New build or retrofit: What is the better decision?

Fortunately, cutting emissions is also a cost-saving measure for businesses. But are you better off retrofitting a building or constructing a new zero- or low-carbon one?

If you can’t seem to find a clear answer, that’s because there isn’t one, says Thomas Mueller, President and CEO of the Canada Green Building Council (CAGBC). There are many variables to consider.

“Each building is unique, and contexts vary across Canada,” says Mueller.

For example, some provinces have cleaner power grids than others—so while converting a building from gas-powered to electrical heat might be your single best move in certain provinces, that change would drive your emissions up in others. The price you are paying for energy will also affect the return on investment of a potential construction project. 

Additional variables include the size and age of the existing building, the retrofits needed, and your goals and budget.

Still, there are considerations and resources that can help you make an informed decision.

What are the main emission sources in a building?

First, it’s essential to understand the two most significant sources of carbon emissions related to buildings:

• Embodied carbon—the emissions generated to construct the building
• Operational emissions—those produced by heating, cooling and lighting the building

What is embodied carbon?

Embodied carbon refers to the total GHG emissions associated with the materials and processes used to construct a building—from mining, harvesting and producing the raw materials (like timber, steel or concrete) to transporting them to the construction site. It also includes the future emissions associated with maintaining, repairing and eventually disposing of the building.

Lifecycle GHG emissions account for a building’s entire lifespan, including both embodied carbon and ongoing operational emissions. The average share of embodied GHG emissions from buildings that follow current regulations is 20% to 25% of lifecycle GHG emissions.

This figure escalates to 45% to 50% for highly energy-efficient buildings, even surpassing 90% in some cases. That’s because the less energy you need to operate a building, the more its embodied emissions count in the lifecycle tally.

What to consider when weighing a new build versus a retrofit

Here is the dilemma:

• Building new can give you more control over operational emissions going forward. For example, you can choose to construct a zero-carbon building. But the construction will generate significant emissions from embodied carbon unless you use lower-carbon materials.
• Retrofitting an existing building enables you to avoid new emissions from construction (embodied carbon), but you may need to make significant changes to reach low- or zero-carbon operations. However, these changes can be made gradually, for example by choosing new technologies like heat pumps.

Mueller advises entrepreneurs to calculate the costs and advantages of both scenarios when trying to decide. In addition to considering embodied carbon and the cost of building new, factor in the age and condition of the existing building and the resulting cost of retrofitting it to the standard you have in mind.

“You can do some really remarkable things with a retrofit,” he says, offering the example of an abandoned 1950s warehouse in Montreal that was completely transformed into a sustainable office building with a much lower carbon footprint.

From an energy perspective, you can’t go wrong either way. The main thing is to get started and have a plan to lower carbon emissions.

“It would be a mistake to kick the can down the road and say, ‘That’s not my problem,’” says Mueller, because evolving building regulations increasingly recognize the need to reduce emissions. “Governments now know they can’t meet their climate targets unless the building sector decarbonizes.”

In addition, if you own a building and lease it out, you may find that tenants increasingly want to be in low- or zero-carbon buildings.

A consultant familiar with building codes, municipal and provincial regulations, trends and costs can help you make the decision, says Mueller.

What are the best retrofit projects in terms of return on investment?

More than three-quarters of a building’s emissions come from heating, so it makes sense to start there. While the initial cost of switching from a gas boiler to new technology (such as an electric heat pump) can be high, the upgrade will significantly reduce emissions in provinces with clean grids, leading to substantial long-term energy cost savings.

Improving the building envelope—such as through better insulation and air sealing—is another smart move because an airtight building will have far less need for heating and cooling. Smart thermostats and high-efficiency water heaters can also make a big difference for a relatively low cost.

The process can help you plan your retrofit, reduce costs and streamline projects.

What you don’t want to do, says Mueller, is switch to LED lighting (an easy, inexpensive upgrade) and stop there. That switch is a key part of the overall business case for retrofitting a building, but “it’s really important to look at the whole building and how you can improve its performance over time without picking only the low-hanging fruit,” he says.

Above all, adds Mueller, don’t do things in isolation—start with a plan, and think about the building as a system with interconnected elements. For example, if you electrify an older building but don’t improve its envelope, you won’t see the payback you were hoping for. Or if you upgrade the envelope, then you may not need the powerful HVAC (heating, ventilation and air-conditioning) system you had in mind.

What are some considerations for a new build?

If you decide to move ahead with a new building, pay attention to its building envelope and how it will be heated and cooled. If you live in a province with a clean power grid, choose an electric heat source.

Building to certifications can also help ensure your emissions are as low as possible:

• The Zero Carbon Building Standards target zero-carbon operations and are applicable to new or retrofitted buildings.
• Leadership in Energy and Environmental Design (known as LEED) focuses on energy efficiency, water conservation, health, materials, waste and more.
• Other standards may be worth exploring, including Passive House, BOMA BEST and ENERGY STAR.

Tips for completing a successful retrofit

If you’ve decided on a retrofit, there are steps you can take to ensure success—like starting with an energy audit, considering the whole building, focusing on cost-effective upgrades, and more. Find all the details in our Practical guide to retrofitting your building for energy efficiency.

Next steps

• Check out our roadmap to retrofitting your building to reduce its energy use.
• Watch our free webinar on how a retrofit can cut your energy spending.
• Read the CAGBC summary report on Decarbonizing Canada’s Large Buildings.