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Hi-tech entrepreneur Tom Rand (Blue jacket) and his business partner Anthony Aarts (grey jacket) are photographed at a building located at 357 College Ave. in Toronto, Ont.Kevin Van Paassen/The Globe and Mail

Anthony Aarts steps out of the glass-walled bar and onto the rooftop patio atop his new Planet Traveler hostel. He looks south over Kensington Market toward downtown, where a few of the five new luxury hotels currently being built in Toronto are craning upward.

Those hotels will have many things the more Spartan hostel lacks: spas, valet parking, porters, pools. But that list isn't exhaustive. These luxury facilities will also have huge belching furnaces and power-hungry air conditioners.

When the doors to North America's greenest hostel opens next month at 357 College St., the most exciting feature won't be anywhere inside, but instead 115 metres below ground in the adjacent alleyway. That's where the glycol liquid in eight geothermal loops will turn the corner and start heading back above ground to heat or cool the hostel.

Having decided to upgrade from his previous hostel in Kensington Market, Mr. Aarts picked an ambitious business partner in Tom Rand. The 43-year-old is a successful entrepreneur and venture capitalist. He's also a recent author ( Kick the Fossil Fuel Habit: 10 Clean Technologies to Save Our World) and the Cleantech lead advisor at MaRS Discovery District, where he advises businesses on making practices as sustainable as profits.

With Mr. Aarts as project manager and Mr. Rand providing much capital and green expertise, the two disemboweled and renovated a 150-year-old building into a 114-bed museum of efficiency that will reduce energy consumption by 75 per cent. The premium paid was close to $160,000, an amount Mr. Rand calls a bargain, since what they save in energy bills will eclipse the cost of borrowing from day one.

Upgrades run from top to bottom. The bar's roof is covered with solar thermal panels that will concentrate the sun's energy to mostly satisfy significant hot-water needs. A 4.7-kilowatt array of electricity-generating photovoltaic solar panels serves as an awning over the patio. By installing LED lighting, which uses one-tenth the energy of incandescent bulbs, they can power every diode on the property for 1,600 watts - the same amount consumed by a two-slice toaster (or a four-slicer on bagel setting). Copper coils that wrap around the shower drains will capture heat destined for the sewers and return up to 40 per cent of it to the showerhead.

But the geothermal heating-and-cooling system will do the heavy lifting. Once you get three metres underground, the earth stays a constant 10 degrees Celsius all year. This is a source of relative heat in the winter and cold in the summer. The system exploits the temperature discrepancy by using small amounts of electricity to pump glycol through the underground pipes and collect that heat or cold. Heat exchangers inside the hostel pull the heat or cold from the glycol and send as much as is needed into the rooms.

The hostel is hoping to attract young visitors from overseas looking for a cheap doss and a communal living scene. Dorms will be $30 a night and rooms will go for $70. Utility bills should follow close on the heels of the first guests, but with expected savings of up to $2,000 a month, the owners expect to have the investment paid off within eight years. After that, it's green gravy.

By that time, a geothermal drilling rig might be a more common sight in Toronto. Mr. Rand had to go through 14 city departments to get permits for the pipe installation, but the city has since set up a task force to streamline geothermal development in city-owned alleyways and parkland.

If Toronto dives into the geothermal pipeline, it will be making actual progress toward addressing this planet's sudden warming trend. Buildings account for 40 per cent of a city's greenhouse-gas emissions. As Mr. Rand argues, if owners can cut that amount by three quarters with upgrades that make them money from the start, we might be looking at the type of technological advance a nervous Saudi oil minister foresaw when he said, "The Stone Age didn't end because we ran out of stones."

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