Clarity and consistency should be at the heart of Toronto’s BEPS bylaw
Developing an existing building performance standard requires selecting one or more metrics with which to measure performance and establish targets for building owners to meet. This is one of the most important and fundamental policy design choices. Toronto is leading the GTHA as the first municipality to develop Building Emissions Performance Standards (BEPS). While the policy is still being finalized, Toronto’s choice of metric will set a precedent and needs to work for building owners across the region. Based on deep industry knowledge, extensive research, and our quantification expertise, TAF is recommending Toronto use greenhouse gas intensity (GHGi) with a fixed or capped electricity emission factor.
Why GHGi?
We started by reviewing metrics other jurisdictions have selected for their BEPS. Building owners operate in multiple markets and have a strong preference for consistency in codes, standards, and policies. Existing North American BEPS policies are almost evenly split, with half using GHGi and the other half using energy use intensity (EUI). A small number use both EUI and GHGi, or combine one of the two with another metric like EnergyStar scores or Vancouver’s Heating Energy Limit. However, it is notable that most of the largest cities are using GHGi, including Boston, New York City, Seattle and Vancouver.
GHGi is also well aligned with Toronto’s policy goals. While Toronto’s BEPS aims to generate multiple benefits, its primary purpose is to reduce carbon emissions and help achieve Toronto’s climate goals. GHGi metrics directly address carbon, focusing attention and investment on the problem we are trying to solve. EUI, on the other hand, is fuel neutral, treating all energy sources equivalently regardless of their carbon intensity. Toronto could include both EUI and GHGi, which could help promote energy affordability, as it correlates better with utility costs than GHGi. However, building operators have been clear that they prefer a single metric, as it makes planning for compliance much simpler. Ultimately, the benefits of including EUI as a secondary metric may be outweighed by the additional regulatory and compliance complexities it entails.
Addressing the grid
There is one problem with GHGi metrics that must be addressed to ensure fairness and predictability for building operators. The emissions intensity of the provincial electricity supply varies dramatically year-over-year, with a high degree of uncertainty around where it will go in the future. This makes it challenging for building operators to plan for compliance with GHGi targets. A building might be in compliance today, based on the current carbon intensity of the grid, but be out of compliance in future years if gas power plant usage ramps up. Building operators have no control, or ability to plan for, electricity supply changes driven by provincial and federal policies as well as other factors such as weather and economic growth.
Forecasted Ontario Electricity Emissions, 2015-2050
(Source: 2023 Carbon Emissions Inventory, The Atmospheric Fund)
There are two ways to address this uncertainty and enable building operators to plan for meeting GHGi targets. One way is to exclude electricity-related emissions from GHGi and only count the emissions from on-site fossil fuel combustion (also known as scope 1 emissions). The challenge with this approach is that electricity would be falsely treated as zero carbon, eliminating incentives for electrical energy efficiency. Building operators would get no credit for investments in electricity conservation or on-site generation like solar, thereby limiting their compliance options. The other approach is to use a fixed or capped electricity emissions factor in computing GHGi. In this approach electricity emissions are still included, but the emissions intensity of electricity is either fixed or capped for the long-term. Building operators can plan confidently for how to comply because they are insulated from year-over-year swings in the grid’s carbon intensity.
The federal government takes a similar approach in developing net zero ready building codes for new construction. The national codes are in the process of being updated to include GHGi targets, but with fixed grid-emissions factor for each province based on projected average grid carbon intensities over the coming decade. Toronto could use the fixed emissions factor developed for Ontario under the national codes, which would make sense from a regulatory consistency perspective. Or, a long-term factor could be used as a cap, with electricity emissions calculated based on the lesser of the long-term projected factor and the real factor for the most recent year. This would ensure that if the grid decarbonizes faster than projected, buildings can take advantage of this to ease compliance. At the same time, they could plan retrofits to meet the target with confidence, knowing they won’t be penalized for sudden spikes in grid emissions they have no control over.
Our recommendation
In summary, TAF is recommending Toronto and other cities use GHGi as the metric for BEPS policies. This aligns with the approach taken by leading cities around North America and directly addresses the City’s climate goals. EUI could be considered as a supplemental metric, but the advantages of doing so probably don’t justify the additional complexity for building operators. Emissions from electricity-use should be included, but the emissions factor for electricity should be fixed or capped to provide building operators with long-term certainty on how to comply.
We welcome input and considerations on this nuanced topic. Send your suggestions in the comments below, or contact us at communications@taf.ca.
To learn more about Toronto’s BEPS policy, check out TAF’s resource hub with additional news, commentary, and reports about the policy development.
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