Retrofitting Canada's Building Sector: Efficiency Canada’s Corey Diamond in Conversation

Corey Diamond:

earth day does give you a pause and a moment to step back and see how far we have come. But the task ahead is extremely daunting, given the stakes of not only our survival, but the survival of the planet as a whole and the amount of suffering that could happen if we don't go in that direction. That gives me that extra push to want to keep going.

Michael Torrance:

Welcome to Sustainability Leaders. I'm Michael Torrance, Chief Sustainability Officer with BMO Financial Group. On this show, we will talk with leading sustainability practitioners from the corporate, investor, academic and NGO communities, to explore how this rapidly evolving field of sustainability is impacting global investment, business practices and our world.

Speaker 3:

The views expressed here are those of the participants and not those of Bank of Montreal, its affiliates, or subsidiaries.

Michael Torrance:

As we celebrate earth day, we have an interview with Susan McGeachie, Head of the BMO Climate Institute, and Corey Diamond, Executive Director of Efficiency Canada on increasing demand for home energy retrofits and sustainably-sourced building materials. For more than two decades, Corey has helped to build and manage mission-driven organizations with the goal of driving positive environmental impacts.

Michael Torrance:

On the occasion of earth day, BMO's annual Trees from Trades Program will see us donate a portion of global markets revenue from trades to fund the planting of trees for a greener planet.

Susan McGeachie:

My name is Susan McGeachie and I'm Head of the BMO Climate Institute. The institute was established just over a year ago by BMO Financial Group to bridge climate policy and science with business strategy and finance.

Susan McGeachie:

Over the past 12 months, we've provided a platform for thought leadership and collaboration with industry, government, investors, and academia to help advance climate solutions and identify opportunities for clients in the low carbon transition.

Susan McGeachie:

Today, on earth day, I am joined by Corey Diamond, Executive Director of Efficiency Canada, to talk about the decarbonization of the real estate sector as a critical success factor for achieving our national net zero ambition. Thanks for joining us here for earth day, Corey.

Corey Diamond:

Thanks, Susan. Happy earth day.

Susan McGeachie:

Happy earth day. Let's start with you telling our listeners about your vision and mission at Efficiency Canada.

Corey Diamond:

Yeah. Sure. No problem. Essentially, Efficiency Canada is a national climate organization. We focus on, as you can tell by our name, on engaging governments at all levels on the topic of energy efficiency. What are the right policy solutions across the country at the federal, provincial and municipal levels that can essentially release the full potential of energy efficiency?

Corey Diamond:

What does it look like to reduce waste in our buildings, in our transportation, in our industry? Then how does that result in a sustainable environment, a productive economy, and ultimately a just and equitable society? Our organization, we're based at Carleton University on the traditional unceded territories of the Algonquin Nation, and we essentially do three things to achieve that mission.

Corey Diamond:

We do a lot of research. We're part think tank. We do the typical type of research outlining, what is it going to take to ensure that we have strong energy efficiency in Canada? We do a lot of communication. Things like these podcasts, telling the story or the narrative around what the value is for Canada and Canadians on this.

Corey Diamond:

Then we do a lot of engagement where we're bringing the sector together and trying to have a louder voice of the people in the sector that do this work so that politicians and government officials and the private sector fully understand who is behind this sector and what can they do to help drive the decarbonization of things like the built environment?

Susan McGeachie:

The BMO Climate Institute this year, we published a report, Decarbonizing Canada's Housing Stock, and leveraged a lot of the work that you did, and as you described that we found in your report, Canada's retrofit mission. Can you tell us a bit about the driver behind that report and give us a sense of the decarbonization potential of Canada's building stock, and related, what some of the key challenges are that prevent this potential from being realized?

Corey Diamond:

Yeah. Okay. Here's the part of the podcast where I throw out a whole bunch of numbers. I'm in someone's AirPods right now so I'm really going to try and simplify because it's hard to visualize in this format, but buildings account for about 12% of Canada's emissions across the board.

Corey Diamond:

But when you bring in the impact of where we get energy from, like our electricity generation, the sources that power our buildings, that rises to about 17%. The total amount of emissions coming from buildings is about 91 megatons. To put that in perspective, only transportation and the oil and gas sector emit more as part of Canada's emissions pie chart.

Corey Diamond:

We've got these 91 megatons, we've got this 17% of all of Canada's emissions come from buildings. If we're looking at a strategy to eliminate the emissions from buildings, overwhelmingly about 85% of the emissions that come from Canada's buildings, come from space and water heating.

Corey Diamond:

If we're looking at the strategies to take care of those emissions and figure out how we're going to ultimately eliminate them by 2050, that's where we have to focus our efforts. The federal government just released a plan called the Emissions Reduction Plan, where they look at all the different sectors and they determine, what do we have to do to get us to as close as we can to our 2030 targets and our 2050 targets?

Corey Diamond:

They said, "Okay. So in the building sector, over the next eight years to get us to 2030, we have to eliminate 42% of our emissions." Okay. That's a lot of percentages and a lot of numbers, but let's simplify. Approximately one-fifth of all of our emissions in Canada come from buildings. Out of that, almost all of it comes from heating our water and our spaces.

Corey Diamond:

Now we have to essentially cut that entire set of emissions in half by 2030, and completely down to zero by 2050. That's a big task. What our research did, and you referenced the Canada's retrofit mission report, was we wanted to work backwards from 2050 and asked the question, what's it going to take to decarbonize every building in Canada?

Corey Diamond:

The modeling looks at different building types, looks at different geographies, current emissionsprofiles, and then puts a plan together to rapidly bring every building to net zero within a generation. A huge challenge. You ask what the challenges are. That is a big challenge. We essentially need to triple the scale and amount of building retrofits right now.

Corey Diamond:

There's all these little mini challenges within that. Do we have enough skills and labor? Do we have enough flexibility in the supply chain? How do we deploy capital? Our approach in the report that we wrote and the work that we're doing to advocate on this is to essentially put this all through the lens of a mission.

Corey Diamond:

Just like we put a person on the moon, or we figured out these monumental shifts during or after wartime, we need a national Canadian mission that attempts to scale up this activity and work through each of these mini challenges so that we're ultimately putting every building on a path towards decarbonization as fast as possible and within the given timeframes that our targets have set.

Susan McGeachie:

In terms of talking about this as a mission, and you also mentioned Canada's 2030 plan, it sounds like the role of government in decarbonizing Canadian real estate's pretty important. Are you optimistic following the release of that 2030 plan as well as the 2022 budget?

Corey Diamond:

Yeah, I am. I mean, if you think about the role of government in decarbonizing real estate, it's absolutely vital. I mean, it's hard to imagine a net zero future without good sound policy guiding it. Those policies have some principles. We got to make sure they're clear and consistent, that they don't change every time a new government comes in.

Corey Diamond:

Those policies have to move the market in a certain direction so that it sends signals to investors that we need to do this. Those policies also have to recognize that in Canada, we've got multiple different layers of government. One level of government can't do it all. It's got to be in cooperation with the other levels. What we saw in the 2030 Emissions Reduction Plan that was just released, there is optimism about it.

Corey Diamond:

Things are definitely moving in the right direction. I would say personally, I spend way less time trying to convince officials on the need to do this and way more time on the minutia of how we're actually going to implement this and how we're going to send signals to the marketplace that this is the direction the country's going.

Corey Diamond:

We're definitely seeing a shift in sort of consciousness and paradigm around the need to do this and the policies we need to sort of implement. But there's definitely areas where we're not all quite there. As any good advocate or climate activist, there's always great things and then there's always things that aren't necessarily going in the right direction.

Corey Diamond:

One of those areas for us is around the lack of policy or attention being focused around helping those Canadians that need it the most. In Canada, we have more than 20% of Canadians live in energy poverty, and they're paying a larger portion of their income on energy bills and there's a desperate need now to start to connect our climate ambitions ensuring that we don't leave anyone behind.

Corey Diamond:

There's definitely some work to go on that. We've been doing a lot of work with other groups to push in that direction. But overall, if we don't have good sound policy and those policies aren't guided by good strong principles, we're never going to get to the level of decarbonization in the short period of time that we have.

Corey Diamond:

And so it's absolutely vital that everyone works together and make sure that they're supporting good policy making or else we're not going to see the outcome we want.

Susan McGeachie:

Well, you talked about that you've moved beyond the why we should do this to the how and your report notes a key limitation to scaling retrofits in buildings is the model in which renovations are deployed. That a paradigm shift is required in how we think about and deliver retrofits. Can you describe the current model and what an alternative would look like?

Corey Diamond:

Yeah. Anyone who's listening, if you've had any experience in renovations, not necessarily related to reducing energy use, but any kind of renovation, you know what you have to do. This is what's called in our report, an atomized approach. It means individuals are finding their own contractors, determining what their retrofits look like, creating these unique projects on their own and just basically getting it done.

Corey Diamond:

They find their own financing. They're just doing the best they can to get things done in time for the deadlines that they've set for themselves. That's very typical of energy efficiency upgrades, because we have a system that provides grants and incentives, sometimes loans and things for individuals to go out and make that.

Corey Diamond:

What we looked at is, what if we just kept doing what we currently do at the pace we're doing at, with each individual homeowner or building operator making the changes that they need to make on their own? It would take 140 years to retrofit every building in Canada if we continue along that path.

Corey Diamond:

Clearly we need a different model, and so what we looked at is what some new and interesting, exciting pathways are unfolding in Europe and in the U.S. around essentially determining how to take the power or the actual control of these retrofits out of the hands of individuals and aggregating mass retrofits on a much larger scale.

Corey Diamond:

You can imagine an entire street or every school, or a whole bunch of buildings in one area and them all being retrofitted at the same time. This is an approach that is being delivered and has been delivered for a number of years in The Netherlands. It's called “energy sprung” or “energy leap.”

Corey Diamond:

What they've done is they go into a neighborhood or a community, and they consult and liaise with all of the homeowners and renters in that neighborhood. They measure out, down to the millimeter, what is required to put this external cladding on the building and to install some solar hot water system.

Corey Diamond:

Then they go into a factory and they literally manufacture this cladding down to the millimeter for each house, and then come along and within a week, they've retrofitted an entire block. Each one of those houses is now at a 50% less energy use and has completed a deep energy retrofit. Those people who live in those houses haven't had to go and do this on their own. This is sort of done as a service as a model for them.

Corey Diamond:

We'd love to see something like that happen in Canada, where you've got these, what are called market development teams that are identifying neighborhoods, communities, types of buildings, aggregating them all together, figuring out these really cool, innovative models of how to retrofit really fast, determining the supply chains, how to get the capital, all that kind of stuff.

Corey Diamond:

Then essentially turning this into a service for people that you could then essentially pay like you pay your Netflix bill, or like you pay your hydro bill each month. You're essentially paying off the cost of that retrofit through your energy savings.

Susan McGeachie:

If we keep this theme, because this sounds like the retrofit mission that you were describing earlier, who pays for that? Is it the public sector? Is it private capital? Is it the two working together? Then how does that happen?

Corey Diamond:

Really good question. Because this is going to cost tens, if not hundreds of billions of dollars over the next 30 years, which sounds like a lot of money, but it is in comparison to the amount of money being spent today in the renovation sector. It is in line with how we're already renovating and it's a really good question. How do we actually get the capital to do it?

Corey Diamond:

I'd say there's four steps. First step is we need to recognize that we need a paradigm shift. We have to move away from this idea that we can just provide a loan or a grant to someone and they'll make the right choice. We have to completely change the paradigm. We're starting to see some recognition of that. The federal government just put in $33 million to set up these market development teams. A great start.

Corey Diamond:

The second step is then to get the public funding deployed fast enough to start this paradigm shift. The public funds are going to come first from the government to get this thing going and to help aggregate, identify potential projects, how you bring it all together. First we get the paradigm shift, then we get some public funding to get this thing going.

Corey Diamond:

Then third, we just need to start doing it. We need to let each market development team identify their target market, new systems that they're developing and put their plans together. Then the fourth is we need to find some initial funding to do these projects, to determine which ones are the winners and which ones are totally failing.

Corey Diamond:

That way we can move quickly to scale once we've identified the winners and start to bring in significant private capital where there's less risk. I think in that sort of four-step model, you do see a significant need of the public sector to move in this direction and de-risk this type of activity.

Corey Diamond:

Once the winners are found, once we know how to retrofit an entire street or a whole bunch of apartment buildings together, then we can identify the winners and it's now de-risked. Then you have the opportunity for lots of different private capital providers to come in and make it happen. In the meantime though, we still need to carry on with our existing model.

Corey Diamond:

Like it's not going to be just overnight we just shift to this new paradigm. We still need to do the things like get a hundred dollars off this or get $5,000 towards your retrofit. Keep pushing that and encouraging people in everything that they do, in every decision they make in their homes to think of reducing their energy usage.

Corey Diamond:

We have to do that while we're building this brand new beast and getting that going and bring in everyone early enough so they can start to see their role in it.

Susan McGeachie:

How do we get the average homeowner excited about energy retrofits and energy efficiency?

Corey Diamond:

Well, I guess in this new model that I identified, I think what you do is the value that you're providing is that you don't have to spend all of your free time figuring out how to get this done and finding your own contractors and finding your own capital.

Corey Diamond:

We're essentially taking the decision-making out of the hands of the individual approach and bringing in this new mindset and sort of, as I said earlier, treating it more like a payment plan or a subscription type service, and then getting the benefits from that. Ultimately, what we're hoping is just by doing that, the demand increases because it's being taken care of.

Corey Diamond:

But we know that what increases demand for home energy retrofits typically doesn't have a lot to do with what you would think it does, which is energy savings. What matters to people are things like comfort. They want to be able to watch TV at night without having cold air blowing on their ankles. They want security.

Corey Diamond:

They want to know that their house is resilient to all these changes that are coming from whether it be fires out west, floods and the impact that climate change has. People are interested and concerned about their health. We've all just spent two years inside our houses and we're starting to make the connection between indoor air quality and our own health.

Corey Diamond:

These are things that appeal to people when they're thinking about retrofit. If we're talking about increasing the demand as we build this new ship around this mission and sort of taking it out of their hands and providing such a turnkey service, we have to keep in mind what is going to get people excited, which is typically what they used to call non-energy benefits in the policy world.

Corey Diamond:

To me, it's really just benefits. It's the benefits of what people are looking for in their lives.

Susan McGeachie:

I completely agree with you. I see this paradigm shift significantly increasing demand for retrofits. In the meantime, you also said we need the traditional structure to move along where somebody can get a grant and retrofit their home. But it's still expensive and the grant application process is onerous.

Susan McGeachie:

Also, I'm wondering, with the 2022 budget, the Canadian government mentioned an EnerGuide label rating at the time of sale, which I would imagine would create some incentives for homeowners to retrofit their homes so that it'll have more value. I just wondered if you could unpack all of that.

Corey Diamond:

Yeah. I've been in this game pretty much my whole adult life, and I used to think that if we just provide enough information to people about the value of doing something, then people will make the right choice and ultimately do the right thing for themselves and for the environment. But you could probably identify a hundred different decision points in your day that don't take into consideration the right choice.

Corey Diamond:

You could easily make a cup of coffee at home before you leave, but we all stop and get a 4 or $5 cup of coffee on the way. Why do we do that? Well, there's obviously things happening in our lives and the role convenience plays that force us into decisions that aren't in our best interest all the time. There's a multi-billion or trillion dollar advertising juggernaut forcing us into those decisions as well.

Corey Diamond:

Yes, there's going to be a group of people, a group of Canadians that are going to be first movers and always going to make the right decisions based on the data that they're getting on their house and the emissions they can reduce and the comfort they can increase and they'll make decisions on that. They're willing to go through the process of applying for a grant and things.

Corey Diamond:

But most Canadians are probably going to be nudged in a certain direction by a policy that they probably don't know much about, but is there anyways. The one policy you mentioned is a perfect example of that. Energy labeling at the time of a sale is a proven effective policy that can push people to better understand, not only how the house is performing, but what the impact over the long term of that house is before making a decision.

Corey Diamond:

Basically the way that works is when a house is listed for sale, you're given information on the energy usage of that house and the opportunities or potential for you to reduce energy usage and ultimately limit and reduce your emissions from that, by identifying some things that you could do.

Corey Diamond:

That can be either effective for person who's selling the house, because you could then maybe make some changes and ultimately list your house for a higher price. And it can definitely be effective for the person buying the house because they now have a roadmap of the types of things they can do once they've taken possession of that home.

Corey Diamond:

If you have ever purchased a house, then you know that in the first 30/60 days, those are the times you're doing all the big changes. You're fixing the roof, you're changing out the wiring, all the big stuff that you have to do when you buy a house. This is no different. This is the time when you can actually make a decision about your heating, about your windows, about your insulation.

Corey Diamond:

To have that roadmap at the time of sale is a perfect opportunity to nudge people in the direction that they may not have been thinking of in the first place. It's a nice mix of speaking to people's interests and attitudes towards this, but giving that policy nudge that actually gets them over the edge to actually do it.

Susan McGeachie:

Corey, this has been a really insightful conversation. I wonder if we can reflect for a moment, much like New Year's, earth day reminds us to think about our efforts over the past year and what we've achieved and what we haven't achieved, and what we want to prioritize over the next year. What's your perspective this earth day? Are you optimistic about achieving our Paris commitment?

Corey Diamond:

That's a really good question and a great way to end the podcast. I mean, I don't think you can do the work that we do and not be optimistic. I'm sure you see it in your work too, Susan, around trying to push for the world we want to see. And so I am generally optimistic what we can do, because I'm convinced that the barriers or the issues that we have, don't really have a lot to do with technology.

Corey Diamond:

We've got the technology to live in a better world. Don't have much to do with money. I mean, there's plenty of money to go around and being invested. Certainly the commitments that major Canadian banks are making to decarbonizing their portfolio, money will be there. Overwhelmingly, some of our issues are just political and just encouraging governments to create the world that many of us want to live in.

Corey Diamond:

Judging by that, we are seeing, at all levels of government, not just in Canada, but around the world, that kind of recognition. Certainly I get my optimism and inspiration from young people who are out in the streets over the last two years, forcing this as an issue and demanding a better world that they're going to have to live in. It's an exciting time.

Corey Diamond:

It never used to be this way where you'd be in a situation or in rooms where we're no longer convincing, but we're actually really tackling the real hard challenges for this. No place I'd rather be in advocating for that kind of world. earth day does give me a pause and just a moment to step back and see how far we have come.

Corey Diamond:

But the task ahead is extremely daunting, given the stakes of not only our survival, but the survival of the planet as whole, and the amount of suffering that could happen if we don't go in that direction. That gives me that extra push to want to keep going and ride the optimism I have and make it all happen.

Susan McGeachie:

Corey, thank you so much for taking the time to share your knowledge, your experience, your expertise in this area with us today. Corey Diamond, Executive Director of Efficiency Canada.

Corey Diamond:

Thanks very much, Susan. Have a great day.

Susan McGeachie:

Have a great a day.

Michael Torrance:

Thanks for listening to Sustainability Leaders. This podcast is presented by BMO Financial Group. To access all the resources we discussed in today's episode, and to see our other podcast, visit us at bmo.com/sustainabilityleaders. You can listen and subscribe for free to our show on Apple Podcasts or your favorite podcast provider.

Michael Torrance:

We'll greatly appreciate a rating and review and any feedback that you might have. Our show and resources are produced with support from BMO's marketing team and Puddle Creative. Until next time, I'm Michael Torrance. Have a great week.

Speaker 3:

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Speaker 3:

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