A Department of Energy report from earlier this year looked at decarbonizing the buildings sector by 2050. It’s another time to take a look and begin planning for a future — one that might well include more regulation, client demands, and investor expectations — that’s coming faster than it might seem.
More than a third of greenhouse gas comes from buildings. There are almost 130 million existing buildings in the country and an expected 40 million new homes and 60 billion square feet of commercial space coming by 2050. Buildings account for 74% of electrical use and people spend 90% of their time in structures.
The U.S. goal is to reduce building emissions 65% of 2005 levels by 2035 and 90% by 2050. As GlobeSt.com has repeatedly reported, such goals aren’t some feel-good goal. It’s a solid business consideration for the industry, whether existing buildings or new ones.
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Investors are increasingly concerned about legal liabilities as federal, state, or city regulations look to limit the impacts of climate change and also short-term profit implications. Buildings taking sustained weather damage can expect insurance rate hikes of 50% to 100%.
Additionally, there are significant tax reductions available, including through the Inflation Reduction Act of 2022, that can help decarbonization with the potential for reducing construction or remodeling costs.
The DOE’s blueprint includes five types of technical applications that help with decarbonization: energy efficiency, efficient electrification, grid edge resource management, low global warming potential refrigerants, and low-embodied carbon construction.
Making such changes is easiest in new construction, not refitting. Buildings last too long and need to be planned and constructed with maximum efficiency using low-carbon technologies. When properties are upgraded or need component replacements, the developer should prioritize high-efficiency investments and low-carbon technologies.
The reason action has become necessary now is to maintain the ability to leverage efforts. The longer developers put off, the more that has to be redone and the more expensive the work. To avoid unnecessary additional rounds of upgrades, efficient and clean technologies need almost 100% market share by 2029 for space heating equipment, and by 2037 for typical water heating equipment.
Advancing energy efficiency and reducing carbon emissions will take negotiation and a partnering approach with subcontractors. For example, the DOE notes that the 124,000 independent HVAC contractors in the country are often risk-adverse because of industry challenges. Many aren’t experienced with newer technology like heat pumps. Roofers don’t necessarily know how to do installations to enable efficient solar panel installation and use.
Developers will also need to research new materials and business techniques to further include lower-carbon materials and to train their teams in using them. The more work that is necessary, the sooner the efforts should start to allow for sufficient time to make the necessary changes.
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