A presentation I did at the Green Building Ottawa Conference, May 14, 2010

1. Impacts of Carbon Pricing
for Buildings
Green Building Ottawa Conference
Retrofit ‐ Sustainability for the Future
Carleton University
May 14, 2010
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2. Introduction
Carbon pricing is preferred way to shift from carbon intensive towards low‐carbon
Current and coming needs to retrofit and expansion our infrastructure are a unique
opportunity to shift towards cleaner and more sustainable energy systems
Carbon pricing will impact all aspects of our society – buildings are a important piece
of the puzzle representing a large source of greenhouse gas emissions and energy
demand
By understanding forthcoming carbon pricing policies, we can begin to shape our
buildings in a way that will help ease our transition the new economy
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3. Basis of Government Policy
Putting a price on greenhouse gas (GHG) emissions (carbon pricing) is widely accepted
as the most effective way of mitigating the man‐made causes of climate change
There are three basic measures to implementing carbon pricing:
• Command and Control
Mandatory rules governing action which includes emission limits or requiring new technology
Costs are not directly related to emissions
• Emissions Trading
Puts limits on emissions but allows reductions elsewhere to count towards meeting limits
Costs related to market of reductions – reductions are more cost‐effective than other measures
• Tax
A levy is placed on goods based on emission from manufacture, transport, or use
Costs are directly related to emissions
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4. Emissions Trading
Much of the debate around mitigating greenhouse gas emissions has focused on
emissions trading, specifically cap and trade systems
Trading emission reductions allows reductions to occur at the lowest cost
Previous Canadian climate change plans and current U.S. congressional work has
focused on emissions trading
In cap and trade systems, the government put a limit on the emission from regulated
sources – the government then creates an allowance for each tonne of emissions
under this ‘cap’
The government then distributes these allowances into the market either for free or
through an auction
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5. Emissions Trading
Regulated sources must have allowances for each tonne of actual emissions each year
Sources that have more allowances than actual emissions can sell allowances to
others for compliance
To further facilitate compliance and accommodate growth, GHG cap and trade
systems have an ‘offset’ system – reductions from non‐regulated sources can
generate credits that can be sold to regulated sources for compliance
The price on emissions arises from the costs incurred to either reduce emissions or
purchase reductions from others
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6. Emissions Trading
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7. Current State of Play
Current Canadian federal government policy is tied to action in the United States
U.S. congressional efforts on cap and trade are expected to continue
– White House is also proposing to regulate through command and control measures if
congressional efforts fail
Provincially, four provinces have committed to implementing a cap and trade system
under the Western Climate Initiative (WCI)
– System set to start January 1, 2012
Both U.S. congressional efforts and WCI will capture building industry emissions
Any effort to make GHG emissions more expensive will lead to increased costs for the
building industry
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8. Building Industry Emissions
Emissions from buildings in Canada are described in two broad categories:
1) Direct emissions – released from the building itself
Space heating
Hot water
2) Indirect emissions – released elsewhere but result from construction or operation
Building materials and construction
Electricity use
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9. Direct Emissions
Building industry represents 11% of Canada’s total direct GHG emissions
Space heating and hot water represent 95% ‐ 99% of these emissions
Residential Emissions by Activity Commercia/Institutional l Emissions by Activity
Space Heating Space Heating
74% 83%
Hot Water
14%
Hot Water
25%
Other
3%
Other
1%
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10. Indirect Emissions
Emissions from the manufacture, transport, and use of building materials represent
only a fraction of the lifetime emissions from building operation
Emissions from electricity generation represent a larger source of indirect emissions
Amount of emissions depends on the generating source (coal, oil, natural gas, wind)
Both residential and commercial buildings in Canada each emit around 30Mt
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11. Broad Costs of Carbon Price
Costs imposed through a cap and trade system are often dilute and re‐direct
There are estimates of carbon pricing that will flow from proposed cap and trade
systems
In Canada, prices are often forecasted to be initially between $10 ‐ $25 per tonne
These prices are forecasted to rise to between $60 ‐ $100 per tonne by 2020
The building sector in Canada should be expected to bear between $800 million and
$4 billion per year in direct emissions costs between 2012 and 2020
Adding for growth and indirect emissions from electricity use and the number grows
significantly to between $1.5 billion and $16 billion per year between 2012 and 2020
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12. Broad Costs of Carbon Price
Costs to Building Sector
$100 $16 billion
$60 $9.6 billion
Costs to Building Sector
$25 $3.75 billion
$10 $1.5 billion
Emission estimates based on
0 1% growth per year in direct
and indirect emissions
2010 2012 2020
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13. Costs for Residential Buildings
By 2020 a price on emissions could mean:
30% higher natural gas costs
30% higher electricity costs
10% higher home heat oil costs
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14. Costs for Commercial Buildings
Costs for natural gas could be between $0.02/m3 and $0.20/m3 per year
Commercial and institutional buildings in Canada use roughly 500 cubic meters of
natural gas per year resulting in costs that range between $9.5 ‐ $95 million per year
Commercial and institutional buildings use is about 55,000 GWh of electricity per year
resulting in between $120 million and 1.2 billion in added costs per year
Light fuel oil use in commercial and institutional buildings represents the third largest
source of emissions and could result in between $60 million and $600 million in added
costs per year
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15. Costs from Indirect Emissions
As direct emissions are reduced, indirect emissions from building materials become of
greater significance to a building’s carbon footprint
Source: Ayaz and Yang, Why Embodied Carbon in Materials Can’t be Ignored, Design Intelligence, 2009
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16. Costs from Building Materials
Estimated emissions and costs resulting from building materials vary based on the
size and type of building
Residential
Building Type Estimated Indirect Emissions Estimated Costs ($10/t - $100/t)
1500sqft, single storey 50 tonnes $500 - $5,000
2000sqft, single storey 65 tonnes $650 - $6,500
3500sqft, single storey 110 tonnes $1,100 - $11,000
Commercial
Building Type Estimated Indirect Emissions Estimated Costs ($10/t - $100/t)
5000sqft, two storey 160 tonnes $1,600 - $16,000
10,000sqft, five storey 300 tonnes $3,000 - $30,000
50,000sqft, ten storey 1,440 tonnes $14,400 - $144,000
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17. Embodied Emissions
Emissions from building materials are based on embodied carbon
Embodied carbon is an estimation of the emissions that arise from the
manufacture, transport, and use of a product
Typical Embodied Carbon Values
Building Material Embodied Carbon
Concrete 0.50 tonnes/m3
Lumber 0.27 tonnes/m3
Bricks 0.22 kg/kg
Steel 1.77 kg/kg
Asphalt 0.29 tonnes/ m3
Shingles 0.30 kg/kg
ABS Pipe 3.20 tonnes/ m3
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18. Embodied Emissions
Commercial Residential
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19. Conclusion
Costs to the building industry from a price on greenhouse gas
emissions has the potential to significantly increase costs
In less than two years, Ontario and Quebec are set to
implement a price on emissions
U.S. congressional efforts may yet yield a climate bill – this may
prompt the action in Canada at the federal level
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20. Conclusion
By 2020 costs to buildings in Canada could reach upwards of
$16 billion
Both direct and indirect emissions will expose buildings to
carbon costs
Embodied carbon costs may only add 1‐2% building to building
costs
Direct building emissions could result in a 30% increase in
natural gas and electricity costs by 2020
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21. Graystone Environmental
A full service environmental consulting firm offering legal
counsel along with sound technical and policy advice
On the web at…
Website www.envconsult.ca www.climatechangelawyer.ca
Email roxie.graystone@envconsult.ca
twitter.com/GraystoneENV
www.climatechangelawyer.wordpress.com (blog)
search ‘Graystone Environmental’
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