Posted by Luke Riseborough

CRREM publication of V2 pathways- update from Verco's CRREM experts

On Wednesday 11th January 2023, CRREM published the V2 pathways, following their reflection on responses from the November 2022 consultation. No major changes have been made to the V2 approach, with the majority of updates being based on improvements to the underlying data and greater clarity being provided to points of uncertainty (such as the exclusion of E-charging stations from an asset’s energy demand). Therefore, our analysis and overview, published in October 2022, still applies.

Guidance on approaches for situations not covered by the pathways and a 2-degree pathway to be developed

However, following feedback from the consultation, CRREM have committed to provide guidance on approaches to be taken for locations/property types not currently covered by the pathways, as well as developing a 2-degree pathway. The 2-degree pathway will not be compatible with the SBTi buildings guidance (set to be published next week) but is to be developed for a variety of reasons, including use as an interim stage for market actors taking their first steps in setting energy/carbon reduction strategies. Unfortunately, some actors may see this as an opportunity to avoid allocating the necessary capital for facilitating a sufficient transition to a carbon constrained future (following a 1.5-degree pathway).

Energy pathways rely on gross energy demand not net energy use

As a reflection on the finalised methodology, we are surprised to see the energy pathways from CRREM continue to rely on gross energy demand, rather than net energy use – potentially dis-incentivising the installation of renewable energy. Although this approach aligns with the IEA forecasts that underpin CRREM’s updated approach, the use of gross energy demand contradicts a number of other prominent frameworks adopted in the European market (as outlined in the below article). CRREM state that the carbon and energy targets need to be considered in tandem and this will therefore overcome the argument that the new energy targets will dis-incentivise renewable energy installation on site.

Operational and embodied carbon remain decoupled

While it is a concern that CRREM, regarded as the one of the most robust real estate decarbonisation frameworks currently available in the market, continues to ignore embodied carbon, The Project stands by the scope of their tool as a measure of stranding risk, solely related to operational carbon. CRREM are leaving the embodied carbon consideration to the SBTi/Ramboll collaboration, which will make up the other half of the SBTi building guidance to be released later this year. However, this decoupling of operational and embodied carbon could lead to certain energy reduction measures being made that result in a greater whole-life-carbon impact than a reliance on other methods of carbon reduction, such as renewable energy installation. Additionally, the continued lack of consideration of use intensity (occupancy rates) by CRREM places asset owners at risk of going beyond the actual optimum operational carbon levels that would be required for a 1.5-degree pathway.

CRREM remains at the forefront of driving industry operational carbon reductions

That being said, CRREM continues to be at the leading edge of driving operational carbon reductions in real estate and will be a prominent enabler in achieving the reductions required over the coming years. If you have any further questions on the impact of this update, please contact Luke Riseborough (, one of our in-house CRREM experts.

Read our analysis of the update in October here:

CRREM update October 2022