Toronto Green Standard Tier 2: 2026 Compliance Guide for Commercial Buildings

If you own, develop, or operate a commercial building in Toronto, the rules just changed under you. The Toronto Green Standard Tier 2 — formerly the voluntary high-performance path — becomes mandatory in 2026 for a wide class of new construction. The biggest shift is embodied carbon reporting, and most owners we talk to in Ontario have no plan for it.

This guide covers what TGS Version 4 actually is, why Tier 2 is no longer optional, the life-cycle assessment requirements, the energy targets you must hit, which buildings are affected, and how to retrofit existing stock to align with where the standard is heading.

Planning a 2026 or 2027 build in Toronto? Talk to an Engineer — we model TGS Tier 2 compliance before the design is locked, when changes are still cheap.

What TGS Version 4 Is

The Toronto Green Standard is the City of Toronto's sustainability and resilience standard for new development. It is applied through the Site Plan Control process, which means it is enforceable as a condition of approval — not a recommendation.

Version 4 came into effect in May 2022. It introduced:

• A more demanding set of energy performance metrics
• New embodied carbon reporting requirements
• Tightened ecology, water, and waste standards
• A phased ramp-up that puts Tier 2 on a mandatory schedule

Version 4 is built around a two-tier structure:

• Tier 1: Mandatory minimum for all applicable development. Energy, carbon, water, and ecology requirements apply to every new Site Plan application.
• Tier 2: Higher performance. Historically voluntary, but mandatory as of 2026 for the development classes below. Compliance at Tier 2 unlocks the Development Charge Refund Program.

Why Tier 2 Becomes Mandatory in 2026 (The Big Shift)

The City's phased plan was always to make Tier 2 the baseline. 2026 is the year that plan becomes policy. What was a voluntary incentive path for three years is now the floor.

This matters for three reasons:

1. Projects already in design for 2026 permits need to be re-modelled against Tier 2 if they were designed to Tier 1. We are seeing this in real time across Ontario architecture firms.
2. The embodied carbon reporting requirement — which previously was for projects pursuing the refund — now applies to the mandatory tier.
3. The Development Charge Refund Program shifts up to reward Tier 3 and Tier 4 performance, rather than Tier 2.

If you were planning to "just meet code" in 2026 Toronto, code just moved.

Upfront Embodied Carbon Reporting

Operational carbon (the emissions from running a building) has been regulated for years. Embodied carbon — the emissions from making and transporting the materials — has not. Toronto is now one of the first North American cities to require it on a large scale.

Tier 2 requires upfront embodied carbon reporting for:

• Concrete, including cement content and low-carbon mix disclosure
• Steel, with recycled content documentation
• Other structural and envelope materials above a reporting threshold

You are not required to hit a specific embodied carbon number at Tier 2 (yet) — you are required to measure and report it using a recognized life-cycle assessment tool. The disclosure alone is driving structural engineers across Ontario to specify lower-carbon concrete mixes, because the number shows up in the approval package.

Worried about how a concrete-heavy design will report under TGS Tier 2? Talk to an Engineer — we run embodied carbon scenarios during schematic design.

Life-Cycle Assessment (LCA) Requirements

TGS Tier 2 requires a whole-building life-cycle assessment for the structure and envelope. The LCA must:

• Use a recognized tool (Athena Impact Estimator, One Click LCA, Tally, or equivalent)
• Cover modules A1–A3 at minimum (product stage: raw material supply, transport, manufacturing)
• Be submitted as part of the Site Plan approval package
• Reflect the actual specified materials, not a generic assumption

For developers, this adds a consultant line to the project budget — typically $15,000 to $45,000 depending on building scale. It also changes procurement. Once the LCA is in the submission, swapping to a higher-carbon concrete mix post-approval becomes a re-submission issue.

Energy Performance Targets (TEDI, TEUI, GHGI)

TGS Version 4 uses three energy metrics. Understand all three or you will miss compliance on one.

TEDI — Thermal Energy Demand Intensity

The amount of heating energy needed per square metre of conditioned floor area per year. Measured in kWh/m²/year. TEDI is about envelope performance — insulation, air tightness, glazing, thermal bridging. You cannot fix a bad TEDI number with better mechanical equipment. It must be designed in.

TEUI — Total Energy Use Intensity

Total energy consumption per square metre per year. Includes heating, cooling, hot water, lighting, plug loads. Measured in ekWh/m²/year. TEUI is where efficient mechanical systems, LED lighting, and heat recovery earn their place.

GHGI — Greenhouse Gas Intensity

Operational greenhouse gas emissions per square metre per year. Measured in kgCO₂e/m²/year. GHGI is the metric that penalizes natural gas heating. A high-efficiency gas boiler looks good on TEUI and bad on GHGI. Heat pumps and electric resistance look good on GHGI regardless of efficiency.

Tier 2 tightens all three targets relative to Tier 1. The specific numbers vary by building type — mid-rise residential, tall residential, office, retail, and institutional have separate tables. Check the current version of the standard for your building class before you design.

What Buildings Are Affected

Tier 2 mandatory requirements in 2026 apply to:

• Residential buildings 4 storeys and above (mid-rise and tall)
• All ICI — industrial, commercial, and institutional buildings subject to Site Plan Control

Single-family homes, row houses, and minor additions are generally outside the scope. Large additions and major renovations often trigger TGS requirements proportional to the scope.

Across the GTA and greater Ontario, this captures effectively every significant commercial building project entering approval in 2026. If you are developing in Toronto, you are in scope.

Development Charge Refund Program Incentives

The Development Charge Refund Program (DCRP) is Toronto's financial carrot for buildings that exceed the mandatory tier. With Tier 2 becoming mandatory, the refund structure rewards Tier 3 and Tier 4 performance.

Refund amounts are calculated as a percentage of the development charges paid, based on which higher tier the project achieves. For large projects, this can represent hundreds of thousands to millions of dollars in recovered development charges. For many Ontario developers, the DCRP is the only reason the economics of going beyond Tier 2 pencil out.

The City of Toronto Green Standard page{:target="_blank"} publishes the current refund percentages and eligibility tables.

How Droz Helps Retrofit Existing Buildings

Here is the part most compliance guides skip. TGS Tier 2 is written for new construction, but the energy and carbon metrics it enforces are exactly where older Toronto commercial buildings fail. If you own a 1990s office tower or a 2005 mid-rise residential building, your TEDI, TEUI, and GHGI numbers are almost certainly well above the Tier 2 targets a new building next door will have to hit.

That asymmetry is going to show up in leasing, valuation, and lender scrutiny — faster than most owners expect.

The retrofit path Droz builds for Ontario owners typically targets three levers:

1. Envelope improvements: Thermal bridging remediation, glazing upgrades, air sealing. This is the TEDI lever.
2. Mechanical electrification: Heat pumps, heat recovery, hydronic system retrofits. This is the GHGI lever.
3. Controls and monitoring: Real-time energy metering, fault detection, and load optimization. This is the TEUI lever.

For more on the economics, see our guide on smart building retrofit ROI in Ontario.

We model every retrofit against the metrics TGS uses for new construction, even when the building is not required to comply, because the direction of regulation is clear — operational metrics that are mandatory for new buildings today become reporting obligations for existing buildings within a decade.

Your 2026 Compliance Checklist

If you are developing or retrofitting a commercial building in Toronto, here is the short list:

• [ ] Confirm your project class is subject to Tier 2 in 2026
• [ ] Model TEDI, TEUI, and GHGI against Tier 2 targets during schematic design, not after
• [ ] Budget for a whole-building LCA and embodied carbon report
• [ ] Specify low-carbon concrete and document recycled steel content from the start
• [ ] Evaluate whether Tier 3 or Tier 4 and the DCRP refund improves your project economics
• [ ] For existing buildings, run the same three metrics against your current performance and build a retrofit roadmap

TGS Tier 2 is not a sustainability nice-to-have in 2026 Toronto. It is a condition of Site Plan approval, which means it is a condition of building at all.

See our intelligent construction services in Ontario for how we help owners and developers navigate the new compliance reality.

Have a 2026 Toronto project that was designed to Tier 1? Talk to an Engineer — we will model the delta to Tier 2 and tell you exactly what needs to change.