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Canada

Canada's Federal Buildings Initiative, despite a modest (US$600,000) budget and just a half dozen employees, has leveraged private sector funding to make enormous efficiency gains in Canada's federal building stock. After just ten years of existence, it now counts among its achievements retrofits in some 7,000 buildings and savings close to US$20 million per year; not coincidentally, the greenhouse gas emissions of Canada's federal agencies have fallen approximately 20% over the same period. FBI provides an excellent example of how to parlay limited resources amidst a tight government budget - one in which no large federal buildings have been constructed for over a decade - into a substantial national program with impressive savings.

According to the FBI's head, John Brennan, the program is based on three assumptions about Canada's federal agencies vis a vis energy conservation: they do not have identified funding, they do not have trained staff, and they do not have the necessary energy management knowledge. Given these constraints, the program turned its focus to performance contracting as a source for helping it achieve savings. This has generated US$140 million in private investment over the last decade.

Several characteristics differentiate the Canadian government's performance contracting program from similar efforts in the United States and other countries. One such feature is the importance the Canadian initiative places on employee outreach. To encourage facilities to develop a sense of ownership of the conservation work in their buildings, FBI requests that participating energy service companies (ESCOs) include an employee awareness program in their proposals. FBI estimates that if the agency fully incorporates the energy savings concept, an additional 10% savings is likely as a result of changes in employee practices (e.g., reducing plug load and avoiding unnecessary lighting). This conservation ethos is then likely to be carried into employees' personal lives, Brennan thinks. That full "translation" of the energy-saving effort is FBI's ultimate goal.

Another element that distinguishes the Canadian performance contracting program is its emphasis on training. FBI found, in its early years, that the technical potential of the ESCOs' energy conservation measures was often not realized due to agency building operators' limited understanding of the installed measures. As a result, in addition to providing basic manuals and training on the installed measures, FBI now requires the participating ESCOs to outline a broader energy management training program for the building operators. Ultimately, FBI would like to see required energy management certification for all federal building operators. Certification is currently voluntary, provided through an alliance FBI has developed with Canada's network of community colleges.

In addition to the training program, ESCOs are expected to include in their proposals an assessment of the potential for renewable energy use as part of the intended project. Though this met with some initial skepticism from some of the program's qualified ESCOs, FBI began offering a training course in evaluating renewables opportunities. The ESCOs have taken advantage of this course, and have gained the knowledge needed to scope renewable options in their proposals.

The mechanics of the FBI performance contracting program allow two approaches: "First-out," in which the ESCO is paid all of the achieved savings up to a stipulated amount (or time, whichever comes first), after which the contract is closed out and the agency becomes the sole beneficiary of additional conserved energy; and a shared savings plan, which allows ESCOs to reap a percentage of the reduced costs for the duration of the contract term (generally about ten years). One aspect of the FBI contracting mechanism that stands out is its relatively liberal allowance for savings accounting. "Energy-related" savings, such as those from operations and maintenance, may be permitted. This is not unusual, but FBI also encourages agencies to internalize difficult-to-quantify externalities in their project accounting. For instance, in considering replacement of propane water heaters with a renewable alternative at a national park, the park service and proposing ESCOs were encouraged to assign values not just to the eliminated propane purchases but also to the avoided costs, such as transporting the propane (including road repair), and the diminished liability risks.

Participation in the program by some Canadian agencies has been quite high. However, Brennan feels that activity in the program, despite prima facie support from agency senior managers, suffers some from an absence of active pushing from these high-level officials. A new initiative that may make a difference is the "House in Order" program introduced by the government in 2000 to help Canada meet its 6% greenhouse gas reduction commitment (by 2010, from 1990 levels) as a signatory to the Kyoto Protocol. House in Order sets a 31% greenhouse gas reduction goal for federal operations (excluding some highly variable military functions), and imposes reporting requirements. According to Brennan, the 31% figure is likely achievable with the current rate of improvement; however, the goal has caught the attention of many agency officials, perhaps paving the way for increased activity through the program.

Although high-level pressure on the agencies is welcome, FBI's customary targets have been champions at the regional operations level. As FBI was once informed by its contact at an airport facilty in Nova Scotia, "the planes don't fly out of headquarters." Ironically, downsized maintenance budgets and staffs - due largely to an early-1990s recession - may have helped to enhance FBI's prominence, according to Brennan; performance contracting offers facilities not only turnkey design and installation but also the much-needed financing to make it happen. Another factor that may aid the program is competition to achieve the greenhouse gas reductions - among military bases, for example, where the use of the performance contracts has been high.

FBI provides an excellent model for governments with under-sized energy management budgets. Not only has it successfully countered the scarcity of its own resources and those of the Canadian federal agencies it serves - by sponsoring a thriving energy-savings performance contracting program - but it has done so in a way that integrates the training and employee awareness elements that fortify and compound those savings.