© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Credit Risk and Capital Management Global Warming Real Estate Building What we can do Now Ron Dembo January, 2007

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Credit Risk and Capital Management 40% of total US energy consumption and GHG can be attributed to operating buildings! heat light cooling hot water Another 8% to the materials used Source: Mazria SUV’s = 3%

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Credit Risk and Capital Management 40% of total US energy consumption and GHG can be solved using better design! Source: Mazria

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Credit Risk and Capital Management Mazria’s Challenge to Students Add one sentence to all school design projects now : “The project should be designed to engage the environment in a way that dramatically reduces or eliminates the need for fossil fuels” Source: Mazria

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Credit Risk and Capital Management Striving Towards Zero Footprint Building U of T, Brigitte Shim’s Workshop Source: Mazria

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Credit Risk and Capital Management A Large-Scale Shift to using Earth–Source (Geothermal) Heating/Cooling

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Credit Risk and Capital Management How does an Earth-Source system work?

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Residential 2 pipe Horizontal Source: Waterfurnace

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Residential Vertical Source: Waterfurnace

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Commercial Vertical Source: Waterfurnace

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Over time, in every home, business ….. use green power Install photovoltaic solar Install solar hot water systems Install earth-source heating, cooling, hot water Risk Management in the Business Line Make Every Building a Generator (of renewable energy)

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Energy Generation Today vs The Future Incremental, less risky, sustainable, scaleable, can be very environmentally friendly Capital intensive, long lead time, risky, often environmentally unfriendly

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto A “Simple” Policy Change For all new buildings now : Require a special permit for anything other than earth-source heating, hot water and cooling systems

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Lower risk More “resilient” system Lower transmission infrastructure Can lower pollution and carbon effects Can create significant economic activity Fosters innovation Cultural change Distributed Generation

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto 14% of residential homes (666,000) were still heated by electrical baseboard heating. (6.8 million MWh) Electric hot water systems in 1,612,000 homes (7.2 Million MWh) Electric air conditioning in 2,941,000 homes (3.6 Million MWh). Residential Energy Stats (Ontario 2003)

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto 3 – 5 times more efficient than electric baseboard heating 3 – 5 times more efficient than electrical water heaters times as efficient as standard air conditioning units. Earth-Source Heating, AC, Hot Water

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Would save 7.7 Million MWh This annual capacity is equivalent to removing 1,177 MW of generation capacity, or approx. 2 Pickering nuclear reactors. All Electric Homes (2003) Retrofitted to Earth-Source

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Retrofits would cost $5.21 billion dollars 2 Nuclear plants would cost much more and take 15 years to build That’s only 14% of Ontario Homes! All Electric Homes Retrofitted to Earth-Source

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Cost $700 million Peak load shaving of 550 MW Equivalent to retrofitting 250,000 homes (gas +electric AC, HW) Retrofitting cost is 2 billion Scenario: Toronto Proposed Portlands Plant

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Drastic reduction in pollution 700,000 tons CO 2 saved from homes 1,700,000 tons CO 2 saved from plant Could be funded without a cent of taxpayers money ( Benefits: Avoiding Toronto Proposed Portlands Plant

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto (Assume each home was new, efficient 3000 sq ft normally $270 / month heating, hot water and AC) We could offer homeowners this service for < $270/ month City wins (pollution, cost) Homeowners win (cheaper and hedged) Province wins(cost, more resilient system) Canada wins (CO 2 ) Investors in Zerofootprint Energy (“green” investment) Benefits: Avoiding Toronto Proposed Portlands Plant

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto How Do We Get from Here to There ?

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto A Generic (Greening) Problem nowthe future

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto A Generic (Greening) Solution nowthe future

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto An Example An ESCO Model

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Zfp-Energy Makes it Cost-Neutral for Homeowner / Builder Capital Cost of Geo- Exchange System Funded by Zfp-Energy Capital Cost of Traditional Heating, cooling, hot water system

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Homeowner’s Energy: Monthly Payments Starts at today’s cost for traditional energy, then declines Zfp-ENERGY’s Business Model (cont.) Zfp-ENERGY Hedged energy Get heating/cooling/hot water for less than as non-green alternative

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto Solar Hot Water Earth-Source heating, cooling and hot water …… can be funded using clever Financial Engineering, subsidies are not required Use Financial Markets

© zerofootprint 2005 © Zerofootprint 2007 Green Real Estate Workshop, Toronto The Financial Institution of the Future The End