This is Part I of a two-part series.

NEW YORK CITY-Climate change has been a scientific issue for decades and the role of human activity in global climate change will drive a transformation in the global economy. So said Christopher Pyke of CTG Energetics Inc. at Wednesday's PLI Green Real Estate Summit 2008 chaired by Ellen Sinreich of Green Edge LLC.

The business of real estate may initially seem far removed from these global issues. However, "we will see that these changes create new risks and opportunities for the real estate sector," he explained.

In a session titled, "Climate Change and Alternative Energy Sources," Pyke opened discussions about what is new about the issue of climate change, how to understand risks, liabilities, and opportunities associated with greenhouse gas emissions and changing climatic conditions. He also touched on which business strategies create an advantage and reduce risks. There are six categories of change associated with the issue of climate change, he explained, including: new scientific consensus; new costs; new policies; new regulation; new markets; and new standards-of-care.

As far as scientific consensus goes, humanity must consider the consequences of continued "business-as-usual" activity, Pyke said. "It is clear that humanity is exceeding the ability of the global atmosphere to assimilate the byproducts of fossil fuel combustion--greenhouse gas emissions. It defies logic to think that our finite atmosphere would have an infinite capacity to absorb these gases."

The global economy is currently based on fossil fuels, however, we have the technology and the innovative capacity to break this pattern, Pyke said, adding that studies have shown that responding to climate change is likely to result in economy-wide benefits.Ongoing policy discussions in the US Congress have taken note of the issue, and federal policy is also beginning to take notice, he said. In California for example, attorney general Jerry Brown does not allow land-use activities to interfere with the state's greenhouse gas reduction goals, stated in the Global Warming Solutions Act. The Act has set economy-wide targets for greenhouse gas reduction, starting with 20% by 2002 and ultimately aiming more than 60% by 2050.

Pyke noted that climate change is not just "another" environmental issue. "It cuts across our economy and our environment." Buildings, land-use projects, and real estate portfolios represent a nexus for greenhouse gas emissions--the primary drivers of anthropogenic climate change, he said. "It is possible to quantify these emissions and use the information to facilitate communication with interested parties, including investors, regulators, consumers, and other stakeholders and establish a performance baseline that can be used as a point of comparison, potentially to demonstrate improvements through emissions reduction efforts." Components of a comprehensive greenhouse gas inventory include: building operations; transportation; construction; water; solid waste; materials; and land cover conversion.

Pyke's overall conclusion was that climate change has far reaching implications. "The most successful players in the new carbon-constrained economy will be those who can respond in ways that create competitive advantage for their organizations."

Instant Insights /

Climate Change Creates Real Estate Implications

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