The term “net zero” is everywhere, including in the real estate industry. Even if people don’t know how to define it, it’s hard to avoid. Solemn “net zero by 2050” vows have flooded news feeds and become a call to arms for countries and corporations. I’m here. According to the United Nations, more than 70 countries, including the biggest polluters China, the United States and the European Union, have set net-zero carbon emissions targets covering 76% of global greenhouse gas emissions.
Leading commercial real estate firms are racing to demonstrate net-zero pledges. Companies such as CBRE, JLL and Cushman & Wakefield, along with his Transwestern commercial real estate services firm, have taken net-zero pledges. Since early 2021, more than a dozen real estate companies have set net-zero targets, including his REITs such as Boston Properties, Prologis and AvalonBay Communities.
In most cases, shareholder and public pressure are the primary motivations behind climate change pledges, and many real estate companies acknowledge this. “So many clients, especially public companies, like us, want to know what climate risks and opportunities mean for their organizations and what they are planning for their carbon footprint from their shareholders. We are listening,” he said, CBRE. Her VP of Corporate Responsibility, Jennifer Leitsch, said: For corporate tenants and landlords, adopting net zero her carbon can also bring employees back to the office, leading to higher leases on buildings and higher rent premiums.
Is net zero a smoke screen?
No matter how much Net Zero talk there is, I doubt most people know what it means. In fact, it generally refers to a state in which the greenhouse gases emitted are balanced by their removal from the atmosphere. The “net” is important because it is very difficult, if not impossible, to reduce global emissions on the timescales demanded by climate activists. Countries and companies will need to increase carbon removals and significantly reduce broader emissions to meet the ambitious targets called for by the Paris Agreement goals.
But there is a growing backlash against net-zero pledges, something commercial real estate companies should be aware of. Environmental advocates are stepping up their efforts, blaming companies for what they see as lackluster net-zero promises. A recent Friends of the Earth International report called the concept of net zero “a dangerous, problematic and conveniently invented concept because of how effectively it conceals a smokescreen, inaction.”
And environmentalists make a good point. While net-zero pledges have good intentions, they often rely on offsetting carbon emissions in a variety of ways, including land-use change that establishes forests and expensive technologies such as carbon capture. Net-zero targets often rely heavily on carbon capture and removal technologies to continue operating at a cost-effective scale in the near future. And to reach the net-zero target, we need to “steal land” from countries in the Southern Hemisphere as much as possible to plant trees and enable other nature-based solutions to remove carbon dioxide. there is.
Many of the big company’s promises may be unrealistic. Oxfam, a charity focused on alleviating poverty, has more than doubled its area of land in forests thanks to net-zero commitments from the world’s largest oil and gas companies (BP, Eni, Shell, and Total Energies). points out that it will be necessary to plant British. They argue that many pledges by companies may also be too far in the future, deferring accountability until it is too late. , and can be polluted for as long as desired until emissions are predicted to decrease.
Net-zero plans that rely on these future carbon removal promises rather than reducing emissions more than they do now could prove to be a risky gamble. This is because the carbon removal and capture technologies we rely on to remove large amounts of carbon over time may not work as expected. Another problem with net-zero commitments is that they often end up with too many forest conservation projects anyway. But when plantation projects are traded as offsets in carbon markets, carbon emissions continue elsewhere.
tall order
In the real estate industry, it is imperative to remember that creating net zero carbon buildings is still very difficult. According to the World Resources Institute, net-zero carbon buildings now make up just 1% of the world’s buildings. The International Future Institute Zero Carbon Certification was created in 2018 and the first certification took place in 2020 at the Google offices at 6 Pancras Square, London. The US Green Building Council also received his new LEED Zero Carbon certification, the first of his two certifications. 2020 buildings including Hanergy Renewable Energy Center in Beijing.
Net zero energy buildings are a little easier to achieve. With Net Zero Energy, the facility will combine on-site renewable energy, electrification, and significant energy efficiency reductions to generate all the energy it needs. There are now about 700 net zero energy buildings in the United States and Canada, and according to the New Buildings Institute, net zero energy buildings have grown by 42% between 2018 and 2020.
Making a building zero carbon is more complicated. A zero-carbon building is one that offsets the emissions from the carbon contained in its materials and building operations. Offsets can be used for carbon zero buildings, but are seen as a necessary last resort to reduce the worst emissions. There is currently no building in the world that meets the carbon zero ideal without the use of offsets and achieves net zero carbon across its entire lifecycle, both operationally and embodied carbon. Admittedly, it’s a tall order.
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Net zero carbon is considered an imperfect goal. However, when we consider how difficult it is to make a building or portfolio of buildings net-zero carbon, we begin to understand the scope of the real estate decarbonization challenge. Net-zero carbon is the new foundational framework for the real estate industry, and many companies are using it as their north star to build for the long-term future. Achieving the net-zero goal for many commercial real estate companies is considered technically and economically feasible using existing and new technologies, but the actions required to achieve it And don’t take huge changes in policy lightly.
Obstacles ahead
The journey to decarbonize real estate is just beginning, and many obstacles lie ahead. Switching to zero-carbon electrification comes with initial costs that some major institutional investors can afford, but not all real estate companies. Either way, some of these replacement costs are paid when gas heating systems and other equipment wear out or become obsolete. However, there is no need to replace an inefficient system unless necessary.
One example is the electrification of heating and cooling systems in commercial buildings in the form of heat pumps. Commercial heat pumps make economic sense in some parts of the country, but not in all. Also, many building mechanical systems have long life cycles and are replaced only when necessary. Building decarbonization often results in energy savings and a return on investment. Yet, in a world characterized by short-termism and in the real estate industry, only the long-term view is profitable.
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Another obstacle to decarbonizing real estate at scale is the significant and disruptive economic and social impacts of sustainable transformation. At the national level, new green building technologies could create millions of jobs, but millions of other jobs would be lost. One example is the natural gas industry and the impact of green building codes and laws on it. More states and local governments are considering legislation to ban natural gas connections in commercial buildings, which is good for the environment but bad for the natural gas industry. Losers of this transition, even if it leads to , will slow things down unless they receive adequate compensation or can move quickly to other new jobs.
Some environmental groups say net zero is a gimmick, but it’s still a huge improvement over the past. Getting a building or portfolio of buildings to net zero is a huge task that is just beginning and it remains to be seen if these promises will be delivered. How commercial real estate firms communicate their climate pledges We need to be careful about what we do, and beware of environmental activists who make ardent claims of ‘greenwashing’. Net zero may not be everything, but the end goal is laudable and hard to achieve.Many people want perfection, but most importantly to greener real estate. progress.