What are the 2020 CREtech Thoughts on Aiming at The Race to Zero Campaign

Recently the world has witnessed many climate-driven disasters like wildfires in Australia & California, floods in Africa, cyclones and heatwaves in India. Amidst all of these, there are a couple of announcements that came out surprisingly well for the environment and future businesses. In October the EU passed the bill that makes net-zero emission 2050 target, into law. With that announcement, Europe became the first continent to aim for carbon neutrality by the end of 2050. Besides the EU, one of the recent reports published by the new climate institute, the number of commitments to reach net-zero emissions from local governments and businesses has roughly doubled this year, that includes some of the leading businesses and companies with combined revenue of over $11.4 trillion. Vowing to net-zero carbon emission, the biggest and leading companies like KPMG, JLL, Capgemini or even Siemens have committed to carbon neutrality or net-zero by 2030.

Net-zero as a term has been there for quite some time. Describing it with emission of carbon footprint it can be described as the reduction in the demand for energy and materials to a level that can be met solely by resources that do not emit greenhouse gases. In simple terms, it is a function of resource consumption during the design or construction and the operational phases.

What does net zero mean for CRE?

As per the Paris Agreement signed in 2016, most of the private and public listed enterprises have committed to achieve carbon-neutral or carbon positive, science-based targets between 2030 - 2050. As a known fact, buildings are responsible for almost 40% of the world’s total direct and indirect CO2 emission, in fact buildings in the USA emits over one-third of the greenhouse gas emissions, which is more than any other sector of the economy. 

Evidently, a larger part of the net-zero commitment comes under the commercial building spaces and supply-chain (warehouses to mobility). Companies in the IT, retail, consumer goods manufacturing and financial sectors are focusing on developing a portfolio of net-zero carbon buildings and also ensuring, new buildings to operate at net zero carbon by 2030 and existing buildings by 2050. That’s a humongous task considering that almost 80% of the buildings for 2050 have already been built.

JLL was the first property consultancy in the UK to sign the WorldGBC’s Net Zero Carbon Buildings Commitment (NZCB) in 2019. Later they went ahead and announced a global net-zero carbon building commitment which covers a portfolio of 460 buildings with a total floor area of 474,967 square meters. 

Eventually, if developed economies want to follow the path of net-zero carbon then they will have to focus on the buildings, specifically commercial real estate, where most of the resource consumptions can be controlled and monitored in a better way. 

Where can commercial buildings apply brakes on carbon emissions?

Carbon Emissions by the buildings can be seen in two phases

1. Design and construction phase (short and one-time)
2. Operation

In most of the cases, carbon emission during the construction phase makes a significant contribution – between 30% to 70% of a typical building’s total lifecycle emissions considering the selection of the raw material or any resources used for construction, and design aspects of the building being the most critical part of the process. This type of emission is termed as embodied carbon emission. Since most of the portfolio of net-zero committed businesses consist of existing buildings, the focus is on the emissions that happen during their operational phase. 

Building’s operational aspects that are associated with unwanted/extra resource consumption

• Operational efficiency: Inefficient assets, lack of monitoring & control systems, and the mismanaged workforce leading to higher energy consumption

• Asset life cycle: Poorer maintenance practices can severely compromise the asset life cycle ultimately leading to uncontrolled energy consumption or new asset installations 

• Demand management: Not knowing the incoming demand inflow could lead to mismanaged assets and their capacity. This could cause higher energy losses due to unplanned chiller sequencing.  

• Tenant’s behavioral aspects: It has been observed that the environmental aspiration and comfort expectation does not go in hand causing higher resource consumption than the expectation. Misaligned priorities and improper communication on sustainability goals make policy or the implementation weaker.    

Net-zero turning into reality or a chase to the Race to Zero campaign?

Initially, net-zero emission targets were more aspirational than practical in nature and there was no technology blueprint or policy framework available to support them. But the recent market-driven approach, climate-conscious thinking is not only enabling faster adoption of such practices but also motivating enterprises to race to net-zero.          

Changing perceptions:

• Awareness of operational environmental impact is increasing among some commercial occupants, particularly larger organizations with internal sustainability commitments. Although it will take time for mid-size businesses to adopt carbon-neutral practices, certainly we can see the change in perception.  
• There is this constant fear that the Carbon intensive assets may become “stranded” if action is not taken to decarbonize them. Currently, the market is not yet accounting for carbon intensity in property valuation, still property management firms and owners need to be aware of this risk/ opportunity.
• As the scope of sustainability reporting is expanding, the importance of facility lifecycle data (Asset + Material) to analyze and optimize lifecycle and carbon emissions is also growing.

Performance Contracts:

• Transforming existing facilities to net-zero requires a planned approach and strong partnership between owners, occupants, and facility management teams. Digital tools and mobile applications have been strengthening communication and improving operations and team productivity.   
• The long-term business plan for an asset lifecycle maintenance is aligning with other business objectives. Value of resource performance is increasing as O&M contracts are turning to performance-based.

Digitalization:

• A data analytics-driven approach to operation and maintenance is demonstrating significant value addition over the conventional approach helping to improve energy sustainability
• Cloud applications, open data infrastructure and API based approach to select a relevant application to manage asset performance is making it easier to try or scale. 
• Efficient systems combined with operational tools/applications to allow operators to choose how they will maintain net-zero performance. 

These three drivers are setting up the ecosystem which is required to race for the net zero, a solid market driven approach to go for sustainability, supporting technologies such as IoT, data analytics and change management.

Asset performance analytics - Enabling the Race to Zero Campaign:

As far as achieving net-zero is concerned, the ability to harness renewable energy would always help to meet the carbon-free energy demand. But that comes with constraints of space for PV cells, geographical location for the good wind, and time for adoption and implementation. 

On the other hand, focusing on the existing buildings to better manage or reduce energy consumption in a data driven way makes a great approach to the race. In Fact, It wouldn’t be an overstatement to say that almost all the emission that happens during the operational phase can be monitored, controlled, rectified, and reduced to achieve net-zero or carbon positive status, and the first building block towards net-zero journey is to have the access to facility O&M data.

From the data flow pyramid we realize that to access any of the use cases, we would need to climb up 4-5 steps, and in that process, we would be able to lay the foundation for multiple digital transformation initiatives.  

Asset performance management - Leading Facility managers one step closer to net-zero buildings:

1. Predictive maintenance: With the right asset performance data facilities one can move to proactive maintenance practices reducing the unexpected breakdowns and cutting down operational cost. Of course, that wouldn’t be possible without unified energy and asset data strategy.

2. Fault detection diagnostics: Buildings generate tons of data & insights through BIM, BMS, workplace management applicants such as CMMS, CAFM. Correlating with the team with such insights to make sense is not an easy job to get it done and hence finding the operational irregularities without having a strong FDD engine on the analytics layer is next to impossible. An in-house FDD improves the operation and maintenance team’s responsiveness to anomalies and energy leakages.  

3. Energy forecasting: As discussed earlier, demand management and tenant’s behavior aspects can affect the energy utilization. Hence understanding tenant’s consumption patterns, comfort metrics and predicting demand peak can help O&M teams to prepare for it.   

There are a couple of other use cases(asset life cycle management and tracking) that could help facility managers to improve the utilization of the asset and monitor the life cycle of carbon emissions.

As we realize, with every step a facility goes closer to net zero, it increments the importance of stopping every cubic meter of carbon release into the environment, which can’t be reached without having a data driven portfolio operations and a 360 degree asset performance management strategy. It has to be a synchronized effort of digital initiatives, well equipped O&M teams and conscious tenants taken together.

Aiming to net zero is an ambitious start, but the planning and implementation should take the center stage and that's where the actual race starts involving skill management, digital and commercial aspects of the facility operations.
Stay tuned for upcoming blogs and explore the 360-degree approach to the race to Net-Zero Campaign. 

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