Insider Only Real Estate

On the road to net-zero: Developers in Ottawa are upping their game in the name of sustainability

December 21, 2022

Already an Insider? Log in

Get Instant Access to This Article

Become an Ottawa Business Journal Insider and get immediate access to all of our Insider-only content and much more.

As Canadian policy-makers across all levels of government search for ways to reduce greenhouse gas emissions, major developers working on projects in Ottawa are taking the lead in the building industry. According to a recent report from the World Green Building Council, buildings are one of the most overlooked carbon emitters, accounting for nearly 40 per cent of global carbon emissions. Retrofitting existing buildings to improve their energy efficiency is a primary goal of the federal government when it comes to meeting its net-zero targets. While developers and real estate investors are well positioned to play an essential role in fighting climate change, attitudes across the industry have been slow to change, according to Jamie Gray-Donald, senior vice-president of sustainability at QuadReal Property Group. “I think most developers are still pursuing a business-as-usual approach,” he said. “Everyone, including architects (and) mechanical engineers, are used to doing buildings a certain way. So that’s just the norm.” As one of several global development companies working on projects in Ottawa with sustainability at the forefront, QuadReal is undertaking a major renovation of the World Exchange Plaza, its downtown office and retail complex at the corner of Metcalfe and O’Connor streets. First built in 1991, the property is one of many that will be modernized not only for functionality and aesthetic, but also for energy efficiency, said Gray-Donald. The redesign is expected to bring the property up to LEED Platinum standard, the highest certification awarded for sustainability by the Canada Green Building Council. “What we want to do with our buildings is try and take them to the highest standard,” he said. “This team in particular is very strong at achieving excellent results. In general, we’re strong supporters of green certification, but you can’t stop there. We think net-zero is the next level that needs to be achieved.” By 2030, 75 per cent of buildings will be ones that already exist today, rather than new construction. When it comes to updating existing properties to meet emissions targets, Gray-Donald said QuadReal wants to be a leader among real estate investors. In October, the company announced its plans to decarbonize its entire portfolio by 2050. That includes a 50-per-cent carbon reduction of its Canadian portfolio by 2030 and net-zero emissions for all office buildings globally by 2040. “We can typically get to be 30 to 40 per cent more energy efficient, but the focus is now shifting to carbon efficiency,” Gray-Donald said. “We look at the lifecycle of major pieces of equipment and buildings and understand when they would typically be replaced. How do we create a roadmap to 2040 to have these buildings be zero-carbon?” When it comes to buildings, carbon emissions are divided into two primary categories: embodied carbon and operational carbon.

Embodied carbon is attributed to emissions that occur due to the production and transportation of materials, as well as construction, while operational carbon is emissions from everyday use, including heating and electricity. When it comes to reducing operational carbon, sustainability-focused developers have two main priorities: higher-performing envelopes (building facades that lessen heat transfer in both directions, thereby reducing heating and cooling needs), and tapping into renewable energy sources. This is something that retrofit projects and new developments can achieve. In Ottawa, a proposed mixed-use sustainable community in LeBreton Flats is building sustainability into its design. Dream LeBreton is intended to be the first development built into the National Capital Commission’s LeBreton Flats Master Concept Plan. The 2.5-acre Library Parcel site will become home to two residential towers with 601 rental units. Operated in partnership with the MultiFaith Housing Initiative, 41 per cent of those units will be affordable. The project is pursuing a number of sustainability targets, prioritizing a high-performance building envelope, solar panels and regionally sourced, sustainable materials. While energy efficiency is a cornerstone of the development, the developers are careful to say that they’re striving for “very close to zero operation carbon” and “low-embodied carbon.” Local architecture firm Perkins&Will is one of the leading companies for the development. According to global design principal Peter Busby, the specific language stems from the fact that it isn’t really possible to achieve zero carbon right now. “Generally speaking, electricity across Canada has different carbon footprints,” he said. “So this is an all-electric building, but the carbon footprint does exist. We can’t say zero.” Achieving net-zero carbon is most difficult in provinces like Alberta and Nova Scotia, which still rely heavily on natural gas and coal to power their electrical grids. But provinces such as Manitoba and Quebec run entirely on hydro electricity, meaning their grid is carbon-free. Ontario is somewhere in the middle. Approximately 59 per cent of electricity generation in the province is driven by uranium, 24 per cent by hydro, and seven per cent by wind. “Depending on where you are on the grid, it’s somewhere between eight and 17 per cent fossil-fuel driven, so the carbon footprint does exist,” said Busby. While the electricity grid is out of their control, the LeBreton project architects hold the reins on everything else. “There are no fossil fuels being used in this building,” said Busby. “There’s no gas fireplaces, there are no gas appliances, there’s no gas boiler in the buildings; everything is electric.”

They’re also reducing embodied carbon with designs that limit carbon-heavy materials like concrete and by bringing in more sustainable options like wood. “We’ve absolutely minimized the amount of concrete that we’re using,” said Busby. “We will use low carbon concrete and we do use non-concrete finishes wherever we can. We also looked at carpet and glazing and aluminum, for example.” When Justin Robitaille talks about the LeBreton development, he is most keen to discuss plans to implement an innovative sewer heat recovery system right into the property. Robitaille is vice-president of development for Dream Unlimited, another of the principal companies overseeing the project. Dream has set its sustainability ambitions high. Based on current designs, the completed buildings are set to be operationally net-zero carbon, LEED Gold certified, and One Planet Living Accredited. But the cost of reaching these targets can be high. According to Robitaille, the two-building development on the 2.5 acre parcel currently has a price tag of over $300 million. The sewer heat recovery system will be one of the major investments. “(The system) involves tapping into the sewer line beneath the site as an energy source to provide all heating, air conditioning and domestic hot water needs for the buildings on a zero-carbon basis,” he said. These systems have found success in other developments across Canada. In Burnaby, B.C., Canadian-based company SHARC International Systems installed a system in several local buildings, including a 172-unit condominium complex. Depending on the size of the building, the system can cost anywhere from $200,000 to more than $1 million. The LeBreton property will have the central plant built into the development itself. Utilizing heat recovery chillers and heat pumps connected to the City of Ottawa sewer system, the system will be able to produce enough energy to heat and power most of the building. To offset the demand on the building's heating and electrical system, designers are also looking to integrate additional sources of renewable energy, like solar. The design integrates solar photovoltaic panels into the facade of the building. The positioning of the two buildings, offset from each other and oriented at different angles, is meant not only to maximize the view for both buildings, but also to reduce the amount of shade throughout the day to optimize sunlight-harvesting potential.

“We really tried to optimize the design for solar power generation through placing panels on juliet balconies for instance — which would minimize solar shading — and the orientation of panels to maximize solar availability.” In the 40 years Busby at Perkins&Will has worked in Canadian architecture, high-cost investments in sustainable technology have been a tough sell. “Architects and engineers have been telling clients to do sustainable design for a long time,” he said. “Clients always said no, that’s not what we normally do, it’s going to cost too much money.” However, in the past few years, the incentives to go green have multiplied and become harder to resist. “It’s mainly the marketplace,” said Busby. “That’s the thing that’s been holding us back. All of the strategies we use for decreasing building emissions now have been around for a while. There’s not much in the way of invention. It’s just putting them all together and doing them all at once.” In some cases, sustainable technology has resisted cost inflation, with prices instead going down as they become more popular. According to EnergySage, the cost of solar panel installation, for example, has dropped dramatically over the last decade. In 2009, the cost of a solar panel installation was $8.50 per watt. By 2021, that price had fallen to $2.77 per watt. “There’s almost nothing else in the world that’s gone down in price except for those solar panels,” said Busby. “It’s becoming easier and more accessible.” There are also more incentives for developers to make those up-front commitments. “In some cases, going that extra step on the efficiency side opens up opportunities for some attractive financing,” said Dream’s Robitaille. For example, the LeBreton project will likely be able to secure high loan-to-cost financing with competitive interest rates, something the Canada Mortgage and Housing Corporation offers to companies meeting or exceeding ambitious energy targets. And because cities like Ottawa are prioritizing low-carbon building initiatives, they’ve been able to fast-track parts of the approval and permitting process. “They recognize our significant investment in affordable housing in a sustainable setting,” said Robitaille. “I think our goals are very much aligned in delivering on that. The support from the city has been tremendous.”

Shifting consumer values are also pushing corporations to make changes to attract clients. While it’s not yet evident if carbon-emitting buildings are losing value in Canada, investors are starting to see lower vacancy rates and longer-term resale value in their sustainable properties, according to Busby. “People want to live in low-energy buildings; they want to be part of the solution,” he said. “There will be no problem renting this (LeBreton Library Parcel) building. If rentals across Ottawa have five to eight per cent vacancy, this building will have zero, because there’s people who want to make lifestyle choices around climate change.” Accessibility and opportunity aren’t the only things making low-carbon investments more attractive for investors. Rapidly evolving energy policies are also making the status quo more unappealing — and expensive — by the day. “Developers across the country now are really getting it and want to do low carbon,” Busby said. “They see climate change as a threat to their business.” It’s what Busby calls a “carrot and stick” approach, one that’s necessary if the country wants to achieve its emissions targets. “(Buildings) are credited with 40 per cent of total carbon production on the planets,” said Busby. “If we can get operation carbon down to zero, we could actually change carbon emissions globally by 20 or 30 per cent, just through buildings.” All levels of government are already starting to press for more stringent policies. The federal carbon tax, for example, is shifting attitudes. Currently, a ton of CO2 costs $50, a price that is expected to increase to $170 in 2030. With prices like that, investing in energy efficiency now is just good business, experts agree. Busby said he’d like to see more municipalities stepping up to the plate, too. Cities like Vancouver have started setting standards for other cities to follow. “We should have a high level of building performance requirements issued by the authorities having jurisdiction where we get our building permits,” said Busby.” If you don’t do this, you’re not getting a building permit.” While reaching net-zero carbon across all Canadian buildings will be a decades-long process, recent changes to corporate attitudes are encouraging to sustainability experts like Busby. “Public and regulatory authorities are changing their minds and insisting on high levels of performance. Industries coming up to the table will reduce prices of photovoltaics and heat pumps. Things are starting to change. I’m very optimistic about the future.”