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Geared for Change: Energy Efficiency in Canada?s Commercial Building Sector

5.0 International Policy Trends


Energy efficiency is a rapidly developing area for policy development and although many policies have not yet been subject to rigorous evaluation, Canada can look to global regions for trends in energy efficiency policy in order to be aware of innovative developments and potential best practices. Specific research was commissioned to identify emerging international trends in energy policy for buildings in order to position recommendations within a global context. Four regions were selected for this work based on their unique policy approaches for advancing energy efficiency.

Several examples of policy instruments employed by each region are reviewed. This section does not attempt to identify best practices or examples of successful policy implementation, due to limitations in data and resources required to do so. However, several indicators are identified within the regions that are instrumental in approving, establishing, and implementing policy programs.

5.1 Japan

The number of energy efficient buildings in Japan is growing rapidly, due in part to its Energy Conservation Law, which is a form of command and control regulation that came into force in 2003 as a way to strengthen energy management. It specifies requirements for energy control systems in commercial buildings and emphasizes the rational use of energy related to the prevention of heat loss and efficient energy use in buildings. The Law authorizes local governments to provide guidance and advice to commercial energy users, and has become a documented success. The Law was amended in 2003 in part to promote the engagement of ESCO projectsk with subsidies, low-interest loans, and tax incentives for energy conservation measures. In 2006, mandatory energy conservation measures were released to strengthen the Law. Buildings with a total floor space of 2,000 m2 or larger are now required to report conservation measures in new construction, extension or rebuilding. If deemed insufficient, instructions are given for energy compliance and performance reports are required periodically.[74]

The Top Runner Program is a leading Japanese regulatory tool designed to help achieve the goals of the Energy Conservation Law. Rather than setting a minimum efficiency requirement for equipment, it identifies products with the highest energy efficiency ratings in the market and sets them as the market standard. That standard then becomes the requirement imposed on manufacturers. Given the ambitious nature of this policy, notable energy savings impacts have been associated with the introduction of the program.[75] The program has achieved energy efficiency improvements of over 50% for some products, while total energy savings are expected to reach 2.2% of the country?s total energy use by 2010.[76] It is considered to be flexible, dynamic and adaptive, and allows failures and shortcomings to be addressed and remedied. Also, market stakeholders are involved in helping to set the targets and standard requirements, which ensures that awareness and commitment levels are high.[77]

The Energy Conservation Centre of Japan (ECCJ) was established to promote rational energy use, and to act as a resource for technical advice to local governments. The ECCJ has also adopted a list of policies entitled the Fundamental Policies for Rational Use of Energy, which outlines various measures for builders, owners and local governments to encourage adoption of energy efficiency measures. Local governments are also encouraged to support capital investment, technology, research and development, and education as it relates to energy conservation.

5.2 The European Union (EU)

The EU administration has acknowledged that it will be impossible to meet Europe?s climate and energy security goals without including policy action targeted at buildings. In 2003 the Commission introduced the Energy Performance of Buildings Directive (EPBD), which aims to increase the energy performance of public, commercial and private buildings in all Member States. It has played a critical role in EU policy and legislation by standardizing and strengthening building energy efficiency requirements and has become known as one of the most advanced and comprehensive pieces of regulation targeted at the improvement of energy efficiency in buildings [78].

The EPBD consists of four main actions:

  • The establishment of a common methodology for calculating the energy performance of buildings.
  • The application of new methods for minimum energy performance standards for new buildings. Commercial retrofits must match efficiency levels of new buildings. This is unique because it is one of the few policies worldwide to target existing buildings
  • The establishment of certification schemes for new and existing buildings and the requirement to display energy performance certificates in public buildings. These certificates are intended to address the landlord/tenant barrier by facilitating the transfer of information on the relative energy performance of buildings. Information from the certification process must be made available for new and existing commercial buildings and for dwellings when they are constructed, sold, or rented.
  • The establishment of regular inspections and assessments of boilers and heating/cooling equipment.

The EPBD buildings platform was established to offer support to national policy makers implementing the directive. The EU has begun to issue warnings to countries that have been slow to implement the directive or adopt it as part of their legislation. The region is also working to harmonize building codes between countries to streamline processes and to mandate energy efficiency in all codes. It has investigated the possibility of designing a harmonized building code at the European level and has set up a platform for information exchange on energy performance standardization and legislation among the prominent national players to develop suggestions for a European model code.

5.3 Australia

In response to drought and increasing water shortages, the Australian government has implemented policies to mitigate negative climate-change impacts, including energy conservation and GHG mitigation in buildings. In June 2005 it released the Ecologically Sustainable Development (ESD) Design Guide for Australian Government Buildings,[80] which stipulates how the government intends to show leadership in minimizing the environmental impacts of its own buildings and operations.

The Green Building Council of Australia (GBCA)l is the nation?s leading authority on green buildings and works very closely with the government to promote the importance of energy efficiency in buildings. Central to its work is the development of the Green Star environmental rating system for buildings, a national comprehensive environmental rating scheme for buildings.

In 2000, the Australian government reached an agreement with industry and state/territorial governments to adopt a two-pronged approach to reducing GHG emissions from buildings. The first was the introduction of mandatory minimum energy performance requirements through the Building Code of Australia (BCA), and the second was the encouragement of best practice voluntary initiatives by industry. Industry was supportive of this two-pronged approach, taking the view that building-related matters should be consolidated in the BCA wherever possible.

Energy efficiency measures were introduced in January 2003 following extensive consultations and the BCA has now been amended to include energy efficiency measures for all building classifications. All new and substantially refurbished buildings, whether owned or leased by the Australian government, must meet minimum energy performance standards based on the Australian Building Greenhouse Rating Scheme (ABGR)m or other approved scheme. The Voluntary Building Industry Initiatives Programmen is designed to promote energy efficiency practices among building and construction practitioners.

5.4 The United States (US)

5.4.1 Federal Initiatives

Legislation governing the built environment is notably progressive in the US. The Energy Independence and Security Act adopted in December 2007 aims to cut energy use in federal buildings in the US by 30% by 2015, and requires new and renovated federal buildings to reduce their reliance on energy from fossil fuels. The energy bill requires that new buildings consume 30% less energy stipulated by existing codes. As a supporting measure, the Federal Energy Management Program (FEMP) provides guidelines and tools to assist federal facilities to achieve these goals. The National Association of State Energy Officials (NASEO) provides a forum for the exchange of information and ideas. The National Association of Counties has initiated a County Energy Efficiency Network designed to leverage resources and provide technical assistance, local training, staff support and financial assistance to counties implementing energy management strategies.

In 2007, the Energy Efficiency and Conservation Block Grant (EECBG)0 authorized $2 billion in grants to communities and states as part of the US Energy Security Act. Municipalities can apply for program funding to encourage energy efficiency and conservation in commercial, residential and municipal buildings. The Commercial Building Tax Deduction,p also written into the Act, establishes a tax deduction for expenses related to the design and installation of energy efficient commercial building systems.

The Energy Policy and Conservation Act (EPCA) was amended in 1992 and left a profound impact on the use of building energy codes in the US. Under the EPCA every state was required to certify before October 1994 that its energy codes would meet or exceed the requirements of the ASHRAE Standard 90.1-1989. At the time it was estimated that the EPCA could lead to a 20% reduction in energy use in half the new commercial buildings built between 1995 and 2010.[81] Although an evaluation of the projected savings is unavailable, the package of US energy codes and the 90 series of ASHRAE Standards is by far the most widely adopted model used in other countries in the development of national energy codes.[82]

Appliance labelling has been successful in driving market transformation.[83] Of the energy efficiency schemes, the best-known is the Energy Star Program, which was launched in 1992, operated jointly by the US environmental protection agency (EPA) and the Department of Energy (DOE).[84] The Program was initially designed to identify and promote energy efficient products, and later expanded to cover building components, systems and services installations. The Energy Star Program is a government-backed voluntary scheme that is well accepted by industry. According to published data, more than 600 buildings have earned the label, and the administrator of the Energy Star program is already working with organizations that represent approximately 17% of building square footage in the US[85]. In recent years, the EPA has licensed the Energy Star trademark to several countries, including Japan, New Zealand, Australia and Taiwan, and to the EU[86].

The High Performance Green Building Act was recently passed in the United States to legislate the creation of an Office of High-Performance Green Buildings within the General Services Administration (GSA) that would coordinate research and development on ways for government buildings to become more sustainable. As part of the Act, GSA announced that all future construction within its $12 billion portfolio must be LEED-certified[87].

5.4.2 State and Municipal Initiatives

US constitutional jurisdiction for buildings crosses federal, state, and municipal levels and several exemplary policy initiatives have been adopted at local levels. California has demonstrated strong leadership in making energy efficiency a priority in energy policy and its energy efficiency programs are considered the most successful in the US. The State?s 2005 Energy Action Plan II establishes energy efficiency as the state?s top priority procurement resource and is endorsed by the Governor, California?s Public Utilities Commission (CPUC) and the California Energy Commission (CEC).q The new administrative structure calls for utilities to invest in energy efficiency whenever it is a cheaper alternative to new power plants and it is recognized as ?the most ambitious energy efficiency and conservation campaign in the history of the utility industry in the US.?r It directs the CEC to adopt new building standards for implementation in 2008 that include new energy efficiency measures, cost-effective technologies and photovoltaic systems. The 2004 Green Building Initiative commits California to a series of actions that will result in a 20% reduction in the energy use of state- and privately-owned buildings by 2015.s California is currently developing policy to mandate that all new and a significant proportion of commercial buildings be net zero energy consumers by 2030.

Tax credits are used as policy tools to increase investment in energy efficiency in Oregon and New York State. Oregon provides two tax credits for efficient buildings: a Sustainable Building Tax Credit for buildings achieving LEED certification, which is based on the gross square footage of the project space; and the State Business Energy Tax Credit, which is also available to projects that fulfill certain energy conservation, equipment efficiency and renewable energy systems requirements. New York State has a Green Building Tax Credit program based on a dollar amount per square foot for commercial buildings larger than 20,000 square feet. Its goals are to support the installation of photovoltaic panels in new construction and innovation in existing buildings. Since 1999, New York has provided more than $92 million in federal and state funds to provide assistance for projects affecting more than 137 million square feet of building space.

The City of Chicago introduced a green permit program in 2005 to overcome permit approval barriers for green buildings. It was the first of its kind in the US and has a rapidly growing program that has helped to significantly accelerate the growth of private sector green building development in the city. Chicago has also developed a comprehensive Green Building Education and Awareness Program that highlights the work of green builders and seeks to drive demand for their products. Today, Chicago leads the nation in number of LEED registered projects.

5.5 Common Factors across Regions

A number of common factors emerge as contributors to innovative policy strategies. They include the following:

  • Government Leadership
    In all cases governments established the promotion of energy efficiency as a key priority target for policy development. Government buy-in is particularly important in the implementation and enforcement of command and control regulations and building codes.

  • Stakeholder Collaboration
    Stakeholder collaboration with governments was a key element of programs considered to be successful by the regions. While local governments are responsible for developing legislation, stakeholder organizations such as green building councils and relevant industry associations were considered critical to successful promotion and implementation of the new policies.

  • Coordinating Role
    Many of the countries examined have established federally legislated bodies responsible for policy execution, program development, and public information with respect to energy efficiency and energy use in buildings. These agencies helped to coordinate, organize, manage, and streamline energy efficiency policy.

  • Measurement and Verification Protocol
    Measurement and verification protocols proved effective in updating programs and policies. To remain current with emerging technologies and practices policy tools were monitored, evaluated, and upgraded regularly. Long-term funding, an institutional structure to deliver initiatives, and specified input processes and review cycles are important components of measurement and verification protocols.

  • Diverse Portfolio of Policy Instruments
    The efficacy of individual policy measures was considered to be highest when combined within a package of other policy instruments. Combining regulatory, fiscal/market-based, and information-related instruments helps to capture the advantages of the single instrument as well as reduce the impact of their shortcomings.

  • Setting Legally Binding Targets
    Setting annual targets for emissions reductions and energy savings was an underlying component of innovative programming in several regions. These targets establish a common goal and can be considered a motivating factor for many associations, agencies, and private sector firms.


k An ESCO project is an energy-saving business activity on a private basis offering comprehensive energy-related services to clients.

l Launched in 2002, the GBCA is a national, not-for-profit organization that is committed to developing a sustainable property industry for Australia by encouraging the adoption of green building practices through market based solutions. It is uniquely supported by both industry and governments across the country.

m The Australian Building Greenhouse Rating System (ABGR) is an energy efficiency and greenhouse gas emissions
standard that addresses commercial building design, operation, and maintenance best practices to minimize greenhouse gas emissions. Since 2000, ABGR has been rating buildings according to their actual energy performance over 12 consecutive months.

n Projects developed with the support of the Australian Government under this program include:

  • WERS Window Energy Rating Scheme
  • EDG Environmental Design Guides
  • BDAA Marketing Sustainable Design Workshops
  • BDP Making Energy Pay
  • HIA GreenSmart Professional Accreditation Course
  • MBA Energy Wise-Dollar Wise Training Course
  • LBPP Lighting Best Practice Project
  • WELS Water Efficiency Labeling and Standards

o EECBG is a program, as part of the Energy Independence and Security Act, which provides block grants to cities and states to improve energy efficiency and encourage other environmentally beneficial practices. Grants could also be used to provide energy audits and energy technical assistance.

p As part of this deduction, a building owner may claim a tax deduction for expenditures made as part of a building
designed to reduce the total annual energy used in the operation of the building.

q CEC is the state?s principal energy planning agency responsible for developing and implementing building and appliance energy efficiency standards. It licenses power plants, implements renewable energy programs, and supports the state?s energy efficiency research and development programs.

r California Energy Commission (CEC). (2005). ?Options for Energy Efficiency in Existing Buildings?. CEC

s California Energy Commission (CEC). (2005).

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