We cannot build our way to net zero. The only way to win the decarbonisation race is to optimise our assets, says RLB’s Head of Asset Optimisation, Nick Constantine.
As one of the world’s largest economic ecosystems, responsible for producing 40% of global carbon emissions, the construction industry has a major part to play in achieving global sustainability goals.
The scale of the carbon problem is substantial, as are the challenges faced by companies in the built environment industry – challenges predominantly centred around the upfront costs required to make impactful change.
But there are solutions available to reduce the carbon footprint of the built environment, and many of those solutions also deliver long-term cost savings. With 80% of 2050’s building stock already in existence today, there is a significant opportunity to retrofit and optimise existing assets to meet national emissions goals.
RLB strongly believes that asset optimisation practices will play a fundamental role in the race to decarbonise buildings, which is why we have grown our team in the UAE in this specific area of expertise.
Asset optimisation is the process of maximising the efficiency, performance, and value of a building’s physical assets. This can include strategies that prioritise cost-effective energy efficiency measures in existing buildings, rather than simply replacing systems or building new structures. This approach can be more efficient than other methods of decarbonisation because it targets the specific energy consumption patterns and inefficiencies of each individual building, rather than applying a one-size-fits-all solution.
By focusing on existing buildings, asset optimisation can achieve greater carbon emissions reductions at a faster rate and at a lower cost than building new, energy-efficient structures.
Asset owners are under pressure from multiple fronts: from consumers and investors that are demanding climate action, from tenants looking to reduce their environmental footprint and from governments tightening regulation. Changes in market expectations and regulation have increased the risk that carbon-intensive assets may become isolated or less competitive.
According to McKinsey, regulators in more than 50 countries have already established or are planning a form of carbon taxation. The UK government, for example, will require every commercial building to have an energy performance certificate (EPC) from 2025. The New York City Council passed Local Law 97 in 2019, requiring all buildings over 25,000 square feet to meet new energy efficiency limits by 2024 that become stricter in 2030. In the UAE, Abu Dhabi’s Pearl Rating System mandates minimum green building credentials for new projects while the country’s Emirates Green Building Council has bolstered awareness and influenced the implementation of green building regulations. Commercial proprietors would therefore be wise to prepare sooner rather than later.
As legislation around the eco-credentials of buildings gathers pace, asset owners could be forced to stop procuring, or even using, carbon-intensive equipment. To future-proof assets, owners may consider optimisation strategies in advance to avoid relying on carbon-intensive equipment that carries a risk of obsolescence.
It is important for asset owners to view these inevitable regulatory changes not as a burden but as an opportunity to increase the value and competitiveness of their buildings. We only need to look at the Australian market for confirmation of the link between operational carbon performance and value. Launched in 1998, Australia’s National Australian Built Environment Rating System, or NABERS, has since halved the average energy intensity of commercial property and reduced the gap between the carbon emission profile of a building at design stage and its actual carbon emissions during performance. A high NABERS rating in Australia’s commercial property market equates to a significant value premium of roughly 20%.
Despite the advantages to the planet and to market competitiveness, optimising assets for decarbonisation is not without hurdles. One is the perception that only new buildings can be green. In fact, creating a new structure increases the amount of carbon due to the embodied carbon generated during construction and in the manufacturing of the building’s materials as well as the operational carbon emitted once the building is up and running. Optimising assets in already-built structures avoids embodied carbon, as well as mountains of construction waste ending up in landfill.
Another obstacle is the belief that choosing “greener” solutions, for example upgrading HVAC equipment, is prohibitively expensive compared to the carbon-intensive alternative. Although upfront capital costs can be higher, carefully selected energy efficient optimisations do typically pay for themselves over the long term via reduced energy costs. Long-term savings, however, can often be overlooked when short-term cash-flow is crucial for business survival.
A third obstacle is asset owners’ desire for a quick, generic decarbonising solution. Every building has different energy consumption baselines and detailed analysis by asset optimisation experts is vital to determine the performance gap and subsequent solutions. It can be challenging to model and understand the long-term cost benefits, and then to balance those with short-term objectives – but that doesn’t mean we shouldn’t try.
Innovation in sustainable solutions for the built environment continues at pace. Smart energy systems, LED lights, solar panels, renewable energy sources, increasingly efficient chiller systems have all helped to decrease the biggest carbon impact of the built environment: operational carbon, which accounts for approximately 28% of the 40% of emissions emitted by the construction industry globally.
Other solutions come in the form of current or prospective government initiatives. There are positive signs that governments are developing incentives to encourage asset owners to elevate the sustainability of their buildings. In Singapore, for example, an incentive scheme offers funding to building owners that reduce the carbon footprint of their assets as the city endeavours to achieve “green” status for 80% of its buildings by 2030. Sydney and Shanghai are aiming to lower their carbon emissions by 70% and 65% respectively by 2030, while Tokyo has a cap-and-trade programme which incentivises building owners to reduce emissions and use renewable power. It would be safe to assume that authorities and regulation in other urban hubs will follow suit as the conversation around sustainability continues to gain momentum.
The famous American architect, Carl Elefante, rightly said, “the greenest building is one that is already built.” By optimising existing buildings to higher environmental standards, we drive down operational carbon emissions and avoid embodied carbon emissions. We cannot therefore build our way to meeting the emission reduction pledges of the Paris Agreement. Decarbonisation via the optimisation of existing assets will be vital for success, as will a new carbon-conscious approach to managing our buildings. Embracing asset optimisation is essential if asset owners want to maximise the lifespan of their buildings, leverage long-term cost savings and remain competitive in an increasingly scrutinised and regulated market.
For more information on how RLB works with asset owners to maximise the efficiency, longevity and competitiveness of their buildings, please contact…