X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

PITTSBURGH-Climate change can position commercial real estate on the cutting edge of the emissions-reduction movement and provide an additional income stream in the process. Trading renewable energy credits is not a new concept, but its application in the real estate sector is still embryonic. In “Monetizing Energy Efficiency and Renewables,” the closing session of the Urban Land Institute’s two-day Developing Green conference here, experts stressed the importance of the approach to the environment and the capital gains it can reap.

It’s a complex procedure, but essentially, trading credits revolves around the theory that some practitioners will be better suited to reduce carbon emissions than others. “The things you do to reduce emissions should be rewarded,” said Peter B. Clarke, project manager for ICF International in Toronto. By way of example, Clarke continued: “Two entities each emit 30 tons of CO-2. Regulators dictate that the production of emissions be reduced by 40 tons total. Entity B reduces emissions substantially, but Entity A is unable to do anything. Entity A can purchase emissions credit from B. B gets cash, A gets the allowance and emissions are reduced.”

Despite the voodoo-economics sound of the concept, there are real income gains to be collected, said Paul MacGregor, an EVP with Neuwing Energy Ventures in Alpharetta, GA. While exact gains can vary, based on location and the efficiencies employed, “In the volunteer market, it can be $5 per kilowatt hour,” he stated. “In areas with high CO-2 emissions, it could be three times that amount.” Spread over the breadth of a portfolio, the trades can multiply into sizable income gains.

The currency of sale here are Green and White Tags, certifications, essentially, from regulatory bodies that the savings are real and accurate. The color codes represent the type of greening application employed, such as lighting or solar panels.

“In the political context of climate change, this is a huge policy trend,” stated Roger Platt, SVP and counsel for the Washington, DC-based Real Estate Roundtable. For utilities, energy efficiency is “a zero-sum game. We are in a position to create a win/win. Trading credits can add value to the utilities while giving us the opportunity to advocate for our stake in the climate-change debate.”

Real estate, he pointed out, is responsible for 40% of the nation’s energy consumption. “We can be portrayed as another Detroit,” he argued, “or we can be portrayed as an industry on the cutting edge and helping to reduce climate change.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt. NET LEASE Spring 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.