Opinion: Commercial real estate and the climate challenge

The provincial government's climate action plan includes several goals for the commercial real estate sector, which has so far escaped regulatory attention.

Credit: Mike Benna/Unsplash

By the end of this decade, B.C. will have cut greenhouse gas emissions from commercial buildings by 40 percent. Guess how the province will do it?

CleanBC, the province’s climate action plan, outlines a range of policies and actions intended to drive down greenhouse gas (GHG) emissions and help bring B.C. closer to its target of reducing carbon pollution 40 percent below 2007 levels by 2030.

It’s an ambitious and commendable goal, and reaching it will require sweeping changes across the economy, with implications for almost every industry. The CleanBC plan touches natural gas producers, new-vehicle dealers, and trucking and freight companies, to name just three sectors.

But one industry has largely escaped regulatory attention, and it’s not exactly a niche: commercial real estate. This sector contributes $3.5 billion to the provincial economy each year and employs 37,000 people, according to the Building Owners and Managers Association of British Columbia (BOMA BC).

When it comes to improving the performance of existing buildings, so far the province has focused on carrots. The $24-million Better Buildings BC program, co-funded with Ottawa through the federal Low Carbon Economy Leadership Fund, offers the owners and managers of commercial and multi-unit residential buildings incentives for energy assessments and upgrades.

But on the climate file, Victoria means business. CleanBC spells out several goals for the commercial real estate sector. By 2030, the province intends to reduce overall emissions from buildings by 40 percent, through a combination of:

  • Higher energy performance for new buildings, through the BC Energy Step Code, which requires all new buildings to be net zero-energy-ready by 2032;
  • Major retrofit initiatives to boost the energy efficiency of existing homes and buildings; and
  • Fuel switching to get at least 40 percent of our commercial space onto clean electric heating, including increasing heat pump usage by 15 times today’s level.

All tiers of government will be rolling out building policy and incentive programs in the months ahead. According to the province, voluntary action and incentives—with an extra nudge from the carbon tax—yielded a 6.5-percent emission reduction from commercial buildings between 2007 and 2016. However, all of the measures outlined in the CleanBC plan, across all sectors, only bring the province within 75 percent of its target.

Over the coming years, the government will be looking for opportunities to squeeze another 6.1 megatonnes of carbon out of the economy. Given the significant GHG contribution of existing commercial buildings, and the dearth of regulation to date, the sector won’t likely escape Victoria’s attention. 

For a glimpse of where things may end up in Metro Vancouver, we can look to New York City. Last April, it enacted a law that forces the owners of thousands of commercial buildings to slash their greenhouse gas emissions. Besides capping carbon pollution on buildings with more than 25,000 square feet of floor area, the law requires companies to cut reduce their GHGs 40 percent by 2030.

NYC’s reg has teeth, too: companies will face fines of US$268 a year for every excess tonne of carbon they emit, which could translate into penalties in the range of millions of dollars annually. Clearly, it’s in industry’s interest to join the conversation. Smart property owners will get out front, and fully understand their carbon exposure and the incentives available to them.

Fortunately, Building Benchmark BC, a new voluntary pilot program, hopes to make the disclosure process a little easier. Several of the province’s fastest-growing local governments have thrown their weight behind the pilot, as have leading property owners and managers such as Colliers, Concert Properties, QuadReal Property Group and Shape Properties Corp.

Building Benchmark BC aims to show property owners that energy benchmarking can be easy and effective. Participants will gain valuable insights into their energy and carbon performance relative to their peers. And comprehensive building-by-building performance data can inform effective policy, incentive program design and capital deployment. 

One way or another, the province will meet its climate goal. And as the New York City example shows us, getting there while ensuring the sector’s ongoing health will almost certainly involve some combination of effective policy and enabling incentives. Every businessperson knows how critical good data is to decision making, and Building Benchmark BC is an opportunity to help make sure that regulators get it right the first time.

Our message to property owners and managers across the province: What are you waiting for?

Donovan Woollard is CEO of OPEN Technologies, which develops building energy-performance software, and Dave Ramslie is vice-president of sustainability for Concert Properties. Both are participants in the Building Benchmark BC pilot.