« Make money. Create jobs. Improve the environment.’’ That was the message conveyed to corporate downtown Toronto in 1996. It said that retrofitting buildings to improve energy efficiency would save them money.
Desirable as the goals were, however, it was a tough sell, because it asked companies to accept a ten-year payback on their investments, instead of the three-year payback period they so dearly loved.
But so innovative was the team promoting the message — and so powerful was their argument — that by 1998 their pilot project was a runaway success, surpassing all the goals they had set.
And now, the pilot project has been turned into a city-wide permanent program, aimed at $4 billion in spending by the private sector over the next 12 years. It’s expected to result in retrofitting of 40 per cent of all non-residential floor space in Toronto — a monumental objective.
To make it easier for building owners to borrow money, Enbridge Consumer’s Gas and the Toronto Atmospheric Fund (TAF) have said they’ll guarantee repayment. TAF is a foundation created by the city in 1992 with the sole focus of reducing emissions of greenhouse gases.’’
Toronto’s the only city in the world with such an ambitious program, says City Councillor Jack Layton. « At any one time, one in twenty buildings is going to be undergoing a retrofit.’’ The resulting energy efficiencies will cut the city’s greenhouse gas emissions by 7.5 per cent.
In other words, a single program, in one stroke, will allow Toronto to exceed the target set in 1997 by the federal government in Kyoto, Japan, to reduce emissions by 6 per cent over 1990 levels by the period 2008 to 2012.
What’s more, says Layton, the spinoffs will be enormous. He talks about creation of a retrofitting industry supplying lighting, pumps, design, insulation, computerized control systems, windows, and consultation services. « We’ll generate enough demand that we could even have a manufacturing plant here to produce energy conserving windows. And it’s all exportable!’’
One of the keys to success of the program « is we can demonstrate to companies that it costs them more to do nothing, than it does to take action,’’ says Richard Morris, manager of the city’s Energy Efficiency Office.
The other key is the financial guarantees. Retrofits are recommended on the basis that savings in operating costs will pay for the retrofits. If they don’t, and there’s default on a loan, TAF will pay 20 per cent, and Enbridge will pay 80 per cent of the default.
Based on the experience of the pilot project, there will be no defaults. « We’ve done our homework,’’ says Morris. The pilot project inspired corporate investments of $100 million in retrofitting. No loans went into default, and no guarantees had to be invoked, because the retrofits were so profitable to companies.
The pilot project was run by a partnership that included the city, TAF, Enbridge, and the old Ontario Hydro. It went under the name Better Buildings Partnership, and received $8 million under the infrastructure program that had been introduced by the federal government. The money is for interest-bearing, retrofitting loans. The partnership still has the $8 million in receivables, and the fund is still growing.
For the current program, the partnership has changed slightly with Toronto Hydro Electric System replacing Ontario Hydro.
The partnership is overcoming the reluctance of companies to invest when the payback period is longer than three years by explaining they can get their three-year payback by simply improving the efficiency of lighting and water use in their buildings.
Since the savings from these two efficiencies will continue year after year, the partnership says, « Keep using the savings to create more efficiencies.” And over a ten year period look at retrofitting heating, ventilation, and cooling systems, air-sealing buildings, improving fire protection systems, finding ways to further reduce carbon dioxide emissions, training staff, and even using the retrofitting experience to develop exportable expertise and commodities.
The savings keep growing, says Morris, and the improvement can keep coming.
For me, the best part of it all is everyone benefits.