Best of both worlds

Canada vs Germany: Energy efficiency

According to the World Energy Council, the average Canadian uses more than twice the energy of the average German. You read that right. Twice.

Guelph’s Community Energy Initiative aims to cut per-capita energy consumption by 50% from 2006 levels by 2031. Sounds ambitious, doesn’t it? However, you could rephrase that to say that Guelph is on a journey so that by 2031, it will arrive at the place that Germany occupied two decades before.

That sounds a lot less ambitious.

As I’ve explained in three of my last four posts (this one, this one, and this one), Guelph is embarking on a program called GEERS – Guelph Energy Efficiency Retrofit Strategy – to ensure that, despite an anticipated 50% increase in population, our overall energy consumption will actually drop from 2006 to 2031. GEERS will start by overhauling our residential buildings, yielding 20-40% decreases in energy use, and move on to the ICI (Industrial, Commercial, and Institutional) building segments after that. GEERS aims to retrofit between 2,000 and 3,000 homes per year between now and 2031. By the end of that time, Guelph will start looking a lot more like Germany as far as building energy efficiency goes. Over 38,000 dwellings will have been touched, and the sustained annual energy savings will be $120 million.

That’s a huge boost for an economy the size of Guelph’s. However, that doesn’t even speak to the direct and indirect benefits of the program itself. During the course of the 16 years that the program runs, it will result in over $30 million per year of spending, most of which will stay in the local economy. That’s a total of about half a billion dollars invested in Guelph, all in the name of keeping more energy dollars in the city.

The first beneficiary will be construction contractors. Based on what Guelph’s building department has told me about the volume of building permits for renovation work, GEERS could increase the size of this market by a factor of ten. If we assume it takes a team of three labourers one week to complete a retrofit project, the volume I mentioned above will yield somewhere between 120 and 180 full-time labourer jobs. Supervisor jobs will be over and above that amount, probably 30-45 jobs, to say nothing of management and back office positions.

Construction contractors will also see a profitability boost, since they won’t need to incur sales and marketing costs to win jobs – they’ll see a steady stream of projects from GEERS just for signing up, as long as they maintain quality standards. They will also see better utilization of human resources and equipment since there won’t be any staff sitting idle waiting for deals to close, giving another profitability fillip.

Contractors will also see a boost to their current, non-retrofit business. Homeowners that have been putting off a major renovation will likely decide to jump, once they can get a contractor mobilized to their home for GEERS. Let’s face it – most folks don’t get excited about the prospect of better insulation, weather stripping, furnace, water heater, thermostat, and (to a lesser extent) windows. However, if you already have a contractor on site, you can save big on extending the project scope to include stuff that GEERS won’t cover – granite countertops, new kitchen cabinetry, and a bathroom makeover. GEERS will provide a direct stimulus for work like this.

Along the same lines, financial institutions will see benefits. Since GEERS won’t cover this extra work, homeowners will use traditional methods of financing home renovations. This means that the big banks will see more home equity line of credit business.

Suppliers will see a boost as well. GEERS will cut deals for bulk pricing, and will likely mandate local warehousing operations to ensure reliable supply of product. Such operations will bring more jobs to Guelph. Some suppliers may even need to set up manufacturing facilities – a Euro-spec window producer is the most likely of these – bringing even more jobs.

GEERS will also help out the utilities with their Conservation and Demand Management (also called “Demand-Side Management”) programs, which some prefer to call “negawatts”. Paradoxically, it costs the utilities less to accommodate new demand not by bringing new energy supply online, but by reducing consumption. (More on that voodoo in a future post.) At any rate, the utilities have incentives available for many energy-saving measures, and GEERS will be implementing some of these exact measures. That means more dollars injected into the program, lower costs for the property owner, and a big fat check mark beside utility energy efficiency targets.

Contractors, banks, suppliers, and utilities – not coincidentally, the same cast of characters that I spoke about previously in the context of the EcoEnergy for Homes program – should all rejoice when GEERS hits the streets. But wait, there’s more.

GEERS may well stimulate the local real estate market as well. If a seller can give their home a boost in value which is effectively free, why wouldn’t they? We may even see people making a habit of buying a home, doing a GEERS retrofit and other quick face-lift measures, and flipping it again for a tidy profit. The market may take some time to adjust to the idea of the extra ongoing cost of the LIC, but soon it will become as pervasive as water heater rental.

Prevailing wisdom is that being green comes only at a significant cost, either in dollars, lifestyle, or comfort. GEERS gives the lie to that idea. It will deliver a stronger economy by cutting the flow of dollars bleeding out of the city to pay for imported energy, and it will deliver a stronger economy by creating well-paying, long-term employment for the energy efficiency industry. It will also take a big bite out of our collective greenhouse gas emissions. The best of all possible worlds.