Cleartrace CEO: Buildings Owners Need to Certify Decarbonization

Building owners and landlords soon will be required to certify they’re meeting decarbonization targets required by a slew of new city and state laws aimed at reducing the carbon footprint of buildings, which make up an estimated 40% of global greenhouse gasses.  

“Without a doubt. Certification is a necessary component of any city’s decarbonization efforts and we expect to see these requirements rolled out more broadly,” said Lincoln Payton, CEO of proptech startup Cleartrace, in an interview with GlobeSt.

Cleartrace has emerged as a leading player in real-time, blockchain-based monitoring that transparently displays the sources and amount of energy being consumed in a building. The Cleartrace platform is an integral part of JPMorgan Chase’s ongoing program to convert its entire New York real estate portfolio to 100% renewable energy.

The nation’s largest bank has been leading the push for digital certificates of authenticity and environmental impact for CRE as the SEC prepares to set new rules requiring companies and ESG-oriented investment funds to disclose the carbon footprint of their properties to investors.

Payton told GlobeSt that recently enacted carbon-reduction mandates, including NYC’s Local Law 97 (LL97), Boston’s Building Energy Reporting and Disclosure Ordinance (BERDO 2.0) and Maryland’s Climate Solutions Now Act of 2022, are going to lead to a “proliferation” of energy/carbon credit systems.

Asked if he envisions cities and states permitting trading of authenticated carbon credits as a strategy to speed conversions of buildings to 100% renewable energy, Payton said Cleartrace’s platform is “ideally suited to support any credit-based trading program.”

But the Cleartrace CEO suggested that credits programs should be structured in a way that encourages building owners to speed up their own conversions.

“Carbon credits will speed up the conversion to renewables as long as they are valued correctly, but an ideal program will ensure that there is greater value for buildings to decarbonize on their own than to buy these credits. Credits should be used to incentivize going above and beyond the targets,” Payton told GlobeSt.

Payton declined to speculate on specific penalties cities might impose on building owners who fail to meet decarbonization targets, but he indicated he thinks the most effective penalty would hit them in the wallet. “The penalties surely need to have a financial impact,” he said.

Payton did not specify the fee structure for the deployment of the Cleartrace platform, which creates blockchain records in real-time data visualizations of the “grid-carbon intensity” of every hour of energy a building receives, produces and consumes, but he said the company’s carbon-monitoring proptech is “accessible to businesses and building owners of all size.”

“Our fees vary based on numerous factors. Simply put, the size of the building or portfolio that we (monitor) and the amount of energy that they generate impacts on the cost of using our platform,” Payton told GlobeSt.

We asked Payton how closely Cleartrace works with utilities as its tracks the power buildings are using.

“Cleartrace goes directly to the source for energy transmission data, the suppliers themselves. We monitor the agreements between energy suppliers and consumers and track what energy is generated when and where, and how much energy is delivered to the end consumer,” Payton said.

“Utilities sometimes play a part in the process of data settlement by providing us with billing cycle information that can be compared to the real-time data we collect to check for accuracy,” he explained.

The Cleartrace CEO told us he sees a potential for the proptech startup to partner with utilities on a variety of programs related to data and accounting. Payton said the platform hasn’t been asked to help utilities monitor peak demand in order to pre-empt blackouts or brownouts, but he indicated Cleartrace could be useful in what he termed “demand/response” events.

“Utilities tend to have good forecasting algorithms to monitor these types of events. While we have not made it our purview, we do see an opportunity to monitor demand/response events in the future to enable greater carbon avoidance,” Payton told GlobeSt.

Payton told us he thinks net zero by 2050 is feasible “if the speed of decarbonization accelerates.”

“We need more aggressive, data-driven action from all players across the economy,” he said.