Item - 2021.IE23.1

City Council considered Items IE23.1 and IE23.2 together.

The Infrastructure and Environment Committee recommends that:

Action 1 - Require annual energy and emissions performance reporting and public disclosure for Toronto’s homes and buildings

1. City Council request the Government of Ontario to amend the Province's Reporting of Energy Consumption and Water Use (O.Reg. 506/18) regulation to mandate commercial, institutional and multi-unit residential buildings smaller than 50,000 square feet and single family homes and other building types (e.g. industrial) to report their energy consumption and water use, and to expand the scope of the regulation to include energy, water and greenhouse gas emissions reporting and labelling.

 
2. City Council direct the Director, Environment and Energy to report back to City Council by the second quarter of 2023 on the development of a proposed by-law and implementation plan to require mandatory annual energy, water, and greenhouse gas emission reporting, and mandatory emissions benchmarking and labelling, for commercial, institutional and multi-unit residential buildings that are smaller than 50,000 square feet, to further advance energy and emissions data reporting in Toronto should the Government of Ontario not amend its Reporting of Energy Consumption and Water Use regulation as per Part 1 above.

 
3. City Council direct the Director, Environment and Energy to report back to City Council in the third quarter of 2021 with the development of a voluntary EnerGuide-based energy reporting, disclosure and labelling program for Toronto single-family homes to commence in the latter half of 2022.

 
4. City Council direct the Director, Environment and Energy, in consultation with the Chief Building Official and Executive Director, Toronto Building to report back to City Council by the second quarter of 2023 with the development of a proposed by-law and implementation plan to require all Toronto single family homes to participate in an EnerGuide-based energy reporting, disclosure, and labelling program to commence in 2025.

 
5. City Council authorize the Director, Environment and Energy to negotiate, enter into, and execute agreements and any ancillary documents, as required, with Toronto Hydro, Enbridge Gas, and Enwave for the provision of utility data to home and building owners wishing to voluntarily report to the City on terms and conditions satisfactory to the Director, Environment and Energy and in a form satisfactory to the City Solicitor.

Action 2 - Establish sector specific mandatory emissions performance standards

6. City Council direct the Director, Environment and Energy to report back to City Council in the third quarter of 2021 with an implementation plan to encourage existing buildings to voluntarily work towards meeting emission performance targets established by the City, to commence in the latter half of 2022.

 
7. City Council direct the Director, Environment and Energy, in consultation with the Chief Building Official and Executive Director, Toronto Building, the Chief Planner and Executive Director, City Planning and the Executive Director Social Development, Finance and Administration  to report back to City Council:

a. in the fourth quarter of 2022, on the regulatory and legislative changes that may be required for the implementation of mandatory emissions performance targets for existing buildings in the City of Toronto; and

b. in the second quarter of 2023 with a program design and implementation plan for phased-in mandatory emissions performance targets starting with large buildings, that will require improved emissions performance over time, and which will also take into consideration the enabling regulatory changes identified through Part 7a above and leverage the experience, knowledge and data collected through the implementation of Parts 2 through 6 above.

Action 3 - Require energy and emissions audits and recommissioning to inform net zero retrofit roadmaps

 
8. City Council direct the Director, Environment and Energy to report back to City Council in the third quarter of 2021 with an implementation plan for a voluntary program that supports commercial, institutional, and multi-unit residential buildings in undertaking energy and emissions audits, re-commissioning, and the development of retrofit roadmaps aligned with capital plans and the net zero emissions by 2050 target, to commence in the latter half of 2022.

 
9. City Council direct the Director, Environment and Energy to report back to City Council in the second quarter of 2023 with a proposed by-law and an implementation plan to require buildings 50,000 square feet and larger to undertake energy and emissions audits, recommissioning, and develop retrofit roadmaps aligned with capital plans and the net zero emissions by 2050 target on a regular basis, to commence in 2025.

Action 6 - Support efficient navigation of permitting and approvals process for deep retrofits

10. City Council request the Chief Building Official and Executive Director, Toronto Building and the Director, Environment and Energy to collaborate, identify and implement opportunities in the permitting process for education and engagement of property owners, designers, builders and other stakeholders on the implementation of the City's Net Zero Existing Buildings Strategy, including emissions performance targets, retrofit support resources, and navigation of the permitting process.

Action 9 - Advocate and partner with other Orders of  Government

 
11. City Council request the Government of Ontario to:

a. make a commitment to ensure the provincial electricity supply and other infrastructure is climate change resilient;

b.  mandate implementation of the “Green Button” standard by electricity and natural gas utilities to provide customers with electronic access to utility data; 

c. create and ease access to grant and/or rebate programs to improve the business case for deep retrofits with longer paybacks for all building types;

d. demonstrate leadership through deep carbon retrofits in provincially owned or leased buildings; and

e. ensure the strategy is consistent with the City's approach to stopping renovictions and that programs mitigate any potential negative implications for persons displaced by construction or for affordable housing generally.

12. City Council request the Government of Ontario to direct the Ontario Energy Board and Independent Electricity System Operator to:

a. integrate greenhouse gas emissions reductions into their decision-making framework and mandate;

b. implement rate structure changes that favour electrification and fuel switching away from natural gas; 

 
c. strengthen the capacity of the electrical grid to accommodate the existing building sector switch away from natural gas;

d. develop utility mechanisms to help support and invest in deep emissions retrofits while also providing electricity price relief for both renters and owners in low-income households;

e. continue retrofit cost reduction measures, such as performance-based rebates for improved energy and emission performance; and

f. introduce Enhanced Demand-Side Management programs under the Independent Electricity System Operator Conservation and Demand Management that focus on temporal emissions intensity as well as peak energy consumption.

13. City Council request the Government of Canada to:

a. continue its commitment to carbon pricing via the Greenhouse Gas Pollution Pricing Act;

b. create / expand grant programs and tax incentives to improve the business case for deep retrofits with longer payback periods;

c. continue its commitment to work with municipalities to ensure rebates and financing for deep emissions retrofits flows effectively and directly to recipients;

d. continue its enhancement of deep retrofit financing through the Canadian Infrastructure Bank;

e. highlight emissions more explicitly through the EnerGuide rating system; and

f. support regenerative forestry and agricultural practices that contribute to the widespread availability of low embodied carbon, biogenic materials for the building industry.

14. City Council authorize the Deputy City Manager, Corporate Services to negotiate, enter into, and execute agreements, as may be required, with non-profit, public (including Toronto Hydro), and private sector organizations to:

a. collaborate on projects or initiatives; 

b. provide in-kind and/or financial support from the approved Environment and Energy Division budget on projects or initiatives; and

c. receive funding that will support the implementation of the Net Zero Existing Buildings Strategy, on such terms and conditions satisfactory to the Chief Financial Officer and Treasurer and in a form satisfactory to the City Solicitor.

The Acting Manager, Public Energy Initiatives, Existing Buildings Unit gave a presentation on the Net Zero Existing Buildings Strategy.

In 2017 City Council unanimously adopted TransformTO, the City of Toronto's (City) comprehensive climate action strategy for achieving dramatic city-wide greenhouse gas emissions reductions of 80 percent by 2050 and associated co-benefits of health, local economic impact, social equity, and resilience. In 2019, in recognition of the increasing need for accelerated climate action, City Council declared a climate emergency and increased Toronto's city-wide greenhouse gas emissions reduction goal to net zero emissions by 2050 or sooner.

According to the latest inventory of city-wide emissions released in 2018, significant results have already been achieved, with overall emissions having been reduced by 37 per cent from 1990 levels, all while Toronto’s population and economy continued to grow over the same time period. However, despite this achievement, accelerated action and transformational initiatives will be needed to achieve the City’s long-term goal of net zero emissions by 2050, or sooner. Existing buildings are Toronto's largest source of emissions, accounting for about 55 percent of total community-wide emissions. Additionally, natural gas represents 91 percent of all emissions from Toronto's buildings, and almost 97 percent of emissions from residential buildings in particular, making the reduction of natural gas use a critical focus of emissions reduction efforts.

This report presents the findings of the Net Zero Existing Buildings Strategy, developed by the City's Environment and Energy Division, to specifically address the challenge of achieving net zero emissions by 2050 in existing buildings city-wide. The Net Zero Existing Buildings Strategy has been developed in coordination with the TransformTO acceleration report for achieving net zero emissions city-wide by 2050 or sooner and Corporate Real Estate Management's Zero Carbon Plan for City-owned buildings, which is being presented to City Council this cycle. Engagement with City Planning also supported Net Zero Existing Buildings Strategy alignment with The Toronto Green Standard, which sets out the pathway to net zero emissions for new construction by 2030.

The Net Zero Existing Buildings Strategy is the result of extensive technical modelling and analysis, stakeholder engagement, and best practices research. The Net Zero Existing Buildings Strategy presents nine recommended actions for the City to undertake, identifies key design and implementation considerations for each action, and presents the potential impacts on emissions, costs, and co-benefits of resilience, social equity, health, and local economic development, if the Net Zero Existing Buildings Strategy were to be implemented as recommended.

This report presents staff recommendations to City Council that are informed by the modelling and recommended actions in the Net Zero Existing Buildings Strategy, feedback received through stakeholder consultations, and input from partner City Divisions. The nine key actions recommended in the Net Zero Existing Buildings Strategy are presented in Table 1 below, outlined further in the Comments section of this report, and discussed in detail in the Net Zero Existing Buildings Strategy report (Appendix A):

Table 1 - Overview of Nine Recommended Actions in the Net Zero Existing Buildings Strategy

The modelled impacts of adopting the Net Zero Existing Buildings Strategy as recommended are presented in Table 2 and Table 3 below and discussed in detail in the Comments section of this report.

Table 2 - Net Zero Existing Buildings Strategy Recommended Scenario Emissions Impacts 2020-2050

Table 3 - Net Zero Existing Buildings Strategy Recommended Scenario Economic Impacts 2020-2050

To achieve net zero emissions across Toronto's existing building stock, ExB Strategy modelling indicates that over $300 Billion will need to be co-invested in building retrofits between 2020 and 2050 by all levels of government and the private sector, which is $140 Billion more than business-as-usual investment in buildings city-wide.

Without support these costs would be borne solely by building owners and would likely be passed down to tenants in many cases. The City should seek out opportunities to coordinate investment from other levels of government to provide targeted funding for a portion of deep retrofit actions, and to co-deliver recommended actions in the Net Zero Existing Buildings Strategy, to support building owners in addressing the costs of deep retrofits and to stimulate transformative action across the existing buildings sector.

Resourcing and financial implications associated with the implementation of near-term actions in the Net Zero Existing Buildings Strategy will be included as part of the 2022 budget process and will also be included in the TransformTO acceleration report which will be presented to Council in the Third Quarter 2021.

Key Insights from the Net Zero Existing Buildings Strategy:

- Emissions reductions of over 80 percent across Toronto's existing buildings are possible by 2050 through deep retrofits.

- Offsets, renewable energy credits, and other means for achieving emissions reductions will be necessary to some extent as modelling shows that reaching net zero emissions is not technically nor financially feasible from building retrofits alone.

- Voluntary measures are not enough to catalyze transformative action toward net zero emissions, mandatory requirements are necessary.

- Fuel switching and a clean electricity grid are the two most significant technical requirements for achieving net zero emissions.

- Building envelope upgrades, while more expensive to implement than fuel switching and heating, ventilation and air conditioning upgrades, deliver by far the highest co-benefits of resilience, social equity, health and local economic benefit .

- Multi-unit residential buildings (e.g. apartment buildings, condos) and single-family homes (e.g. detached/semi-detached houses, townhouses, row houses, etc.) offer the greatest emissions reduction potential, the greatest co-benefit opportunities, while also requiring considerable financial and capacity support, making them a clear priority sector to target.

- The cost of the needed retrofit actions represent a significant net investment for building owners and these measures do not pay back on their own.

- Financial supports will be needed to enable market transformation.

- The City does not have all of the authorities needed to unilaterally implement the Net Zero Existing Buildings Strategy in full. Dialogue with the province will be necessary.

The Net Zero Existing Buildings Strategy takes the approach of first introducing voluntary programs and policies in the near-term, followed by a transition to mandatory requirements in the medium to long-term. Lessons learned from the operation of voluntary programs, along with detailed discussions with partner City Divisions and further stakeholder engagement, will be conducted to inform the specific design details and implementation plans for any mandatory requirements. Key aspects of this work will include, but are not limited to:

- Investigation of the necessary authorities, and appropriate regulatory avenues, to enable the implementation of mandatory requirements;  

- Investigation of approaches to compliance and enforcement of mandatory requirements;

- Investigation of resourcing and cost implications for affected City divisions;

- Analysis of equity and housing affordability impacts and development of implementation strategies that mitigate negative impacts and enable positive impacts for equity-deserving groups.