per year average) can be expected from benchmarking alone 26. City of Toronto 4Y Page 3

6 Market force makes public disclosure an important part of a benchmarking program. Market forces arise because the program increases transparency. When building information is publically disclosed, prospective tenants, buyers, and investors can identify which buildings are the most energy efficient and incorporate this information into their decision-making processes. Toronto s Race to Reduce program demonstrates how competition drives energy performance improvements. Buildings participating in this program cumulatively reduced energy use by 9% over two years (4.5% per year) 9, which is more than twice the 2.4% impact of benchmarking alone found by the Environmental Protection Agency. Northeast Energy Efficiency Partnerships identifies disclosure as an important part of a building benchmarking program, and cites transactional or public disclosure as a mechanism to promote transparency in the building market. This protects consumers making informed decisions similar to the way vehicle fuel efficiency is now reported to buyers 0. Creating Jobs The energy savings stemming from benchmarking and reporting will create both direct and indirect employment. Direct jobs are created including additional on-site operational labour required to run a building, manufacture and installation of lighting, HVAC, water heating equipment, appliances, windows, insulation and other building elements. These jobs are created since demand for energy saving retrofits requires energy consultants and skilled laborers to implement 5. IMT attributes 30% or more of jobs generated to installation. It is reasonable to expect that all created installation jobs will be local, and at least some manufacturing jobs will be local, directly fuelling local economies. Indirect jobs are created because the money saved on utility bills is spent elsewhere. A 202 paper by the Institute for Market Transformation reports that the re-spending of energy savings directs economic activity away from the energy supply industry, which supports very few workers per dollar received, towards other more labour-intensive sectors of the economy (for example, retail, healthcare, and food services) 5. Jobs are both gained and lost when money is redirected elsewhere from utility companies, but research conducted by the Institute for Market Transformation and the Political Economy Research Institute suggests a net increase in employment of approximately 5.32 person-years of employment for each $ million saved on utility bills. Industries anticipated to benefit include education, retail, offices, warehouse and storage, lodging, religious organizations, social advocacy organizations, healthcare, food sales, food services, and other 5. Reducing Grid Stresses Rapid growth has placed strains on several parts of Toronto s electricity grid. The City and Toronto Hydro have already concluded that reducing electricity demand from buildings will help reduce the investment required in new distribution infrastructure. As Toronto s large buildings both new and existing reduce their energy consumption, strains on the grid will be reduced. Informing Future City Programs Once the building stock has been benchmarked it will allow the City to map areas and sectors of higher-thanaverage energy use which will facilitate the creation of programs targeted specifically to those areas and to target programs for specific market segments and building types. In Toronto, this could assist with development and/or expansion of district energy systems and community energy planning. This ability to tailor programs to those buildings that need them the most has been successfully implemented in Boston, whose energy reporting requirement was first implemented in City of Toronto 4Y Page 4

7 Further Social Benefits There are additional anticipated benefits associated with reducing energy use in buildings including improved affordability in residential buildings and improved air quality in the city. As energy and water use decreases, the amount of money families and individuals will have to pay for utilities may also decrease, reducing the cost of living for Toronto residents. In rental units where the property manager pays the utility bill, decreased energy use may lead to reduced pressure on rent increases. The air quality in Toronto may also improve as the amount of natural gas burned to heat buildings decreases, resulting in less pollution and harmful smog in the city. 3 COMPLEMENTARY PROGRAMS Energy benchmarking on its own has the potential to reduce energy use and GHG emissions, but many U.S. jurisdictions consider the success of their energy reporting requirement to be tied closely to the addition of complementary programs, such as mandatory (or incentivized) energy audits, retro-commissioning and energy retrofits. For example, New York City and San Francisco 2 require energy audits to be undertaken every 5-0 years. Energy audits allow owners to identify specific opportunities for reducing their energy consumption. An energy reporting requirement will motivate building owners to want to reduce their consumption, while energy audits will show them how. Toronto already has programs that would complement an energy reporting requirement by-law to increase the overall effectiveness of Toronto s conservation offerings for building owners. These include incentive programs for energy audits and improvements provided by the Ontario Power Authority, through Toronto Hydro, and by Enbridge Gas; programs through the City s Environment and Energy division and Tower Renewal Office such as local improvement charge (LIC) financing for energy retrofits; the Toronto Atmospheric Fund s (TAF s) Energy Savings Performance Agreement (ESPA) program; the Tower Renewal Office s STEP program (a site assessment framework); and the Toronto Energy Efficiency Office s Better Buildings Partnership. Together, these programs provide resources, technical guidance and financial assistance for the completion of energy audits, better financing options for buildings and residential owners that want to invest in energy retrofits, and financial incentive for buildings seeking to install energy retrofits. As the City receives more information about the energy use in Toronto s building stock via an energy reporting requirement it will become apparent which sectors are the poorest performers, so programs or incentives can be developed or modified by the City or in partnership with local utilities or other third parties to specifically target these sectors. The costs of improving building performance will be less daunting for building owners and managers as a result of these programs. City of Toronto 4Y Page 5

8 4 LESSONS LEARNED FROM OTHER JURISDICTIONS There are now nine cities and two states in the United States that have mandatory benchmarking requirements 8 : Cities: States: New York City Washington Seattle California San Francisco Boston Chicago Washington D.C. Philadelphia Minneapolis Austin Researching these jurisdictions and interviewing program staff have revealed best practices and trends related to program format, scope, methods of communication, and tools used. 4. Energy Star Portfolio Manager is the Tool Used by All Existing U.S. Programs Reporting building energy performance requires a tool that facilitates information collection, performance calculation, and disclosure. The tool must, at a minimum: Collect building information (e.g. size, use, location) Collect energy and water use information (e.g. electricity use, natural gas use, district energy use) Calculate energy and water performance Disclose individual property performance (share results) Facilitate bulk performance disclosure at the city scale Be publically accessible to owners of all building types within the program scope Ideally, the tool will also: Be economical to access Be easy to use Receive automated data updates (e.g. monthly consumption from energy and water utilities) Report performance on a level playing field regardless of variations in facility size, type, and usage characteristics (normalization) Transparently communicate how performance is calculated Aggregate data for in-depth analysis (e.g. by municipality or government agency) Many building energy benchmarking tools exist that satisfy some or many of these criteria. However, Energy Star Portfolio Manager is the one and only reporting tool that all existing U.S. programs have used. It meets all of the criteria above. City of Toronto 4Y Page 6

9 Energy Star Portfolio Manager is Canada s national energy benchmarking tool. It is developed by the United States Environmental Protection Agency with an intended public purpose, and is licensed for use in Canada by Natural Resources Canada 3. It is free for use by the City of Toronto, and by any building owner(s) to use to collect information and calculate performance. It is also well documented and transparent in its calculation method. Natural Resources Canada summarizes the value of this tool on their webpage Why Energy Star Portfolio Manager? 4 Portfolio Manager is becoming more widely used in the U.S. and Canadian market. It is the technical backbone for voluntary green building programs including the Canada Green Building Council s LEED Canada for Existing Buildings: Operations & Maintenance certification system, as well as Toronto s Race to Reduce energy efficiency program. Building data entry is relatively simple, and data sharing is built-in, making reporting and data analysis easy at any scale, from individual property to whole city. Portfolio Manager also allows many different types of energy use to be included such as electricity, natural gas, district steam, and district chilled water. Water use can also be tracked through Portfolio Manager 5. Any property can use Portfolio Manager. Some property types receive a performance rating in the form of a score (0 to 00) which accounts for variations in building size, type, and usage characteristics (the score is normalized ). At the time this report was written, properties that receive a score include Canadian office buildings, K-2 schools, and hospitals. Properties that do not receive a 0-to-00 score (such as multifamily residential buildings and some industrial buildings) instead receive an Energy Use Intensity rating (energy used per square foot of building area). In this case performance is normalized based on building size, but not by building type or usage characteristics. Natural Resources Canada intends to add scores for other building types on a progressive basis over several years. In most other respects including inputs, outputs, and functionality, the Canadian and U.S. version of Energy Star are similar 4. Portfolio Manager accepts automated data entry (e.g. by energy and water utilities) when available by the utility provider. Local utilities are encouraged to provide aggregated whole building energy use data, with groups including the Data Access and Transparency Alliance (U.S.), and the Green Button Data initiative (in both Ontario and the U.S.). Where automated data entry is available, the owner only has to verify the supplied data before submitting energy benchmarking results to the city each year. While Energy Star Portfolio Manager is the most obvious tool of choice for a Toronto ERR, other tools exist. These include: The Real Property Association of Canada s Energy Benchmarking Program offers a free online Canadian energy benchmarking tool specifically for office buildings. Lawrence Berkeley National Laboratory Energy IQ program (U.S.) benchmarks energy use as well as building features. California s Cal-Arch program (U.S.) focuses on building efficiency of California buildings. Metrix (Abraxas Energy Consulting, U.S.) offers a paid software utility accounting system for use by energy managers of buildings and portfolios. City of Toronto 4Y Page 7

10 4.2 Stakeholder Engagement Directors of U.S. benchmarking programs have found that effective communication with building owners and affected stakeholders is important in establishing a program 7. This communication requires time both during the development of the program or by-law, and during its implementation. Both New York City and Seattle took time, during program development, to receive stakeholder feedback. Stakeholders included building owners and managers, environmental groups, benchmarking service providers, energy managers, city employees, and the general public. Addressing stakeholder concerns helps manage any unfavorable response or delays. For example New York City originally proposed mandatory building retrofits as part of their ordinance but after overwhelming negative building-owner feedback, the start date of the program was delayed and the requirement was removed from the ordinance 7. These two cities spent between one and three years between passing an ordinance and requiring the first benchmarking submission. This time period was used to inform building owners of the program and how to comply, via letter mail, , a media campaign, and numerous educational events for building owners, managers, and service providers. New York City and Seattle compliance rates are among the highest in the U.S., 84% 4 and 93% 6 respectively. In these cities, outreach efforts also included a help-desk/call-centre to help building owners learn about the ordinance and how to comply. These call centres provided timely resolution to any problems that building owners experienced as they complied with the energy reporting requirement. Call centres in New York City and Seattle received an average of 600 to 700 calls during the month before a reporting deadline Program Scope 4.3. Budgets and Staffing Usually Requires Only Minor Investment The jurisdictions that we contacted were not able to share specific budget information. While the costs were suggested to vary substantially by jurisdiction (depending on program scale, but also the amount of partner support received) most were able to say they considered their costs minor. Start-up costs were anecdotally suggested (in interview with Boston and Chicago program representatives) to be more substantial than on-going costs, because most communication, stakeholder outreach programs, training programs, and media campaigns took place at the outset of the program. Jurisdictions were able to keep the cost to the city low by partnering with other levels of government and supportive environmental organizations. Some state governments provided funding. Interested organizations, environmental organizations and utilities hosted learning sessions and released how-to guides and other instructional publications. Staffing requirements vary by city size and the number of buildings in the program, most often requiring one or two full-time employees in the first year, or up to five employees in the largest jurisdiction 8. The investment in staff and resources tended to decline after the program is developed, initiated, communicated effectively, and the first reporting year is complete. City of Toronto 4Y Page 8

11 Exact program costs and staffing needs were difficult to obtain either through research or through conversations with the other U.S. jurisdictions; the only city willing to disclose the information was Boston who had one dedicated employee during program implementation for the first 6-8 months full time, after the initial implementation his involvement was reduced to part time. The Boston city program has a yearly operating budget in the range of $00, By-Law Scope is Determined by Building Type, Size, Reporting Method, and Timeline Several inclusion criteria determine the scope of the by-law, the impact it can have, and the effort it requires. The timeline for program roll-out will impact results in the first few years. Building Types Included The two main categories of buildings that are most often required to comply with benchmarking by-laws are commercial/industrial and multi-unit residential buildings (MURBs). These are the building types included in the scope of existing programs in Boston, Washington DC, New York City, Chicago and Seattle 8. Multi-unit residential buildings have been successfully included in several existing programs, but will present distinct challenges: Their utility consumption may be metered on a suite-by-suite basis by the utility, which requires aggregation to arrive at whole-building numbers. Gathering utility data from private residences must comply with privacy regulations. About 75 to 90% of Ontario multi-unit residential buildings are bulk-metered 9 (meaning 0-25% are metered on a suite-by-suite basis). In some cases local privacy laws limit access to data for MURBs and other buildings where multiple occupants pay electricity directly to the local utility. For example, in California the building owner must obtain written permission from each tenant before aggregated data is provided by the utility 20. This can be especially onerous for any owners of MURBs who have no main building meter and only individual suite metering. A summary of building quantities and floor areas by building category in Toronto is found in the table below (summarized from the Toronto Municipal Property Assessment Corporation (MPAC) database). Single-family residential buildings and some types of industrial buildings will likely be excluded from the scope of a Toronto program. Building Category Total Gross Building Area (ft2) Number of buildings Commercial (Commercial) Commercial (Industrial) Residential Multifamily Residential Single Family (excluded) Industrial (excluded) Grand Total 47,953,035 84,852,88 320,722,67 724,548,863 57,55,835,435,232,78 8,563 5,602 6,2 426,958, ,746 City of Toronto 4Y Page 9

12 Greater detail on which building types in Toronto are included in each of these categories can be found in appendix D. Building Sizes Included All existing energy reporting requirements limit program scope by requiring compliance only from buildings greater than a specified size. Size is usually measured by floor area, but for multifamily residential buildings some programs measure by the number of residential units in the building. Existing program managers interviewed said they found that owners of larger buildings are generally easier to contact for outreach and education. They are more likely to be members of professional associations, or to be managed by a mid-size or large management company, enabling clear communication channels 8. According to the Institute for Market Transformation, The vast majority of smaller and mid-size building owners and managers that may be impacted by benchmarking policy have little or no experience with the process. 2 Seattle increased their program minimum building size from 0,000 ft 2 to 20,000 ft 2 8 after finding some owners of smaller buildings were more difficult to contact, and were less likely to have computer access with which to access Portfolio Manager and submit their benchmarking information 7. In Boston the initiallyproposed threshold of 25,000ft 2 was increased to 35,000ft 2 after challenges related to small building participation 8. The minimum building size in existing programs ranges between 20,000 ft 2 and 50,000 ft 2. Some jurisdictions, including Boston and Washington D.C., have programs which capture -3% of building stock, corresponding to 40-50% of gross floor area across the jurisdiction. A detailed breakdown of Toronto s building quantity and floor area by size range (e.g.: buildings over 00,000 ft 2 ) can be found in appendix D. Reporting Method Required Reporting can occur in several forms. Disclosure to the local government allows progress to be tracked and supports development of future government programs. Government disclosure is required by most programs, including Boston, Washington DC, New York City, San Francisco and Philadelphia. Washington State does not require local government disclosure 8. Public disclosure (on a public website, for example) introduces market forces to create competition between buildings, thought to cause the most impactful change. This mechanism has already been used in Toronto to drive energy use reduction, where the voluntary Race to Reduce program boasted a 9% energy use reduction over two years in participating buildings 9. With public disclosure, buyers and sellers consider energy and water performance long before a transaction takes place. Public disclosure is required by most existing programs, including Boston, Washington DC, New York City, San Francisco and Philadelphia. Austin, California, Seattle and Washington State do not require public disclosure. 8 Transactional or tenant disclosure allows information to be exchanged at specific times, for example at point of sale, lease, financing, or during tenancy. Austin, California, Seattle and Washington State require transactional disclosure, as opposed to public disclosure 8. City of Toronto 4Y Page 0

13 Program Roll-Out Timeline Implementing an energy reporting requirement will involve several phases including: Feasibility investigation (now underway) Engagement and consultation with affected stakeholders regarding the draft by-law, inclusion criteria, etc. By-law development By-law approval Outreach and communication with building owners (requiring between one and three years in U.S. jurisdictions) Phased roll-out, often starting with municipal buildings before addressing larger private buildings, medium-sized buildings, and eventually smaller buildings Each U.S. jurisdiction rolled out their program differently to address the characteristics of their building stock. San Francisco s program phase-in required buildings over 50,000 ft 2 to comply in the first year, buildings between 25,000 ft 2 and 50,000 ft 2 to comply in the second year, and all buildings over 0,000 ft 2 to comply in the third year. A similar multi-year roll-out timeline was also applied in Seattle and Boston. Only Boston rolled out non-residential building compliance earlier than multi-residential building compliance. All other jurisdictions rolled out all building types at the same time. Several jurisdictions actively enforce compliance, for example by issuing written warnings (Minneapolis, San Francisco), providing public notice of noncompliance (San Francisco), and/or issuing fines (San Francisco, Philadelphia, Austin, Washington DC, Chicago, New York City, Seattle, and Boston). 8 5 POSSIBLE IMPLEMENTATION SCENARIOS Implementation scenarios were modeled, based on inclusion criteria determined in collaboration with City staff and benefits were quantified over a 20-year period. For each scenario, we evaluated: Market penetration Potential to contribute to the City s energy conservation targets Potential to contribute to the City s target for greenhouse gas emissions reductions Financial impacts Social impacts Staffing and budgetary implications to the City associated with the program Three scenarios were analyzed: Scenario A: reasonable program scope and success. Scenario B: reduced program scope and success. Scenario C - Business as usual: no mandatory energy reporting requirement by-law is passed, and the city continues to grow. City of Toronto 4Y Page

14 Table below outlines the criteria that differentiate Scenario A from Scenario B. They include factors over which the City will have influence during the design and implementation of the program. Table Criteria Scenario A Scenario B Minimum Building Size 25,000 ft 2 50,000 ft 2 Program Compliance 95% 75% Program Effectiveness (Percent Energy Saved) 2.4% each year.2% each year Program Phase-In Schedule 206 (partial) 207 (full) 206 (partial) 207 (full) Minimum building size and program compliance rates reflect the range represented by U.S. jurisdictions we researched (see sections above, Building Sizes Included ). In Scenario A, the program compliance rate reflects benchmarking effectiveness as reported by Energy Star Portfolio Manager (see section below, Key Assumptions ). The program phase-in schedule was chosen to reflect a 2-year program development timeline, in the middle of the to 3 year timeline seen in several U.S. jurisdictions (see section above, Program Roll- Out Timeline ) 6 KEY ASSUMPTIONS A full table of assumptions applied in this scenario analysis is provided in appendix B. The assumptions of greatest relevance or uncertainty are: Total Building Area in Toronto Today The City of Toronto s Municipal Property Assessment (MPAC) database was used to estimate the number of buildings, total building floor area, and energy use for each market sector. A data quality analysis identified that some (perhaps many) addresses appear to under-report building floor area. For example, several apartment buildings of ten stories or more reported total floor area under,000 ft 2 (buildings of this size are likely to be closer to 00,000 ft 2 in size). This likely leads to an under-representation in this report of the total size of buildings in each market sector in Toronto, and number of buildings that will be included in a benchmarking program. Several alternate sources of data were considered and dismissed for having missing references. However, one such source 22 predicts around twice the floor area of buildings in Toronto, vs. MPAC. Should the actual building sector be twice as large as represented by MPAC, the impact and benefit of a benchmarking program could be twice that reported here. Total Electricity Used by Buildings in Toronto Today The City of Toronto s Energy Mapping Report (April 204) reports electricity and natural gas use, but also stated that discrepancies in means, medians, and typical Ontario averages suggests that the Toronto electricity intensity dataset for high rise commercial office buildings is not reliable at this time, and There are many anomalies in the electricity and gross floor area data for this building type, therefore the Toronto electricity intensity dataset for high rise residential condominium buildings is not reliable at this time. We therefore applied a typical Ontario electricity intensity value (5.2 kwh/ft 2 ) 23 and multiplied this by the gross floor area of commercial/industrial buildings in Toronto (from the City of Toronto MPAC database) to determine the total electricity used by commercial/industrial buildings in Toronto today. As noted above, since MPAC data may under-report building floor area, this may underestimate total electricity & natural gas used by buildings in Toronto today. City of Toronto 4Y Page 2

15 Total Natural Gas Used by Buildings in Toronto Today The City of Toronto s Energy Mapping Report (April 204) reports electricity and natural gas use. However, this report states the natural gas used by commercial buildings includes residential (condominium buildings) and institutional facilities. We do not know of an appropriate, industry-recognized natural gas use intensity estimate (m 3 /ft 2 ) for non-residential buildings, however, the value from the Energy Mapping Report is about three times as high as we would expect, based on our own database of building energy use containing data from nearly,000 buildings. As such, we estimate that the total natural gas used by commercial/industrial buildings in Toronto today is /3 rd of the value stated in the City of Toronto s Energy Mapping Report, a final value of 480 million m3 of gas used each year. As noted above, since MPAC data may under-report building floor area, this may underestimate total electricity & natural gas used by buildings in Toronto today. Program Effectiveness According to Energy Star Portfolio Manager s Data Trends: Benchmarking and Energy Savings report (Oct ), buildings that benchmark energy use consume an average 2.4% less energy each year, and 7% less after the four years observed. We used this finding as the basis for our estimate of the energy savings generated by a MEBD program (2.4% savings annually) in Scenario A, and discounted this by half in the Scenario B. In each case, we added a conservative limit to program effectiveness, described below. Program Effectiveness Limit While energy consumption savings are expected each year, we expect that the effectiveness of energy benchmarking will reach an ultimate limit after several years, and that continued benchmarking beyond this limit will serve to maintain the ultimate savings level, but not further improve it. Since we have found no data to quantify an ultimate program effectiveness limit, for all scenarios we estimate this limit it to be 5% energy savings (about double the 7% effectiveness of benchmarking after four years reported by Energy Star Portfolio Manager). Real Estate Growth in Toronto For all scenarios, real estate growth in Toronto (and associated building energy use) was assumed to follow the population growth rate of.5% / year (based on Statistics Canada 202/203). This is in the range found in City of Toronto s Profile Toronto bulletin (July 204), which showed an estimated residential real estate growth of about 0.9% to 3.5% and a commercial growth of about 2%. Utility Costs and Growth An electricity rate of $0. /kwh and natural gas rate of $0.25 /m 3 are taken from the City of Toronto Energy & Emissions Inventory & Mapping Report (April 204) 6. The water rate of $2.96 /m3 was taken from the City of Toronto water website. An electricity rate increase (excluding inflation) of 7% next year and % thereafter were based on Ontario Power Authority s Long Term Energy Plan. Natural gas rate was assumed to have no increase (excluding inflation). Water rates were assumed to increase by 6% each year (excluding inflation) based on city council approvals in late 203, as reported by the Toronto Star. See Appendix B for a complete list of inputs and assumptions, including: Program effectiveness and program effectiveness limit Program starting year Toronto real estate growth rate Number of buildings and gross floor area in Toronto (commercial/industrial, MURB, and combined) City of Toronto 4Y Page 3

16 Number of buildings above 25,000 ft 2 ; and above 50,000 ft 2 (commercial/industrial, MURB, and combined) Total electricity use; gas use; and water use in Toronto (commercial/industrial, MURB, and combined) Electricity, natural gas, and water utility cost rates and escalation over time Energy use associated with water consumption Average peak electrical power associated with annual electrical consumption Carbon intensity of electricity, and of natural gas Rate of job creation due to energy efficiency 7 IMPACT OF AN ENERGY REPORTING REQUIREMENT IN TORONTO Implementing an energy reporting requirement in Toronto starting in 207 could save a cumulative 2 to 39 Million emwh of energy over 20 years when compared to business as usual. Program results are summarized in table 2 below. Table 2: Program Results, by 2035 Scenario A Scenario B Business as Usual # Buildings Enrolled (#) 5,000 3,000 - Building Gross Floor Area Enrolled (ft2) 620 Million ft Million ft 2 - Cumulative Electricity Savings (MWh) 3 Million MWh 7. Million MWh - Cumulative Natural Gas Savings (m3 gas) 2.4 Billion m 3.3 Billion m 3 - Cumulative Energy Savings (emwh) 39 Million emwh 2 Million emwh - Cumulative Water Savings (m3 water) Cumulative Greenhouse Gas Avoided (tons CO2e) 70 Million m 3 99 Million m Million tons(co2e) 3.3 Million tons(co2e) - Cumulative Utility Cost Savings ($) $3.4 Billion $.9 Billion - Cumulative Employment Generated (person-years employment) Peak Electric Power Savings (megawatts) 8,000 personyears 0,000 person-years - 90 MW 30 MW - 78,000 to 223,000 tonnes of annual CO2 reduction could be achieved by 2020, contributing about 3% to 0% of Toronto s 2020 GHG reduction goal of 30% below 990 levels (about 2.3 Million tonnes less than 20 GHG levels, reported in 204). 24 These results are founded on data with known quality concerns (see key assumptions above), and may under-represent the program impact and benefit, which could be twice that reported here. Further results, as well as methodology, are described in the following sections, including: Program scale and market penetration Energy and water conservation Greenhouse gas reduction City of Toronto 4Y Page 4

17 Financial impact Staffing and budget requirements 7. Program Scale and Market Penetration The following figures show the number of buildings and the total gross floor area that would be affected by the program. Multi-unit residential buildings (MURBs) comprise nearly half of the buildings in the program, and nearly half of the energy savings potential as well. In Scenario A, up to 2% of commercial/industrial and MURB buildings and 79% of building gross floor area (GFA) is represented as seen in Figure below. In Scenario B, up to 7% of buildings and 69% of GFA is represented. Over half of overall Program impact MURBs being included in the program. Figure : Impact of MURB vs. Commercial/Industrial Sector Within 20 years, over one half billion square feet of real estate could be engaged in energy benchmarking and conservation across nearly six thousand properties in Toronto, as seen in Figure 2 and Figure 3. Figure 2: Market Penetration (ft2 building area) City of Toronto 4Y Page 5

18 Figure 3: Market Penetration (number of buildings) Methodology: Toronto building stock, filtered by building size (based on scenario), with annual city growth rate applied. 7.2 Energy and Water Conservation The figures below show the amount of electricity and natural gas that could be saved each year by implementing a benchmarking program. Annual electricity savings could reach 67 to 492 thousand MWh by Over the next 20 years a cumulative savings of 7 to 3 Million MWh could be achieved. Yearly savings can be seen in Figure 4 below. Figure 4: Annual Electricity Savings City of Toronto 4Y Page 6

19 Annual natural gas savings follow a similar trend. Annual savings could reach 3 Million to 88 Million m 3 of natural gas by 2020, and a cumulative.3 to 2.4 billion m 3 over the next 20 years. Yearly savings can be seen in Figure 5 below. Figure 5: Annual Natural Gas Savings Water savings could reach 2 Million to 5 Million m 3 per year by 2020, a cumulative 00 Million to 70 Million m 3 over the next 20 years. Yearly savings can be seen in Figure 6 below. Figure 6: Annual Domestic Water Savings With an energy content of 0.64 ekwh per m 3 of natural gas, and 0.55 ekwh per m 3 of water, combined total annual energy savings could reach 0.5 Million to.4 Million emwh by 2020, a cumulative 2 Million to 39 Million emwh over the next 20 years. Figure 7 below shows the yearly savings from all sources combined. City of Toronto 4Y Page 7

20 Figure 7: Annual Energy Savings (Electricity & Gas) While a mandatory energy benchmarking program will reduce energy use, population growth will continue to cause real estate volume and energy use to rise. Energy savings from this program may be great enough to balance population growth until at least The program is expected to save 0% of Toronto s commercial/industrial and multifamily building energy use after 20 years. Yearly energy use can be seen in Figure 8 below. Figure 8: Total Energy Used Methodology: Toronto electricity, natural gas, and water use savings based on program effectiveness (up to the program effectiveness limit), and only for the compliant participating buildings (based on assumed compliance rate, building size, and program roll-out timeline), with annual city growth rate applied. City of Toronto 4Y Page 8

21 Reduced electricity consumption can also lead to reduced demand. Peak power savings could be as great as 93 MW, as seen in Figure 9 below, helping alleviate the city s already stressed supply infrastructure, and potentially reducing the magnitude of ratepayer dollars needed to upgrade Toronto s power grid in the future which could help mediate utility rate increases over time. Figure 9: Peak Power Demand Savings Methodology: Based on electricity saved, then multiplying by the average peak electrical power associated with annual electrical consumption, with annual city growth rate applied. 7.3 Greenhouse Gas Emissions Reductions The following figure shows the greenhouse gas (GHG) emissions that could be avoided by implementing a benchmarking program. 78,000 to 223,000 equivalent tonnes of CO2 could be avoided annually by 2020, contributing about 3% to 0% of Toronto s 2020 GHG reduction goal of 30% below 990 levels (about 2.3 Million tonnes less than 20 GHG levels reported in 204). Between 3.3 Million and 6.0 Million equivalent tonnes of CO2 could be avoided cumulatively over the next 20 years. Figure 0 below shows the annual GHG savings. City of Toronto 4Y Page 9

22 Figure 0: Annual GHG Savings Methodology: Based on electricity saved, natural gas saved, and electricity saved associated with water saved, then applying GHG intensities to electricity and natural gas savings, with annual city growth rate applied. 7.4 Financial Impact Energy savings lead to financial savings when building owners and occupants see reductions in their monthly utility bills. Tax payers will also carry less burden when infrastructure upgrades become less intensive due to reduced energy consumption throughout the city. By 2020 utility bill saving of $38 M to 08 M per year are expected, as seen in Figure below. Additional savings will escalate with rising utility prices and decreasing consumption, saving a cumulative $.9 Billion to $3.4 Billion over the next 20 years, as seen in Figure below. City of Toronto 4Y Page 20

23 Figure : Annual Cost Savings ($) Methodology: Based on electricity, natural gas, and water saved, then applying utility cost rates to each of these utilities (with utility cost rates escalating over time, and with annual city growth rate applied). 7.5 Social Impact Energy savings lead to financial savings, and financial savings lead to jobs.. Based on a report from the Institute for Market Transformation, approximately 5.2 person-years of employment can be created for every $ million saved on utility bills. Section 2 of this report describes in more detail the types of jobs created The number of jobs created in the scenarios modeled can also be seen below. By 2020, 20 to 577 jobs could be created, generating a cumulative 0,000 to 8,000 person-years of employment over 20 years, as seen in Figure 2 below. City of Toronto 4Y Page 2

24 Figure 2: Jobs Created Methodology: Based on costs saved, then multiplying by the person-years of employment generated per $ Million saved on utility bills, with annual city growth rate applied. 7.6 Staffing And Budget Requirements From conversations with other jurisdictions with established energy reporting requirements, the costs and staffing requirements to implement a program like this are fairly modest, often with two or fewer full-timeequivalent employees. For example, typical costs for running a help center for a year ranged from $50,000 to $00,000, for staffing needs in the range of one to three full time employees 7. The help centre was identified as a major cost by several jurisdictions. Seattle s technical support group averaged.75 FTEs in We have estimated an annual cost (beyond staffing) of $00,000 per year, conservatively assuming no reduction over time, since data is not available on the rate or magnitude of the reduction anecdotally indicated to exist. The actual number of staff required depends primarily on the education, outreach, and support centres provided. Other jurisdictions have reported that education and support are important to program success and well worth the investment required. City of Toronto 4Y Page 22

25 8 CONCLUSIONS An energy reporting requirement has the potential to dramatically change the way energy use in buildings is viewed and managed in Toronto. This program could be a foundational component of the energy use reduction plan needed to reach the environmental targets the city of Toronto has committed to reaching. Toronto is close to its goal to reduce GHG emissions 30% below 990 levels by 2020 and an energy reporting requirement will help the city get the rest of the way there. Supplementing the research conducted on other successful cities that have implemented this type of program with quantitative values that are specific to Toronto has shown that the expected benefits from a bylaw of this type are attractive and far exceed the investment required. A successful city-wide energy and water reporting requirement by-law has the potential over the next 20 years to cumulatively avoid over 6 Million tonnes of equivalent CO2 greenhouse gas, nearly 40 Million emwh of electricity and natural gas use, while saving over $3 Billion for building owners, occupants, and tax-payers and generating 8,000 person-years of employment. While an energy reporting requirement will reduce energy use, population growth will continue to cause real estate volume and energy use to rise. Energy savings from this program may be great enough to balance population growth until at least The program is expected to save 0% of Toronto s commercial/industrial and multifamily building energy use after 20 years. These results are founded on data with known quality concerns (see key assumptions above), and may under-represent the program impact and benefit, which could be twice that reported here. The program s success relies on a wide scope of influence impacting many large buildings, easy-to-access data and effective education and compliance support. The sooner this program can be implemented the sooner the Toronto will start to see the benefits it provides. Yours very truly, HALSALL ASSOCIATES A Parsons Brinckerhoff Company Eric Chisholm, B.ScE., CEM, LEED AP Technical Specialist Jason Manikel, P.Eng., CBCP, LEED AP Project Principal 4Y EnergyBenchmark.rep03.rev02 City of Toronto 4Y Page 23

26 Appendix A Existing Benchmarking Programs in the United States

27 APPENDIX A: EXISTING BENCHMARKING PROGRAMS IN THE UNITED STATES A. Summary of Existing Programs The first city to pass a benchmarking law was Washington DC in July 2008 when they passed an ordinance that requires buildings to disclose energy use to the city who will then disclose it publically. Washington DC was quickly followed by Austin, Texas later in 2008, New York City which passed Local Law 84 in 2009 and several other jurisdictions in the following years. The three earliest reporting deadlines belong to New York City, Seattle, and San Francisco who all required benchmarking starting in 20. These cities have all released reports on the performance of their buildings and those with public disclosure have their information available on their websites. There are now nine cities and two states in the United States that have mandatory benchmarking requirements. These jurisdictions all require energy data to be submitted through Portfolio Manager but the degree of disclosure varies from full public disclosure of all submitted information to disclosure to the jurisdiction and release of information during the sale of a building only. The figure below, provided by the Institute for Market Transformation, shows the level of mandatory energy benchmarking and disclosure in various regions across the U.S. City of Toronto 4Y Page A