The definitive guide to decarbonization planning for commercial real estate
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The biggest levers of decarbonization can actually be inferred using recognizable design patterns, and extracted with a few simple questions. This is the key to unlocking scalable decarbonization planning to meet the demands of a zero carbon economy.
So, he tried a new tactic: starting with interviews before the tour. Bringing just a blank sheet of paper, he would meet with operators over coffee. Together, they would sketch a design schematic of the building and its carbon-emitting systems, which were then verified during the tour.
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Where do we go from here?
Decarbonization planning is increasingly a table stakes activity.
In response to institutional investor demands and new building performance standards, industry leaders have already:
- Established ongoing carbon accounting
- Set targets, across their portfolio or specific funds
- Begun annual reporting and disclosures
- Integrated ESG into due diligence
- Incorporated low carbon design into new developments
- Implemented the obvious, low-hanging fruit, like LED lighting
Here’s the problem: even after all of that, they are still a far ways off from achieving their net zero targets.
Which begs the question…
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Why is decarbonization planning so hard to do?
Energy audits: Yesterday's solution to yesterday's problem
For lack of better alternatives, real estate owners and investors are primarily relying on onsite energy audits to guide their decarbonization planning.
But, energy audits were never intended for decarbonization planning. We know this as a team of former energy service providers who delivered ASHRAE 1/2/3s, net zero feasibility studies, re-commissioning studies, retrofit designs and more.
Audits are intended to inform project implementation and design at an individual building that you have already prioritized for investment.
At a price tag of $20,000-$60,000 per building and taking an average of 3 months to complete, they are not designed to analyze hundreds or thousands of buildings at a time, nor are they intended to build programmatic decarbonization strategies at scale.
Moreover, audits are static, point-in-time studies delivered most often via PDF, making them impossible for ESG teams to easily integrate into their workflows and annual capital planning cycles.
They also turn stale in 3-5 years due to changing economic, regulatory, and technological conditions. At this point, you’ll need to do it all over again to keep your plans up to date.
To achieve your portfolio-wide net zero targets, you need decarbonization planning tools that are purpose-built to analyze buildings at scale, quickly and cost-effectively.
What does a good decarbonization plan look like?
How we build decarbonization models
At Audette, we pre-modeled the built environment such that we are able to accurately infer how your buildings are performing — starting with just an address list.
It’s not magic. Despite how different they might look, buildings are designed for specific purposes and so follow detectable patterns that can, when paired with building science expertise, be used to deduce the major systems inside that drive emissions. Moreover, known decarbonization solutions already exist for every building system.
By using software to bring these concepts together and applying the power of AI, we can analyze buildings for decarbonization at scale.
Audette’s physics-based modeling platform has encoded the same methodologies used by traditional energy auditors into scalable software that can analyze thousands of buildings at a time. Developed by building scientists and trained on 800,000+ unique building simulations, Audette generates decarbonization plans that you can trust.
How do you use a decarbonization plan?
Capital planning at the property level for decarbonization projects
This is what most people think of when they think of decarbonization planning (and how they use energy audits today). You have a particular property you have prioritized for work, and you need an investable, time-sequenced plan to guide investment decisions and determine which projects get funded, when.
Decarbonization planning at the portfolio (or fund) level
If you have hundreds or thousands of properties, it’s simply not pragmatic or feasible to work on 100% of your properties all at once. So the key question becomes, “where do I start?”
By quantifying the carbon reduction potential and cost to decarbonize for every building in your portfolio, a good tool will surface the myriad of possible criteria to assist in your prioritization efforts (e.g., tCO2e reduced, tCO2e per $ spent or per sqft, GHG intensity, ROI/IRR, payback, abatement cost and more).
From there, you can then apply the criteria that are most aligned to your business needs to identify your highest-priority properties. Ideally, whatever tool you use should also be flexible enough to reflect the realities of how your business is run, allowing you to view and filter your results by fund, geography, asset manager, property manager or any other custom cut.
Carbon due diligence during acquisition of new properties
Most of the leading real estate ESG teams have already incorporated some level of ESG assessment into their due diligence process. Onsite energy audits are typically too slow to fit into the due diligence window and too expensive for a property that you may not end up owning. With the advent of tech-driven tools like Audette, it is now possible to conduct a deep decarbonization analysis prior to acquisition. An investable, time-sequenced decarbonization plan not only enables the deal team to more confidently underwrite the investment but, for the ESG team, it also ensures that every acquired property entering the portfolio has a proactive decarbonization plan and budget from day one.
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