Thomas Mueller, President & CEO of the Canada Green Building Council (CAGBC) on the state of the green building sector moving into 2026.
What was your most important takeaway for the building sector in 2025?
Restoring housing affordability emerged as the most critical challenge for the building sector in 2025. CMHC estimates Canada needs 3.5 million additional homes by 2030 to return to 2019 affordability levels. While the federal government has committed to 26,000 new units over five years—including 4,000 on federal lands—scale remains a challenge.
Affordability is not just about purchase price; it’s about the long-term cost of ownership. In 2023, 14% of households—and 18% of low-income households—struggled to maintain safe indoor temperatures due to rising energy costs. Green buildings address this issue by prioritizing energy efficiency and resilience, protecting families from higher utility bills and costly retrofits.
CAGBC is responding to this challenge to demand better more sustainable housing for Canadians. In fact, over 90,000 housing units have been certified to LEED or Zero Carbon Design and many more to other standards. If the proposed homes will be built to the 2020 building code, it would add significantly to Canada’s GHG emissions annually. The takeaway? Every new home built today must combine affordability with energy efficiency because these decisions will shape Canada’s housing affordability and carbon future.
How did the U.S. climate policy and the ongoing tariff situation impact the sector?
The U.S . position on climate change and the tariffs had wide-ranging impacts on Canadian climate policy and corporate ESG commitments. In Canada, the new government prioritized safeguarding and growing the economy over climate action. The shift in government priorities focused on embedding climate action within broader strategies for innovation, economic growth, and competitiveness. At the same time, commercial real estate sector began reassessing and recalibrating ESG commitments, focusing more on pragmatic solutions that deliver financial returns. Despite this recalibration, green building continues to be recognized for its benefits in driving business value, managing climate transition and physical risks.
The tariffs further disrupted supply chains and construction costs which were first impacted during the pandemic. Cost of construction remains a significant challenge across the industry resulting in delays or cancellations of projects. However, government support for affordable housing development through Build Canada Homes, Canada Lands Corporation and CMHC, and the support for pre-fabrication and modular construction are expected to reduce costs. Buy Canadian policies and low-carbon materials present opportunities to spur domestic innovation and manufacturing. Buy Canadian must prioritize low carbon materials to ensure we continue to reduce GHG emissions from building construction. The industry is already contributing through initiatives like CAGBC’s annual Embodied Carbon Summit, which aims to help the industry to transition to low-carbon solutions.
Where is the sector going?
Global climate change policy continues to recognize the importance of the building sector as an integral solution to reduce GHG emissions and to address physical risks. As climate impacts grow more frequent and extreme, resilience will define the future of Canada’s building sector—both for new construction and retrofits. Rising insurance costs and coverage limits are already signaling urgency to act on physical risks.
Real estate investors and lenders have also taken note and want to ensure standards are in place to protect their financial returns. Asset-level performance metrics that reduce investment risk are becoming more frequently requested by investors, especially from Europe and Asia. Credible green building certifications play a significant role by providing trusted third-party verification on building design and performance.
To support capital investment in green buildings, CAGBC supports the development of a green taxonomy approved in the 2026 budget. Through our partnership with REALPAC we have also started discussions with the real estate industry and the appraisal community to recognize investments in sustainability through valuations.
Global momentum is our side as government policy at all levels and corporate commitments continue to support sustainable and low-carbon buildings. We are going through a period of recalibration not retreat as the building sector is transitioning to practical solutions with tangible results. Canada cannot afford to fall behind as it will impact its global competitiveness, economic growth and our standard of living.

