Where are we with net zero?

Where are we with net zero? 1505 1128 Greengage Environmental
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There is a strong commitment within the UK real estate industry to deliver net zero buildings and infrastructure. However, interviewees from our Green Age insights series clearly identified the importance of having a verifiable standard to ensure net zero carbon pledges are genuine, and not greenwashing. This is partly due to the lack of a single clear definition and methodology that can be consistently applied to all asset classes at a whole life carbon level. At present, NABERS, while increasingly being recognised as a successful route to net zero, currently in the UK, only covers operational energy for offices. RICS provides a whole life carbon methodology but not targets, and while LETI’s climate emergency design guide and RIBA 2030 climate challenge have targets, these only cover residential, office, retail and education building classes.

There was positivity about the prospect of the UK’s first Net Zero Carbon Buildings Standard to overcome this issue, and becoming the single, agreed methodology to prove that built assets are net zero. It will however need to be universally adopted to drive change at the scale required for the UK to get to net zero.

In the meantime, a number of organisations are continuing to diligently find their way to net zero. In this article, we talk about what it practically means to be net zero, clarify how it is different from carbon neutrality and set out how we are helping organisations to transition to net zero.

At a practical level, what does it mean to be net zero?

In the simplest terms, to limit carbon emissions below 1.5°C every sector has a carbon budget which is the maximum permissible emission for the sector. These budgets in the real estate sector are then translated into net zero limits for every building type. The UK Net Zero Carbon Buildings Standard, alongside a number of other industry advisory bodies, is in the process of setting these limits at a whole life carbon level, which constitutes operational energy limits and embodied carbon limits.

Embodied carbon from the construction and refurbishment of buildings currently makes up 20% of UK built environment emissions and as such, tackling embodied carbon is crucial to achieving the net zero ambition. As the grid begins to decarbonise, that proportion is set to increase even further, therefore addressing the carbon with this sector is becoming increasingly vital. The six-step embodied carbon reduction hierarchy begins with ‘building less’ which advocates the importance of retaining and refurbishing buildings while incorporating circularity wherever possible, before choosing to demolish and build new.

Achieving embodied carbon net zero is trickier to define, in comparison to operational carbon, on account of the grid’s decarbonisation not fully delivering the same benefits as it does for operational carbon. Therefore, the industry agreed definition requires that upfront carbon emissions (life cycle modules A1-A5), which concerns all emissions up to practical completion, and in-use and end-of-life emissions (life cycle modules B-C, excluding B6 & B7) are minimised to achieve the local carbon targets, with the residual emissions offset to equal zero.

In terms of operational energy, net zero can only be achieved when the required energy demand is met by the available zero carbon energy supply. This is well illustrated by the UKGBC graph in Figure 1 below.

Picture1
Figure 1: UK trajectory to a net zero economy (Source: UKGBC).

Current zero carbon energy supply projections predict that there will be a shortfall of renewable energy in the grid unless energy efficiency measures are implemented to transition properties to net zero levels, and the grid’s low carbon energy is further supplemented by on-site renewables. Therefore, transitioning buildings to net zero operational energy limits is critical to remaining within our carbon budget and limiting emissions below 1.5°C.

The UK Net Zero Carbon Buildings Standard is aiming to set net zero limits for every building type at a whole life carbon level.

How is net zero different from carbon neutrality?

One of the key issues we find when discussing net zero with clients is that it is often confused with carbon neutrality.

As opposed to net zero, where properties must meet the operational energy and embodied carbon limits, carbon neutrality permits organisations to pursue emission reductions without a specified minimum level of reduction, and any residual emissions can then be offset using verified carbon offsets. Carbon neutrality only necessitates reductions in scope 1 and 2 emissions, with scope 3 being optional.

Can not transitioning to net zero impact a property’s exposure to climate risk?

Yes, not being able to transition a property to net zero increases its exposure to stranding. Stranding refers to the risk of early economic obsolescence or devaluation of properties due to exposure to climate change. Stranded assets are properties that will not meet potential future regulatory efficiency standards or market expectations and will become less marketable, devalued or obsolete.

How can you transition to net zero?

Consider the following:

  1. Develop your corporate level net zero strategy;
  2. Develop a more detailed plan to transition your real estate portfolio;
  3. Look at net zero asset audits before developing an implementation plan that looks at phasing and delivery of the short, mid and long-term actions; and
  4. Review how you can embed net zero thinking within your organisation and processes to ensure its delivery.

Corporate strategy

Greengage is committed to embedding net zero thinking into organisational decision-making. We help organisations measure their corporate carbon footprint, establish a carbon baseline, set science-based net zero targets and set out their carbon reduction pathway. Support is provided by setting near-term and long-term (net zero) targets aligned with the Science Based Targets  initiative (SBTi)¹ following a streamlined² approach. Bespoke recommendations are provided to target the emission categories that are most material to the business. A critical part of this process is tackling the scope 3 emissions, specifically emissions related to the supply chain, tenant emissions, embodied carbon and purchased goods and services. These areas need specific focus that should be separately targeted in the action plan.

Examples of this: Wildstone, Cast, Banyards

Real estate portfolio

Greengage can support with developing a detailed action plan for real estate portfolios. This includes assessing the carbon footprint, setting near and long-term targets at  portfolio and asset levels and developing a net zero action plan. An important part of developing the action plan is for us to understand the business and engage various teams within the organisation to identify measures that are practical, quantifiable and that every part of the organisation can sign up to. This action plan is accompanied by a measurement and reporting framework that sets out the process to track and communicate success.

An example of this: Unity Real Estate

Net zero asset audits

Greengage supports clients in assessing the performance of individual assets by conducting asset-level net zero audits. These audits aim to help the assets achieve the net zero target by providing tailored recommendations that take account the building fabric, services, plant and a detailed analysis of how the building is being operated and maintained. We however believe that this is not adequate to transition buildings to net zero. As a result, our audits extend to include an occupier engagement programme and the application of green infrastructure to improve building performance and mitigate climate risk. These recommendations follow the net zero hierarchy and prioritise the reduction of consumption to the net zero target levels, elimination of fossil fuels and on-site generation and procurement of renewable energy. An indicative implementation plan is produced, taking into consideration leasing cycles and asset business plans. Further support is provided with pursuing accreditations, such as NABERS and Passivhaus, that can help in achieving net zero. We also work closely with our clients in implementing the recommendations and providing post occupancy support to review the success of the outcomes.

The net zero audits are supplemented by undertaking transition risk assessment including stranding risk assessment, Minimum Energy Efficiency Standard (MEES) risk and physical risks such as flooding and overheating. These are valuable in the ongoing management of assets to avoid devaluation.

An example of this: Mayfair and Family Homes

If you would like any further information, please contact amrita.dasgupta@greengage-env.com.

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