Tanking oil price doesn’t affect retrofit business case


PhotoMontage-LargeThe plunging price of oil is making headlines around the world. Does this mean the business case for energy efficiency retrofits will also melt down?

Because people tend to equate oil and energy, there seems to be an assumption that the prospects for continued investments in energy efficiency – and the associated greenhouse gas emission reductions – are bleak.   This is incorrect.

Let’s not mix apples and oranges.  Most oil is used for transportation in the form of gasoline and diesel fuel.  Almost no oil is used for heating buildings and generating electricity.

In Toronto, for instance, 50% of our  greenhouse gas emissions come from natural gas used to heat our buildings and the electricity used to power the motors and appliances in buildings.

On the other hand, the gasoline and diesel used in our cars and trucks – the oil part of our energy — accounts for about 40%.

In Ontario as whole, just 4.4% residential buildings and 0.9% of commercial ones are heated with oil and there is only one electricity generation plant that continues to use oil seasonally – during winter periods of peak natural gas use.

That said, the low prices at the pump are beginning to foreshadow a disturbing trend with respect to a potential increase in transportation emissions, with recent reports showing jumps in purchases of passenger vehicles and higher sales of light trucks. Will the trend put even more pressure on Toronto’s growing emissions of greenhouse gases and air pollutants from local vehicles?

In short, low-cost oil has no impact on the energy retrofit business case. In fact, energy retrofits remain profitable despite relatively low natural gas prices, and will only provide stronger returns as energy prices increase. Plus, retrofits provide significant improvements to building value and comfort.

So don’t let the current 90-cent gasoline fool you: buildings don’t run on oil. Besides, the cheapest energy is always the energy you don’t use.

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The Good, the Bad and the Ugly: Ontario’s New Natural Gas Conservation Framework

Natural gas used to heat Toronto's buildings accounts for 35% of GHG emissions

Natural gas used to heat Toronto’s buildings accounts for 35% of GHG emissions

On December 22, 2014, the Ontario Energy Board (OEB) quietly issued a new regulatory framework to govern natural gas conservation programs for the next six years.

While the release of Ontario’s new Demand Side Management (DSM) Framework for Natural Gas didn’t make any headlines, it will have a major impact on Ontario’s ability to meet its 2020 greenhouse gas (GHG) reduction commitment — and on Toronto’s ability to meet its own more ambitious 2020 target.

That’s because natural gas used for heating (i.e. excluding gas used for electricity generation) accounts for 30% of province-wide GHG emissions and 35% of Toronto’s emissions.  While province-wide GHG emissions from electricity have already fallen significantly (by 43% compared to 1990 levels), due to the phase out of coal-fired power plants combined with conservation, natural gas emissions have actually increased.

A new gas conservation framework was required both because the old framework expired on December 31st, but also because the Ontario Minister of Energy had directed the OEB to develop a new framework consistent with the Province’s Conservation First energy policy.

TAF’s research papers

Recognizing the importance of natural gas conservation, TAF commissioned a series of research papers last year summarizing best practices in natural gas conservation from jurisdictions across North America and outlining some recommendations for Ontario.

We provided our research directly to the OEB as well as to a variety of stakeholders, and it was cited prominently by several organizations in their formal responses to the draft framework floated by the OEB last fall, as well as forming the basis of TAF’s own response to the draft.

So, how did we do?

The new gas conservation framework is a significant step forward both compared to the last framework as well as the draft version floated in the September. However, it still falls well short of the Minister’s directive to enable achievement of all cost effective conservation.

Here are the key points: Continue reading

Posted in Conservation, Energy efficiency, General, High-rise energy efficiency | Tagged , , DSM Framework, , | 3 Comments

Sharing TAF’s financing techniques with C40 Cities

C40 Cic40 citiesties – Toronto being one – are big cities from around the world that are actively reducing climate pollution and risks.  C40 offers these motivated cities a forum for collaboration, knowledge-sharing, and problem-solving.  I was recently invited to present to the C40 Finance & Economic Development Network to let them know about the finance innovation work being undertaken at TAF. This was one in a series of webinars focused on municipal funds including funds in Amsterdam, Melbourne, London, and Chicago.  Toronto Atmospheric Fund, established in 1991, is probably the oldest municipal climate funds; we were endowed before climate change made daily headlines. And, unlike most others, TAF undertakes practical programs, advances policies, and develops innovative financing tools as well as making investments. Check out what they’re saying about TAF’s approaches to financing low-carbon solutions on the recent C40 City Solutions blog featured on the National Geographic website.

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TAF invests in … The Big Move

eglinton crosstownAs an acknowledged leader in the field of impact investing, it comes as no surprise to us that Ontario’s first $500 million green bond, offered in September, was almost five times over-subscribed. The capital raised will be dedicated to infrastructure projects like the Eglinton Crosstown LRT, now under construction. Funding of large transit projects in the region is a priority for TAF, because getting people out of personal vehicles and onto public transit addresses a major local source of greenhouse gas and air pollution.

TAF has always spent the interest earned from its endowment to advance low-carbon and air quality solutions.  We are also committed to deploying the endowment capital in a manner that supports our mandate and I’m proud to say that almost 80% of TAF’s $25M endowment is currently invested for impact.  That includes our equities portfolio and direct investments in local projects like high-rise residential energy efficiency retrofits. It now also includes $271,000 of Ontario’s green bond, purchased through our fixed income manager.

We have seen strong interest in opportunities for low-carbon investments for several years, and Ontario’s bond issue along with billions of other green bond offerings confirms that investors around the world really DO want their money to be deployed in an environmentally-responsible manner. And with current market conditions wreaking havoc with conventional energy values, the financial picture only becomes stronger for investments low-carbon alternatives.

Posted in Green finance | Tagged Eglinton Crosstown, Impact Investing, , low-carbon investment, Ontario green bond | Leave a comment

Resilient buildings – not just about adaptation

By Jonathan Morier, TAF’s Indoor Environmental Quality Researcher

district energyEarlier this month I attended the Green Building Festival put on by Sustainable Buildings Canada. It was a day packed with interesting presentations and discussions on the topic of urban resilience. While the day started with a reminder from Ontario Environment Commissioner Gordon Miller  of the “doom and gloom” that awaits us if we don’t act soon on climate change, few of the subsequent presentations provided a focus on greenhouse gas reduction, or the fact that there is a lot of crossover between greenhouse gas reduction and resilience.

For example, Robert Thornton, President & CEO of the International District Energy Association gave a passionate presentation about district energy and how it can increase energy efficiency and resilience, noting that Princeton University was minimally affected by Hurricane Sandy while millions of people around the university lost power for days. The university campus was able to maintain power thanks to its microgrid and cogeneration plant, and even became a hub for police, firefighters, and other emergency workers of the area to regroup, warm up, and recharge their equipment.

District energy networks such as Princeton’s not only increase resilience in times of crisis, but also reduce emissions due to their high energy efficiency capabilities. Robert explained that in a typical fossil fuelled power plant, two-thirds of the energy is wasted due to heat loss (see diagram, above). On the other hand, district energy power plants generally achieve 70-80% burning efficiency by capturing waste heat to warm streets and buildings. One Copenhagen district power plant was even able to achieve close to 90% burning efficiency.

In the afternoon session, Paul Dowsett, Principal Architect, SUSTAINABLE.TO, presented his award-winning designs for resilient houses that can withstand severe hurricanes such as Katrina or Sandy. The designs are elevated to adjust for floodplain but they also embrace passive design principles. They are highly insulated, oriented for optimal sunlight exposure, and have passive shading elements to reduce heat during summer months, making them a great choice both for resilience and energy efficiency.

At TAF, we work on making buildings more energy efficient and you can learn more about our program by visiting out TowerWise website.  We are also very interested in your ideas about integrating strategies to reducing greenhouse gas emissions and build up our resilience to climate change.




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