On February 14 and 15, 2013, the University of British Columbia brought together some 65 sustainability thought leaders from Sweden, the United States and Canada to explore the aspirations, key principles and practical challenges of regenerative sustainability.
Pierre Ouillet, UBC Vice President-Finance, Resources and Operations, spoke during the summit’s evening event. This is his speech.
I guess it is a bit unusual to have a Chief Financial Officer welcome distinguished experts, community leaders and respected professionals to a Regenerative Neighbourhoods Summit. It is a bit like having Darth Vader open a conference of Jedis.
That is not to say that CFOs are evil people. But we finance folks have pressing and difficult issues to deal with. Take UBC for example. We are a large, research intensive university with 56,000 students, two main campuses, a medical system covering the entire Province, and a $2 billion annual budget.
Public funding is down. Domestic tuition is capped. This means a relentless search for efficiencies and for new revenues. And whenever we achieve these efficiencies or deliver new revenues, there is no shortage of investments for us to make.
Faced by the rapid erosion of public funding and the emergence of new entrants delivering massive on-line courses for free, universities are in the midst of the greatest transformation since the printing revolution of the 15th century. Every resource we have is mobilized to take the student experience to a new level and to make sure that, in a world where there will be a few winners and many losers, we belong to the first category. It is no longer about being “top 25 in the world” or “doing the right thing”, it is becoming about survival.
This is the world we live in.
So how do we reconcile this challenging context with UBC’s lofty sustainability goal to reduce our GHG emission from 2007 levels--a starting point that was already below the Kyoto targets? And not by a small margin: 33 per cent by 2015, 67 per cent by 2020 and 100 per cent by 2050.
I do not care as much about the latter target, because there is a fairly good chance I will be dead by then and an absolute certitude that I will no longer be in this job, but 2015 is just around the corner. And we are going to make it!
How do we justify spending close to $40 million to build this demonstration building, the Centre for Interactive Research on Sustainability? How do we justify spending over $30 million on the Bioenergy Research and Demonstration Facility that just opened last September? How do we justify spending $80 million on the conversion of the academic campus from steam to hot water? How can we design and procure for one of the largest neighborhood district energy projects in the Province for the balance of all our land development--when no one is forcing us to do so, we are not going to receive any subsidy for it, and we are likely to face a healthy amount of public skepticism? How do we justify dedicating up to 30 per cent of the future housing stock of our very valuable land to restricted lower cost housing options exclusively for faculty and staff? How do we justify running the largest childcare program in the Province of BC, at a loss?
Because as a University, as a business, as a municipality and as a community, each of these initiatives make sense. They even make sense to me, as the CFO!
Let me give you some examples.
- The easy one first: The hot water conversion project, which will save 20 per cent of our entire energy bill, currently lost in distribution, will pay for itself.
- The Bioenergy Research and Demonstration Project would have paid for itself if natural gas prices had held to the 2011 levels – except that natural gas is even cheaper now, as the Chair of the Finance Committee of our Board of Governors (who is not exactly an environmental activist) reminds me every day!
But the point is, the facility provides an effective hedging strategy in a world of volatile commodity prices. And, even more importantly, it is a unique research facility for our students and faculty, and an opportunity for a BC company partnered with a multinational to demonstrate new technologies at home before taking them to the world. - CIRS has cost 30 per cent more than a typical LEED Gold building at UBC, but the capital cost premium is offset by lifecycle energy savings. More importantly, it serves as a living laboratory for technological and behavioral research, and it has become a catalyst of what can be done in terms of building design, as elements of CIRS are being imported into many current UBC projects.
- The Neighborhood District Energy project will make financial sense for both our residents and for the University, because unlike many other such projects in the Province, it achieves scale right away-- by selling energy to the academic campus in the early years (an innovative and elegant solution) and achieving a large enough scale in the later years, thanks to the density of the neighbourhoods being built.
- The Housing Action Plan represents a significant investment in social housing, but allows us to compete for and retain talent. It is also the way to build an incredible University community around the campus.
So what have we learned so far?
- We have learned that we need to keep the big picture in mind when doing a business case. A builder will optimize construction costs and may ignore lifecycle costs. A developer will maximize land value and has little incentive to provide social benefits. A utility can be short-term in its investment criteria. Because we are a research enterprise, a business, a land owner, a developer, a builder, an operator and a utility, we can take the broad approach and optimize the entire eco-system.
- We have learned the value of partnership. From Nexterra to GE, from Honeywell to Pulse Energy, from Corus to Sunlight, from BC Hydro to the City of Vancouver, from the University Neighborhood Association representing the residents to the campus research and student community, there are many organizations contributing unique technologies, assets, ideas, goodwill and sometimes dollars to make projects viable.
- We have learned, sometimes painfully, the importance of transparency and upfront communication. What does this mean to have a biomass plant in your backyard? How do you get support from students living a few feet away, and from residents living a short walk away? For us, it meant committing to incredible standards and, even more importantly, it meant working with industry and with the community on a robust emission sharing protocol protecting both sensitive industrial data and the right of the community to access health information in a timely manner.
There is much more that we have learned, and even more that we have not figured out. How do you scale up the success of the concept of “UBC as a Living Lab” when dozens of companies are all of a sudden trying to work with us on demonstrating concepts that would allow them to get to their next stage of growth? How do you make the right technology bets? How do you manage the risk of using emerging technologies to meet real operational requirements when “the stuff” has to work? I could go on and on.
But knowing that I am the only thing standing between you and dinner, I will conclude with a last conviction. Universities have a unique opportunity to serve as centers of experimentation and role models to demonstrate the benefits of sustainable urban design. With 4,500 institutions and 20 million students in the US and Canada, higher education has an obligation to help scale up solutions quickly and disseminate them throughout society.
Because WE CAN.
Thank you.