Written By Jason Roth, Mark Lewis, Andrew Jeanrie, Thomas McInerney and Jade Scrymgeour
The demand for sustainable, lower-carbon solutions in the construction industry is creating new opportunities for the use of mass timber in Canada. Building code regulations are changing to allow for taller wood structures. Hundreds of new projects are planned or underway in British Columbia and Ontario.
As an example, at the provincial and municipal levels, British Columbia is aiming to supply more wood and make more value-added wood products available in the province. British Columbia currently has more mass timber buildings per capita than anywhere else in North America. In addition, in April 2022, the City of Toronto announced a new mass timber pilot program for affordable rental housing, using wood products that must be certified by the Forest Stewardship Council (FSC) or CaGBC-approved equivalent.
These developments are exciting. However, there are some important things for developers to consider when looking at a mass timber project, particularly:
- the approval process;
- product supply and trade issues;
- contractor experience and insurance; and
- environmental, social and governance (ESG) benefits.
The approval process for mass timber buildings is not as certain as other projects. Mass timber construction is still relatively new in Canada and the regulatory system is evolving with it. Developers should consider the potential for uncertainty and delays and address this risk in their project scoping and scheduling activities.
We note there are a number of positive developments. The new National Building Code of Canada was released on March 28, 2022. One of the highlights is the inclusion of encapsulated mass timber construction to allow for wood buildings up to 12 storeys tall. British Columbia was the first Canadian province to amend its Building Code to permit the construction of tall wood buildings up to 12 storeys. In Ontario, the Building Code was updated in 2015 to allow wood frame buildings up to six stories, with a change similar to British Columbia's proposed for the next edition of Ontario's Building Code. A 10 storey institutional building for George Brown College is already under construction in Toronto.
British Columbia launched its Mass Timber Action Plan in April 2022 as a roadmap to grow the industry. As part of the plan, the provincial government says it will work closely with industry and researchers to identify and overcome regulatory barriers.
Product Supply and Trade Issues
The supply of mass timber products (e.g., cross-laminated timber) is critical to a project's success. Mass timber products typically makes up a large percentage of overall project material costs. The source can affect cost, schedules and overall ESG aspects of a building.
It is very important to know if the product is sourced in Canada or overseas, as trade issue risk should be assessed for any project. Tariffs and supply chain disruptions may be concerns if the products do not come from Canada. Contractually, as the product is so critical to the project, we typically see developers designate the product source/supplier in a construction (CCDC) contract to avoid issues.
Contractor Experience and Insurance
Using mass timber is very different from concrete-and-steel construction. Developers should seek professionals, builders and trades who have experience with mass timber buildings and a well-developed plan to complete the project. The construction contract should contain sufficient covenants to confirm such experience. Consideration should also be given to including provisions mandating the use of certain product suppliers (see above). A review of standard warranty provisions to confirm appropriate for the specific products used should also be considered.
The insurance requirements for mass timber projects and the timing to place such insurance should be confirmed and priced in advance to avoid delays and cost surprises.
The ESG benefits of mass timber buildings add to their appeal for developers and governments. Wood is a natural and renewable building material, it can be grown sustainably and is a lower-carbon form of construction. Mass timber can match or exceed the structural performance of concrete-and-steel while reducing carbon emissions by as much as 45 percent.
Developers must plan for the entire life cycle of a mass timber building to realize all of the low-carbon benefits. Wood that ends up in a landfill will release its carbon back into the atmosphere, so planning for the reuse of building materials or using capsulated wood products is a necessary step.
ESG benefits are much more than environmental. First, B.C.'s Action Plan supports reconciliation by co-creating tangible economic and social opportunities for Indigenous people in the mass timber economy. Second, developers may be able to generate carbon offset credits under B.C.'s Offset Protocol. This policy is still under development, however, and the B.C. government intends to release a finished protocol this year.
About Bennett Jones
Bennett Jones' Construction group provides full legal support to the construction industry in this increasingly complex, hybrid area of commercial law and litigation.
The Bennett Jones Commercial Real Estate group is a team of proactive, deal-focused advisors who serve clients in all stages of a project, from development, construction and land-use planning to commercial leasing and property management.
To discuss mass timber construction or real estate matters in Canada further, please contact one of the authors.