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1999 Report of the Commissioner of the Environment and Sustainable Development

1999 Report—Chapter 8

Appendix B—Estimate of Potential Cost Reductions in Building Energy Use

• Federal cost data for energy consumption indicate expenditures of $665 million in 1994-95, $640 million in 1995-96 and $520 million in 1997-98. (It is unclear if these costs include non-building expenditures and leased buildings.) Given current projections for federal space requirements and energy costs (relatively stable), we consider a reasonable range of baseline annual costs to be $400-500 million (in 1999 dollars).
• Natural Resources Canada reports savings of approximately 23% on the 30% of the energy bill that has been addressed to date. We estimate that an additional 5-10% saving could be achieved in these buildings and 20-30% in the remaining 70% of the bill.
• Natural Resources Canada's experience with the Federal Building Initiative is that the payback period for project costs (including financing and profit for energy service companies) varies from six to eight years. We have assumed an average payback period of seven years.
• Discount rate of 7%.

For the current 30%:

For the remaining 70%:

Total range = $62-120 million, say $60-120 million.

Adding these savings over 20 years, deducting project costs and applying the discount rate yields a cumulative present value (net of project costs) of between $300 million and $600 million (in 1999 dollars).