In the previous articles, our focus rested on identifying solutions for reducing carbon emissions across diverse sectors entangled in global warming. However, now we divert our attention to a domain that holds personal relevance: the world of real estate.

The UNEP Emissions Gap Report has identified that greenhouse gas emissions are relatively small for real estate at 5% of global emissions in comparison to other sectors, but if combined with indirect emissions from electricity and heat consumption, global emissions jump to 17%. Considering carbon emissions alone, real estate contributes close to 40% of global carbon dioxide emissions, 70% of which come from building operations and 30% from construction (UNEPFI, 2022).

As the population continues to grow, the demand for housing and commercial property is also expected to grow, resulting in more contributions to carbon emissions. The EU, in particular, has set precedence to decarbonize the real estate sector with its EU-funded research project, Carbon Risk Estate Monitor Project (CRREM). It is a tool that assesses “stranding risks” or the potential for assets to lose value due to unexpected and predetermined changes. It also helps prepare building operators for adaptation due to regulatory changes, potential shifts in energy costs, and refurbishment measures. This supports the EU’s goal to reach net-zero emissions by 2050.

With the urgency to develop sustainable buildings to lessen carbon emissions, stakeholders have initiated innovative design and construction accordingly. Let’s look at measures taken to neutralize the real estate sector:

1. Construction of Net-Zero Buildings

a. Raw Materials

Cement is the most-used material in the construction of commercial and residential properties and is also responsible for warming the planet by about 8% through its carbon emissions. CBS News (2023) even asserts that “if the cement industry were a country, it would be the third-largest emitter of carbon dioxide in the world, after the U.S. and China.” If buildings are to switch to sustainable bio-based materials, this can result in significant reductions in carbon emissions and augment carbon storage.

Bio-based materials are alternatives that can be used in the construction of buildings. Bio-based materials originate from components sourced from living organisms, which are also renewable. Bamboo is one popular raw material that can be used because of its flexibility in terms of structure and design purposes and easy accessibility. Mass timber is another material that has already been gaining popularity in the US. It is made of mechanically combined softwood to achieve larger wood components. A report by the Journal of Building Engineering has determined that a hybrid cross-laminated timber building is able to reduce global warming potential by 26%. Wood can also absorb a tonne of CO₂ with just one cubic meter (World Economic Forum, 2023). Transitioning from a concrete jungle to a nature-made neighbourhood, developers in Sweden have revealed plans to build the world’s biggest wooden city that will contain 2,000 homes and 7,000 offices. Other materials that can replace concrete are wool and rammed earth.

Although harvesting wood for construction materials can cause carbon emissions by logging, there are proposed guidelines to maintain production without significantly causing forest damage. Reduced-impact logging for climate (RIL-C) are alterations to operations to reduce logging emissions, such as constructing narrower haul roads, avoiding felling hollow trees, and reducing wood waste. Full implementation can reduce logging emissions by 44% (Forest Ecology and Management, 2019).

b. Design

Aside from reducing carbon emissions from raw materials, architectural design is also integral to helping promote energy efficiency and water conservation. Energy-efficient strategies to help minimize carbon emissions include effective insulation, architectural design that maximizes natural lighting, and installation of renewable energy systems such as solar panels, wind turbines, and geothermal systems. An innovative building structure is that of the Bahrain World Trade Center, wherein 3 wind turbines are positioned between the twin towers to generate clean energy.

Urban greening is another innovative approach to helping reduce emissions plus combat extreme heat as an effect of climate change. Algae Building Technology (ABT), or the algae bio-reactive façades, is a sustainable technique that buildings adopt to increase efficiency and reduce carbon footprint. Microalgae are cultivated on building façades to generate heat and biomass for energy production and absorb carbon emissions. Algae will need to sequester carbon in order to convert this into biomass. The biomass and heat generated by algae are then transported into the building’s energy management centre, which can supply hot water or heat. Microalgae also provide shade from sunlight to help endure the ongoing heatwaves.

Water conservation can be achieved by incorporating sustainable elements like rainwater harvesting systems, low-flow fixtures or water-saving plumbing fixtures, and effective irrigation systems in buildings. The Crystal in the United Kingdom utilizes a rainwater harvesting system that powers the building and supplies potable water. 

c. Amenities

With the constant pursuit of governments to impose electrification of vehicles, buildings with installed EV charging ports can become attractive for potential residents and tenants as they help encourage switching to electric cars and reducing their carbon footprint. Developers can add these charging stations' operating and upkeep costs to the monthly maintenance fees of EV vehicle homeowners. In some countries, governments also provide subsidies or reimbursements for purchasing and installing charging ports to help meet their goal of achieving net zero in the transportation sector.

2. Retrofitting Old Buildings

Retrofitting is the addition of new features or modifications to old buildings to improve performance, efficiency, functionality, or sustainability. Approximately two-thirds of the worldwide building inventory will consist of existing structures that are currently in place. Without any enhancements, these buildings will continue to emit greenhouse gases (Architecture 2030, n.d.). The International Energy Agency reports that to get to Net Zero Emissions by 2050, measures must be implemented to 20% of the existing building stock to become zero-carbon-ready by 2030. Zero-carbon-ready buildings are tagged as highly energy-efficient or source power through renewable energy or energy supply that can be fully decarbonized. Retrofits that developers should consider are the following:

a. Space Cooling

As the weather gets warmer, air conditioning will be necessary to improve air circulation. The property management can consider replacing traditional air conditioning units with highly efficient air conditioners (air conditioners with a SEER or Seasonal Energy Efficiency Ratio of over 13)  and nature-based solutions, such as covering roofs with greenery to absorb heat or renovating areas to include green spaces to serve as shade and increase oxygen flow. In Canada, commercial properties that upgrade their refrigerators and air conditioners to models with refrigerants can merit offset credits that can be sold to generate revenue under The Greenhouse Gas Offset Credit System (Canada.ca, 2023).

b. Electricity and Heat Generation

Transitioning to renewables can provide a sufficient energy supply while reducing carbon emissions. Solar panels can be installed on rooftops to convert sunlight into electricity. Heat pumps provide heating by utilizing the heat from the air and ground, which is then transferred into the interior of a building. Heat pumps are a great alternative to gas boilers as they result in at least a 20% reduction in greenhouse gas emissions compared to the latter (IEA, 2022). To also prevent excess heat from being released into the air resulting in GHG emissions, underground thermal batteries are being explored to harvest and store heat until needed (World Economic Forum, 2023).

c. Building Automation

Installation of automation systems such as a smart thermostat to control heating and air conditioning based on current unit occupancy is one way to conserve energy and reduce carbon footprint. Property Management can consider installing building automation systems as these in the long run can save up on operating expenses and minimize the wear and tear of the building. However, the upfront costs can be substantial, so getting government or investor support is essential.

As governments are pressured to reach their net-zero commitments, some policies have been put in place to help influence developers and other stakeholders to adapt retrofits in current building stocks, such as the US that offers tax credits for modifications such as insulation, installation of heat pumps, solar panels and heaters, and battery storage. The European Union has the European Local Energy Assistance Facility (ELENA) that grants technical assistance for buildings switching to renewable energy and the European Structural and Investment Funds (ESIF), among other subsidy instruments, to finance building renovations. Canada has introduced the Canada Greener Homes Initiative, where households are offered loans up to CAD 40,000 for retrofits of detached homes and multi-unit residential buildings. At the same time, Japan and Korea provide incentives to reduce household energy consumption (IEA, 2023).  

UN Secretary-General Antonio Guterres has warned that “the era of global boiling has arrived” as heatwaves and wildfires have emerged in several parts of the world (World Economic Forum, 2023). It is only the beginning and will worsen if we don’t act now. Neutralizing real estate's ecological footprint demands a collective effort from various stakeholders, including developers, policymakers, investors, and the general public.  By embracing energy-efficient designs, eco-friendly materials, and innovative construction practices, we can significantly reduce the carbon emissions associated with real estate projects. Simultaneously, policies that incentivize environmentally responsible developments and penalize unsustainable practices will foster systemic change. As we navigate the intricate path toward real estate neutralization, we must acknowledge that this journey is not without challenges. Economic considerations, technological limitations, and resistance to change may present hurdles, but they must not discourage us from committing to a sustainable future. GreenEco Investments supports this endeavour of neutralizing real estate for a greener future.