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Minto's "Killarney" net-zero energy model home in Kanata. CEO Brian Johnston said consumers were unwilling to pay a significant mark-up for the houses, which cost an additional $100,000 each to build.

Builders who have constructed "net-zero" houses are urging Ottawa to go slow with any proposal to change the building code to require super-energy-efficient buildings to ensure the rising costs don't add to Canada's housing affordability problems.

Their warning comes as the federal government is set to announce a series of measures this fall aimed at improving energy efficiency and boosting the use of renewable energy in residential and commercial buildings. Ottawa will announce plans to phase-in changes to the national building code, eventually reaching a "net-zero" standard that would require all new houses to be virtually energy self-sufficient.

Toronto-based Mattamy Homes constructed five net-zero houses in Calgary as part of a demonstration project with Natural Resources Canada, but CEO Brian Johnston said consumers were unwilling to pay a significant mark-up for the houses, which cost an additional $100,000 each to build.

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"I would say measure twice and cut once and involve the industry" in enacting policy, Mr. Johnston said. "Builders are generally in support of making homes more energy-efficient. They just want to make sure it is done in a proper way.

"Let's face it: there are some huge affordability issues, and the government risks exacerbating that issue. And that's an enormous issue – the affordability problem – that will run counter to this idea of increasing the energy efficiency of homes."

The Liberal government is unveiling a series of measures – including a minimum national carbon price – ahead of Prime Minister Justin Trudeau's meeting in December with premiers, in which he hopes to conclude a pan-Canadian climate strategy. While the government promotes its carbon-pricing plan as a crucial "market-based" policy, Environment Minister Catherine McKenna argues regulatory measures are also needed to meet Canada's international commitment to reduce greenhouse gases.

Environment and Climate Change Canada calculate that 11 per cent of the country's annual greenhouse gas (GHG) emissions come from building, though that figure does not include the generation of electricity needed for lighting and cooling. The proposed changes to the building codes would occur in stages over the next 15 years, and are part of a long-term strategy that aims to cut emissions by more than 80 per cent by 2050, as countries try to put the brakes on global warming.

On the building code, the federal government does not set regulations but produces a model code – updated every five years – that most provinces adopt to avoid a balkanized regulatory system. Ottawa is expected to gradually toughen energy-efficiency standards in the model code until it reaches a net-zero level.

Ottawa-based Minto Group Inc. has built five net-zero homes, including four townhouses that were completed in September and are now on the market. The company is generally supportive of a gradual toughening of standards but it must be done "with a degree of prudence," said Derek Hickson, its director of sustainability.

He said "2030 would be a lofty goal," though the province of Ontario has announced it will have a net-zero standard by that date or sooner as part of its climate action plan.

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Minto found the additional cost of building a net-zero house was between $40,000 and $60,000, and it remains to be seen whether buyers will accept that higher price. Mr. Hickson said the higher mortgage payments can be fully offset by lower utility bills.

He said the costs of building high-efficiency homes has dropped by 65 per cent since 2008 when Minto built its first one, and those costs will likely continue to decline. "Now we're using technology that is off-the-shelf; it's technology people are familer with," he said.

Mattamy Homes' Mr. Johnston said his company supports a gradual toughening of standards, noting houses are now dramatically more efficient than they were a generation ago. But he added consumers are not willing to pay a significant premium in order to reduce their annual energy bill. And banks don't take into account lower energy costs when they assess whether they are willing to provide a mortgage to a home buyer. Ottawa also recently made it tougher for home buyers to qualify for large mortgages in order to reduce the risk of defaults.

Environmental advocates are urging the government to move as quickly as possible to implement the net-zero standard. Vancouver – one of the few cities with its own building code – has said that, by 2025, all new buildings must be energy self-sufficient. But they say the policy must be complemented with programs to encourage retrofits of the existing building stock.

"Net-zero building codes drive an energy transition from fossil fuels to clean power, so they're a fantastic tool for new homes and buildings," said Clare Demerse, federal policy adviser for the advocacy group Clean Energy Canada.

"Retrofits of existing buildings save energy and create jobs. Both of these kinds of policies belong in Canada's climate plan, so it's very good to hear that Ottawa is considering adopting them."

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