Since its debut in 1970, Earth Day has since expanded into 192 countries and EARTHDAY.ORG now works with more than 75,000 partners in order to “drive positive action for our planet.” Earth Day is about “transformational change” and taking action at all levels, from individual to business to government. So, for Earth Day 2021, after a year of extreme weather events and a pandemic, there is no better time to analyze your real estate portfolio’s carbon footprint and start working on reducing it. Not only is it good for the environment, emissions reduction can also be great for the bottom line and help get you a step closer to reaching your organization’s Environmental, Social, and Governance (ESG) goals.
The Five Steps to Reducing Greenhouse Gas (GHG) Emissions
Quantify Current Emissions
The first step in reducing GHG emissions is to understand and quantify the emissions over time, which is commonly referred to as benchmarking. GHG emissions are generally divided into three scopes and cover everything from emissions from combustion equipment and stationary sources to indirect emissions from use of electricity to emissions from day-to-day operations.
By benchmarking data, through activities such as collecting utility usage of properties annually, the owner or manager can get a sense of whether greenhouse gas emissions are consistent with their property type or anomalous and need to be addressed. Taking an inventory annually will also help show emission reductions year-over-year or as a comparative tool between facilities and industry competitors.
Once the GHG emissions data has been benchmarked, the information can be used to prioritize where to focus resources on reductions. High-emissions properties can be identified, either by per square foot or a normalized unit, or by gross emissions. When comparing properties similar in size, emissions per square foot can be used. However, if a certain property is significantly larger than the rest, the combined gross emissions may make it the biggest culprit and therefore a target for reductions even if the emissions per square foot is lower.
Having all the data in hand, the next step in a cost-effective plan to reduce greenhouse gas emissions is an energy audit. Since energy usage is the largest contributing factor to a building’s GHG emissions, energy audits are used to identify how a building’s energy is utilized and provide recommendations for efficiency measures (such as improving the building envelope to retain heat better in colder months), estimated energy and cost savings, as well as a simple payback period for the upgrades.
An audit report may also include information on end-of-useful life for aging equipment, which should be considered in the context of how long the owner plans to hold the property, to decide what equipment to replace and when. The energy audit is key to improving the asset’s performance and reducing GHG emissions, which can be useful in an organization’s ongoing ESG efforts.
To further decrease GHG emissions and rely less on grid-supplied electricity, property owners can integrate renewable energy into their assets. The most common renewable energy system for building operators is Solar Photovoltaics (Solar PV), which converts sunlight directly into electricity. There are many renewable technologies (solar thermal, geothermal, wind, micro-turbine), and depending on the property location and lease structure, any one of these can be utilized to decrease reliance on grid-energy. Renewable energy, while viable on its own, is best considered in tandem with energy efficiency measures, as every watt of renewable electricity generated offsets a greater portion of the property energy use when the property is more efficient.
Renewable Energy Credits (RECs)
The last step is purchasing Renewable Energy Credits (RECs) to offset the property’s carbon footprint. A REC is produced when a renewable energy source generates one megawatt-hour of electricity. Since not all properties can generate their own renewable energy, purchasing RECs offsets your overall environmental impact and supports the renewable energy market.
As our government tackles climate change and more investors focus their attention on ESG policies, there is no better time to reduce your property’s GHG emissions. Cutting down an entire portfolio’s carbon footprint can be complicated, but a team of sustainability professionals and real estate experts can help you navigate the above steps while providing fiscally-sound solutions.