Item - 2023.IE9.5

The Infrastructure and Environment Committee recommends that:  

1. City Council adopt a new City of Toronto Municipal Code Chapter 367, Building Emissions Performance, substantially in accordance with the draft chapter attached as Attachment 1 to the report (November 16, 2023) from the Executive Director, Environment and Climate, as amended by Infrastructure and Environment Committee, with the Chapter coming into force on January 1, 2024. 

2. City Council authorize the City Solicitor, in consultation with the Executive Director, Environment and Climate Division, to make such clarification, minor modifications, amendments to the City of Toronto Municipal Code Chapter 367, Building Emissions Performance as may be required to give effect to City Council’s decision.   

3. City Council direct the Executive Director, Environment and Climate Division to apply to the Ontario Court of Justice for any new set fines or to review and increase, as required, the current set fines.

4. City Council direct the General Manager, Toronto Water, in consultation with the Director, Revenue Services and the Chief Technology Officer, Technology Services, to prioritize the project to automate the aggregation of whole-building water consumption data for properties with buildings with gross floor area equal to or greater than 929 square meters (~10,000 square feet), and to enable the direct upload of whole-building water consumption data to Energy Star Portfolio Manager by first quarter 2025.

5. City Council request the Mayor to consider financial impacts of the City of Toronto Municipal Code Chapter 367, Building Emissions Performance in proposing the 2024 Budget for Environment and Climate and Toronto Water, in consultation with the Chief Financial Officer and Treasurer, the Executive Director, Environment and Climate Division, and the General Manager, Toronto Water.

6. City Council approve the Building Emissions Performance – Public Disclosure of Report Information Policy set out in Attachment 3 to the report (November 16, 2023) from the Executive Director, Environment and Climate Division, which outlines the City of Toronto’s public disclosure policy for information collected under City of Toronto Municipal Code Chapter 367, Building Emissions Performance to be effective January 1, 2024.

7. City Council direct the Executive Director, Environment and Climate Division to report back to Council in 2024 on the potential of amending the Building Emissions Performance – Public Disclosure of Report Information Policy to include the public disclosure of non-anonymous data sets.

8. City Council direct the Executive Director, Environment and Climate Division to report back to Council in 2024 on the implementation of City of Toronto Municipal Code 367, Building Emissions Performance, including: 

a. status of work with utility providers to enable automatic uploading of information into Energy Star Portfolio Manager reporting tool;

b. the policy and procedure developed for reporting exemptions and extensions granted by the Executive Director, Environment and Climate Division to property owners; and

c. the applying of new set fines to the Ontario Court of Justice.

9. City Council direct the Executive Director, Environment and Climate Division to provide a status update report on the development of Emissions Performance Standards for buildings to the Infrastructure and Environment Committee in the second quarter of 2024.

Existing buildings are Toronto’s largest source of greenhouse gas emissions, accounting for approximately 58 percent of total community-wide emissions. The City’s Net Zero Existing Buildings Strategy focuses on reducing emissions from existing buildings with the ultimate target of achieving net zero emissions by 2040, and an interim target of cutting emissions nearly in half by 2030, relative to 2008 levels. Achieving these ambitious targets will require the City to take nine key actions identified in the Net Zero Existing Buildings Strategy.

Mandatory emissions performance standards for all existing buildings that will require improved emissions performance over time is the most critical of these actions to drive transformation. In the Updated Long-Term Financial Plan (2023.EX7.1), staff recommended the expedited introduction of a mandatory emissions performance standards by-law which is necessary to drive the scale and depth of emissions reductions in the buildings sector, including residential, commercial, industrial and institutional buildings in the City of Toronto.  Introduction of these requirements would establish the City of Toronto as a leader in its commitment to reducing building emissions and provide certainty to the development and retrofit sectors on actions needed to support emission reduction.  A critical step towards enabling the establishment of emissions performance standards for existing buildings is to require annual emissions performance reporting and public disclosure to improve property owners’ and the City's understanding of the performance of Toronto’s homes and buildings.  Ontario was the first jurisdiction in Canada to introduce energy benchmarking regulations, developed in consultation with Toronto and actualized through the provincial Energy and Water Reporting and Benchmarking program. Energy and Water Reporting and Benchmarking currently requires all buildings above 50,000 square feet to report their performance data on an annual basis.

This report proposes that City Council adopt a by-law that would require owners of large and medium-sized buildings to report building energy and water use data to the City annually (the “Building Emissions Performance Reporting” By-law or the “By-Law” as set out in Attachment 1). Energy and water use both have greenhouse gas impacts associated with them. The energy and water use information collected under the By-law will allow the City to calculate the greenhouse gas impacts associated with each property and building.

The Building Emissions Performance Reporting By-law would apply to all buildings 929 square meters (~10,000 square feet) and larger, which would predominantly include buildings from the commercial, multi-residential, institutional, and industrial sectors.  This size threshold is based on the total gross floor area for the building, including all energy and water used on the premises, regardless if metered in bulk or separately for uses or spaces within the building. For example, a small office building with about 30 to 60 employees or a small multi-residential building with 15 average-sized suites could have a gross floor area close to this lower limit.  Coverage of all buildings larger than this lower size threshold aligns with the direction adopted with the 2021 Net Zero Existing Buildings Strategy (2021.IE26.1) and is informed by feedback received during stakeholder engagement.

The By-law would phase-in compliance with buildings that have a gross floor area equal to or greater than 4,645 square meters (~50,000 square feet) being required to report as of the first business day of July 2024 (i.e. July 2, 2024) (these buildings are already required to report under Energy and Water Reporting and Benchmarking) and those with gross floor area equal to or greater than 929 square meters (~10,000 square feet) would begin reporting as of the first business day in July 2025 (i.e. July 2, 2025).   This 2025 reporting deadline for the smaller buildings (929 to 4,645 square meters in size) will give Environment and Climate Division time to work with utilities to ensure a streamlined reporting process, which is especially important for owners of properties with smaller buildings.

The impacts of the proposed By-law on property owners are non-monetary in nature. The cost associated with reporting stems from the time required to gather energy and water data and enter it into the City’s reporting tool.  This is a relatively small time-commitment, estimated at a few hours of time annually, per building.  A potential side effect of the Emissions Performance Reporting By-law could yield a possible energy cost savings by encouraging property owners to more closely track and better manage their buildings' energy and water use. 

Requiring property owners to report the energy and emissions performance of their buildings is critical to achieving the City's net zero by 2040 greenhouse gas emissions reduction target, both due to the greenhouse gas reduction benefits of reporting itself, and to reporting's role as a key enabling action that is needed to implement other critical greenhouse gas-reduction actions called for in the Net Zero Existing Buildings Strategy – notably, the establishment of emissions performance standards for existing buildings.

Reporting energy and water use enables property owners to track their buildings' energy, water and emissions performance and allows them to compare their buildings' performance over time, to other buildings in their portfolio, or to other buildings in Toronto.  If the old management adage "you can’t manage what you don’t measure" is true, then tracking, benchmarking, and reporting energy use is the first step towards better managing energy use and energy operating costs, and to improving building efficiency and energy and emissions performance.

Requiring property owners to report the energy and emissions performance of their buildings is also critical to enabling the City to implement subsequent key actions called for in the Net Zero Existing Buildings Strategy.  Receiving annual building greenhouse gas emission performance data will enable the City to design future by-laws around these subsequent key actions so that they reflect an ambitious yet realistic pace for property owners to achieve the 2040 net zero emissions target.  The most notable key action in this regard is establishing emissions performance standards for existing buildings, which will set limits on the amount of greenhouse gas emissions buildings can emit. The intent of establishing an emissions performance standard is to encourage building owners to make improvements to their buildings so that Toronto can achieve community-wide greenhouse gas emissions reductions which provide a benefit to all Torontonians. Environment and Climate Division staff plan to present a proposed bylaw that would require property owners to meet set emissions performance standards for their buildings (the "Building Emissions Performance Standards By-law") to Council in 2024 as directed by Council in the Long-Term Financial Plan.