Buildings are a significant source of carbon emissions in the modern environmentally conscious world, contributing between 40-50% of all emissions. Real estate is aggressively implementing building decarbonization strategies in response to growing pressure from regulators, capital markets and general public. This thorough article deconstructs the three main tactics that operators and owners of real estate can use to drastically lower their carbon footprint.
Understanding Building Decarbonization and its strategies:
1. Decarbonization Strategy 1
- Energy Efficiency:
Operational Changes: One of the most important stages in the decarbonization process is optimizing the efficiency of current structures and machinery. Notable energy savings can be achieved by putting strategies like improving insulation and HVAC systems into practice. Recent research indicates that a building’s energy consumption can be reduced by 20% just by making operational adjustments.
Energy Efficiency Projects: Real estate stakeholders have the option to implement energy efficient projects with different upfront investments, in addition to operational changes. Broadly applicable projects such as installing LED lighting, are financially appealing for real estate portfolios because they do not only improve energy efficiency, but they also have shorter payback periods.
Deep Capital Upgrades, Retrofits and Renovations: Making investments in capital intensive projects such as renovations & deep capital upgrades, is a calculated step toward long term energy efficiency. Building operating emissions can be significantly decreased by replacing outdated mechanical equipment and adding energy efficient windows and passive heating and cooling. According to our global research study on decarbonization, deep retrofits can save up to 50% on energy.
2. Decarbonization Strategy 2
- Renewable Energy:
Purchase Off-Site Renewable/Clean Energy: Because renewable energy sources are becoming more and more affordable, off-site renewable energy adoption is picking up steam. Real estate portfolios can transition to a more sustainable energy mix by acquiring renewable energy credits (RECs), renewable retail contracts (RRCs) and power purchase agreements (PPAs). Renewable energy sources have become more affordable and ecologically friendly in the last ten years with costs having dropped by an astounding 60–90%.
Add Onsite Renewables & Battery Storage: A concrete approach for real estate to directly support the production of clean energy is through the installation of onsite renewable energy, especially solar photovoltaic panels. An on-site solution for sustainable electricity consumption is offered by rooftop solar installations combined with battery storage. On-site renewables are now a viable & effective building decarbonization strategy because of the advancements in technology that have reduced their installation costs.
3. Decarbonization Strategy 3
- Building Electrification:
Shifting Energy Demand: One important tactic to lessen dependency on fossil fuels is building electrification. This entails switching out conventional heating appliances such as boilers that run on natural gas, with ones that run on electricity. Even though there might be an initial cost increase for this change, there will be significant long-term environmental benefits. The efficiency of electrification is directly correlated with the grid’s carbon intensity. Electrification becomes an effective strategy in areas where the power mix contains a high percentage of renewable energy.
Consideration: A recent report projects a significant growth rate of more than 8% for the global building electrification market in the upcoming years. This demonstrates how important electrification is to the industry’s realization of sustainability objectives.
In order to achieve net-zero goals the real estate sector must implement efficient building decarbonization techniques. The path to decarbonization is complex and calls for a careful balancing act between building electrification, renewable energy adoption & energy efficiency. The data and analysis offered highlight how these tactics may have an effect on cutting operational emissions and support the global effort to tackle climate change.
By remaining up to date, making the most of the data at hand, and taking a comprehensive approach, real estate stakeholders can establish themselves as pioneers of sustainable practices and secure the industry’s environmental future.