Posted by Adam Smith and Robert Cohen

CRREM consultation response from Verco

In April 2020 the EU-funded Carbon Risk Real Estate Monitor (CRREM) project published a set of carbon and energy reduction pathways for a range of different asset classes and geographies, including all EU countries and other major economies including the US, Canada and Australia. These were designed to provide the global real estate sector with a guide, to align with the aims of the Paris Agreement. The CREEM Global Decarbonisation Pathways were opened up for public consultation and in the below consultation response from Verco, we outline our reflections on the CRREM Global Decarbonisation Pathways, touching on topics including their ambition and achievability, their usefulness in steering investment decisions and the missing component of embodied carbon in new buildings and refurbishments.

Response to CRREM Global pathways document

  1. We recognise that there are technical challenges associated with developing a methodology to standardise the definition of Paris-aligned decarbonisation pathways for the global real estate sector. The benefits of this endeavour include the ability for property portfolio owners and investors to directly compare performance and to provide a common rule book for compliance with the goals of the Paris Agreement.
  2. We also recognise that the CRREM project underlines the important role of energy efficiency in decarbonising global real estate. This is consistent with the energy hierarchy principle advocated by the World Green Building Council, among other industry bodies. We are strong advocates of energy efficiency first as the crucial step in enabling the decarbonisation of the built environment and achieving a net zero society.
  3. The energy use intensity targets proposed by CRREM raise questions around technical feasibility (see points 4-7), cost effectiveness (point 8) and the goal of the CRREM project (point 9).
  4. The CRREM 2030 whole building energy use intensity targets for UK commercial offices (145kWh/m2) are consistent with other operational energy performance targets developed by industry, for example the UKGBC’s (90kWhe/m2 NLA or 70kWhe/m2 GIA). We note that the UKGBC target is expressed per m2 NLA or GIA and in terms of kWh-electricity equivalent, applying a conversion factor of 0.4 to fossil fuels and 0.5 to district heating to adjust for energy potential). We would urge CRREM to provide clear definitions of the energy scopes you are using and of the floor area, both of which are essential for understanding of the numeric values quoted. While our experience of undertaking deep dive energy audits has led us to believe that even these 2030 UKGBC targets are challenging to achieve in practice for existing buildings, we are able to identify case study buildings where this has been achieved with today’s technology.
  5. The 2050 energy use intensity targets recommended by CRREM are implausibly lower than those recommended by comparable industry schemes such as the London Energy Transformation Initiative (LETI), and the UK Green Building Council (UKGBC). For UK commercial offices, the recommended CRREM target for 2050 is 25 kWh/m2 which is less than half the “Paris-proof” LETI/UKGBC target of 55 kWh/m2. [These kWh values are electricity or electricity equivalent and the m2 are GIA]. It is worth noting that the UKGBC and LETI targets were arrived at using a top down Paris-proof methodology, but also corroborated using bottom-up analysis. They are perceived by industry as too stretching for new commercial offices today and depend on new technology evolving from 2020 R&D to mainstream by 2035. They arguably represent the minimum quantity of energy required to power an air-conditioned commercial office, as it is currently conceived.
  6. It appears that the CRREM energy use intensity targets have been derived primarily on the basis of the projected carbon intensity of a country’s electricity grid*. This means that in some countries such as Australia with more carbon intensive grids, the figure is as low as 4 kWh/m2. From our significant experience of identifying energy efficiency potential in buildings, we believe that the CRREM targets below 50 kWh/m2 for commercial offices do not pass an engineering reality check and may be impossible to achieve in the climatically more challenged world of 2050 for a large proportion of the building stock without wholesale changes in the way office buildings are used.
  7. We understand that, like the UKGBC targets, the CRREM figures represent the net grid imports, with on-site renewable energy able to contribute to building consumption. However, there are many asset classes, such as high-rise city centre offices, where the renewable energy contribution can be very limited.
  8. As well as doubting its engineering practicality, we question the cost effectiveness and embodied carbon implications of delivering the CRREM level of performance, compared with the counter-factual scenario of greater investment in renewable energy generation in each country. From our experience there are diminishing financial returns involved in the most invasive energy efficiency interventions going beyond what is often termed a ‘deep retrofit’. The embodied carbon associated with such measures also needs to be considered – we recognise that the CRREM project is not currently set up to handle this issue. We note that the CRREM project does not provide any estimates for the cost of delivering these pathways.
  9. One wider observation here is that it is unclear whether the energy intensity values stated by CRREM are actual targets, or a metric for the date by which an asset will become stranded. One interpretation of the CRREM pathways is that it highlights the inadequacy of policy in certain geographies to deal with the supply side challenges of decarbonisation i.e. ensuring there is sufficient zero or low carbon energy to power buildings and the wider economy.