Decarbonization Steps to Reach Your GHG Reduction Goals

1. Develop net zero or GHG reduction goal for each property

Before committing to anything, the first step is to have discrete goals, such as having all carbon neutral assets or a carbon neutral portfolio by 2030. More specifically, net zero goals may include reduction-oriented targets, such as committing to a portfolio-wide energy intensity reduction (e.g., achieving 25% reduction by 2030 from the 2015 baseline), or making specific goals such as replacing all fossil fuel equipment with electric with a target of 100% electric buildings by 2035.

For a portfolio with high GHG emitting assets, these could be compensated for by overperformers in the portfolio. But it's still best practice to implement minimum standards across all assets, which could be either performance based (e.g., 10% reduction of all assets by 2030), or prescriptive based (e.g., 100% LED lighting at all assets by 2025).

Additionally, consider what emissions sources you want to evaluate and reduce, such as energy (electric, natural gas, etc.), which is almost always included as an emissions source for real estate properties, and coolants and refrigerant leakage, which are also frequently included.

2. Establish baseline GHG emissions

With the goals set, the next step is to benchmark the current GHG emissions levels with a systematic analysis of the greenhouse gas emissions sources. The data collected helps drive emissions reduction targets and can be used to show emissions reductions year-over-year, or as a comparative tool between assets and portfolios.

GHG emissions are divided into 3 scopes. In brief, from a real estate perspective, Scope 1 includes direct GHG emissions from owned sources, including vehicles and equipment that burn fossil fuels on site, such as boilers and furnaces. Scope 2 includes indirect emissions from the purchase of electricity for purposes such as heating and cooling. And Scope 3 includes all other indirect emissions that occur in a company's value chain, such as tenant energy use.

Once the baseline has been established, there are 3 main ways to reach your targets – reduction of GHG emissions, renewable energy generation, and offsets.

3. Reduce GHG emissions

Reduction of GHG emissions begins with an energy and water audit, which is a comprehensive analysis of the property's energy and water consumption using the ASHRAE Energy Audit Standards. The audit quantifies energy and water usage, identifies property conditions that may cause excessive use, and provides efficiency measures that, once adopted, will improve the property's energy and water use. Common measures include replacing old florescent lighting with LEDs, changing air filters on a regular basis, insulating domestic hot water piping, and switching to energy efficient appliances.

There should be end of useful life considerations when implementing capital intensive energy efficiency projects such as HVAC or building envelope improvements. Most commitments to achieving net zero carbon have an achievement date by 2050 or in the next 30 years. In that time frame, most major systems in a property will reach the end of useful life and need to be replaced. At that time, we can just consider the incremental cost of the more energy efficient equipment since the base material and labor costs have to be spent anyway to replace obsolescent equipment or systems.

Another useful tool to consider is an Energy Model – a computer simulation program that takes the physical characteristics and location of a property and estimates its annual energy use profile. This tool can be used to predict and diagnose issues with the energy performance of a property. It is best used to calculate the cost versus benefit of various energy efficiency measures. It can also be used to estimate the annual energy cost of a low efficiency and cheaper AC system versus a high efficiency but more expensive AC system. Payback can be calculated by dividing the difference between installation costs and the annual energy savings

To help further reduce a property's GHG emissions, consider electrification of the property—switching from equipment that use fossil fuels to ones that rely on electricity as source. While electricity also produces GHG emissions, and the electricity generation currently accounts for 32% of U.S.'s energy-related CO2 emissions, the grid is getting cleaner and quickly transitioning to renewable energy sources.  If a property has all electric equipment and burns no fossil fuels on site, it can achieve net zero carbon status with minimal effort and investment, assuming the electric grid that provides the electricity decarbonizes.

Another option, given availability, is to engage your utility suppliers to increase the amount of green energy (energy generated from renewable sources) that is provided to the property.

Lastly, low-cost operational improvements (e.g., building automation and controls) and retro-commissioning (optimizing buildings systems and equipment to extend their useful life and reduce maintenance costs) will also make the property run more efficiently.

4. Renewable energy generation

A second component to reaching net zero is integrating renewable energy systems into the existing or planned property, such as installing solar panels on available areas (e.g., roof) to generate electricity for the building. This helps reduce the property's dependence on grid-supplied electricity, which in turn reduces utility bills and consumption, in addition to improving the resiliency and sustainability of the property. And as renewable energy technology has matured, there are multiple energy systems besides solar that can be considered, such as wind, geothermal, and micro-turbine.

5. Offset remaining GHG emissions

Lastly, when neither direct reduction nor renewable energy generation is feasible for a property, an option is to purchase carbon credits, GHG offsets, or renewable energy credits (RECs) to lower the building's net GHG emissions, thus further reducing its overall carbon footprint.

Once you have implemented the decarbonization plan that is right for the property, the final step is to commit to ongoing benchmarking and analysis to track your progress towards the established goal.

Given that each property and portfolio is unique, there isn't a single solution to decarbonization or achieving net zero goals. To help our clients in their pursuit of decarbonization and reaching their ESG+R targets, Partner Energy's team of energy efficiency and sustainability experts develops a pathway for each property, taking into account the client's individual needs and goals.