Item - 2023.IE6.4

The Infrastructure and Environment Committee recommends that:  

1. City Council receive the report (September 7, 2023) from the Executive Director, Environment and Climate, for information.

Existing buildings are Toronto’s largest source of greenhouse gas emissions, accounting for approximately 58 percent of total community-wide emissions. In July 2021, City Council adopted the Net Zero Existing Buildings Strategy (the Strategy) to address the challenge of achieving net zero emissions from existing buildings. The Strategy was developed with a net zero by 2050 target, which was then accelerated to net zero by 2040 upon City Council’s adoption of the TransformTO Net Zero Strategy (TransformTO) in December 2021. Meeting the City’s ambitious net zero by 2040 target will require rapid action to scale up existing programs and significant levels of investment and coordination with other levels of government. Toronto’s community-wide emissions from buildings have been reduced 37 percent between 2008 and 2020. These emissions must be nearly cut in half in the next seven years to meet the 2030 target. TransformTO confirms the establishment of mandatory performance standards for existing buildings as a key action and calls for greenhouse gas emissions from existing buildings to be cut in half, from 2008 levels, by 2030.

The Strategy was developed with extensive technical modelling and analysis, stakeholder engagement, and best practices research. The Strategy identified nine actions for the City to undertake to achieve net zero emissions from existing buildings and includes key design and implementation considerations for each action. The Strategy also presents the potential impacts on emissions, costs, and co-benefits of resilience, social equity, health, and local economic development.

The Strategy recommends an approach of first introducing voluntary programs followed by a transition to mandatory requirements in the medium to long-term (2025-2030). Key insights from the Strategy included that voluntary measures will not be sufficient to catalyze the scale of action required to achieve net zero emissions and that mandatory requirements are necessary. The Strategy estimates that retrofitting existing building stock to net zero performance levels by 2050 will require more than $145 billion beyond business-as-usual investment by all levels of government and the private sector. Accelerating the Strategy’s net zero goal to reach a 2040 target will require accelerated investment and a greater focus on mandatory measures to ensure success.  

Update Report Overview

The Update on the Net Zero Existing Buildings Strategy and Implementation of Mandatory Emissions Performance Standards report provides a general update on implementation progress of the Strategy and reports back to City Council on direction received following adoption of the Strategy, including progress on:

- Mandatory emissions performance reporting for all buildings, providing data to better understand the performance of buildings

- Emissions-based labelling program for low-rise residential buildings that begins as voluntary and transitions to mandatory

- Mandatory emissions performance standards for all existing buildings that will require improved emissions performance over time, taking into consideration the City's authority to implement

- Phased-in mandatory energy and emissions audits, re-commissioning and retrofit roadmaps planning for larger buildings

- Programs which support commercial, institutional, and multi-unit residential buildings in undertaking retrofits including guidance, financing and collaboration

- Promotion and education efforts to engage property owners and other building sector stakeholders including designers, architects, engineers, developers, builders, property managers, tenants and other stakeholders in the implementation of the Strategy and the benefits of retrofits

This report also provides information on efforts underway to realign the modelling and proposed pathways in the Strategy with the accelerated net zero by 2040 TransformTO target adopted by City Council in December 2021. Preliminary key findings include:

- fuel-switch-focused packages for all building sectors are less costly and easier-to-implement

- the requirement to decarbonize the Provincial electricity grid is now even more critical than before

- current market conditions have resulted in significant increases to upfront capital costs for retrofits

These preliminary findings mean that the transition to net zero will be more difficult, making even more critical providing additional supports for building owners and the expedited introduction of mandatory requirements for existing buildings.

Environment and Climate Division intends to bring forward an emissions performance reporting by-law covering buildings with a floor area greater than 600 square metres (6,458 square feet) for City Council’s consideration in the Fourth Quarter 2023. This initial by-law will have reporting requirements similar to the Provincial Energy and Water Reporting and Benchmarking program. Once the Environment and Climate Division has determined the best reporting mechanism for smaller buildings, an amendment will be proposed to cover commercial, institutional and multi-unit residential buildings under 600 square metres and low-rise residential.

Mandatory emissions performance standards are planned to apply to all buildings in Toronto, from the largest office towers to low-rise residential homes. The emissions performance standards will set appropriate emissions limits so that Torontonians have reasonable, achievable pathways to make improvements to their buildings over time. Building owners need to start planning for these requirements as soon as possible. Staff anticipate that an emissions performance standards by-law will be presented to City Council for consideration in 2024.

Environment and Climate Division staff will also develop additional by-law proposals to be presented to City Council in the future, as described in the Strategy, including:

- Emissions Performance Labelling for Low-Rise Residential Buildings

- Amendment to Emissions Performance Reporting for buildings under 600 square metres, including low-rise residential

- Emissions Auditing Requirement for Large Buildings

- Recommissioning Requirement for Large Buildings

- Retrofit Roadmap Planning Requirement for Large Buildings

Toronto Building, City Planning and Legal services provided input into the preparation of this report.