Only Half the Story – Real Estate Needs To Look Beyond Operating Energy Performance

Our consumption of materials is enormous. In domestic consumption per capita in Switzerland, we use about 45 tons per annum. This includes both import, waste and domestic production. Everybody knows that buildings play a vital role in energy consumption. In Switzerland, 28.% of annual CO2-consumption is related to the building sector (including materials, energy consumption, and waste)[1] . Buildings carry enormous weight and therefore store an enormous 98.7% of material stocks. The remaining store in mobility (0.3%) and general production materials (1%) can be ignored. Buildings are the dominant factor when reducing the overall material footprint.

Only Half the Story?

We need to look at the full story. Improvements in operating energy (heating warm water and energy) for properties is only half the story. Reducing the carbon footprint of real-estate will need to include circular, bio-based, and local building value chains that can re-use and recycle the material value stored in our building stocks. The required changes are nothing less than a cultural revolution in the building sector in the next decades.

Operating Energy Consumption (Heating, Warm Water, Energy)

?In recent decades, the politics, the building industry, and architects have focused on reducing the amount of operating energy used by buildings. The goal was basically to build an air-tight building envelope and install high-tech building technologies. The last “pirouette in this performance” was the ventilation, trying to re-use the warmth from the exhaust air back into the rooms”, writes Guillaume Habert, Professor at ETH. The resulting Minergie-Houses look like concrete cubicles, essentially wrapped in oil-based materials. Materials which are produced with huge amounts of energy (polystyrol, stone wool for insulation both require heavy energy inputs in manufacturing). What is currently required is a “material diet” for buildings.[2]

No real change in 50 years how we build

Energy is required not only to operative buildings but also to produce them. Today’s builders need to ask questions about providence: Where does the material come from? How much CO2 is emitted producing it? Can the building be demolished with ease? If you look at this, total emission from buildings have not really changed much in the last 50 years. As a matter of fact, whilst operating energy in buildings has started to decline over the last 10 years, gray energy emissions have essentially stayed flat. Reducing gray greenhouse emissions in buildings stocks needs to rapidly decrease to meet net zero obligations.[3]

?The future ?Plusenergie Haus“ (surplus energy building)

One way to offset gray emissions in buildings is a “Plusenergie Haus”, essentially a building producing more renewable energy (solar) than it requires to operate and build. Such buildings could maybe compensate their material footprint within 20-30 years. “Plusenergie” has already demonstrated use cases (e.g. building with wood instead of concrete and straw bail for insulation instead of using fossil-fuel materials).

No silver bullets – a comprehensive (and complex) reduction approach to make buildings more climate-friendly

A comprehensive (and complex) carbon reduction strategy involves all aspects building and construction. They include building smaller footprints for tenants and renters (“Sufficiency”), but also tackle significant waste reduction goals (today, 40% of urban waste comes from the construction sector). ?Building materials need to increase in durability and reduce their materiality (more light weight, lower tech). A recent study commissioned by the Swiss Energy Ministry concludes that not one silver bullet can deliver the goals.?[4] [5]

?More disclosure on total emissions needed

?Real-Estate funds need to step up their reporting and disclosure on their environmental footprint. The funds I checked mostly still only report annual operational energy performance. For example, Fundamenta Real Estate AG, a Swiss real-estate fund with 1 bn in AUM, highlights a seemingly ambitious strategy of energy reductions in their building stock. From currently around 100 kWh/m2 EBF/a to around 20 kWh/m2 EBF/a, the company projects a 30-year plan.[6] These projections are easily obtainable and not very ambitious. The “Plusenergie Haus” has yet to be made a reality.

Energy efficiency programs are not sufficient for a net zero alignment, and anything but a full account of material values of the real-estate portfolio towards net-zero is another case of “greenwashing”. Industry Experts estimate that less than 1% of buildings currently assess the whole life-cycle carbon footprint.[7] The other 99% of all buildings still have a very long way to go!?

What do the building certification bodies and specialists say?

On disclosure requirements with the EU Taxonomy

?The technical assessment criteria contained in the taxonomy for buildings are likely to be updated in the future. The current focus still lies in using primary energy as an indicator, but the TEG has already made a clear signal that it believes greenhouse gas emissions should be used as the basis for assessment in the future. It has also indicated that so-called grey emissions (ie, environmentally damaging gases resulting from the production, construction, maintenance and end-of- life phase of a building) will form part of taxonomy requirements.“? (?DGNB)

?On circular economy and value chain innovation:

??Rethinking the design of assets for sustainability and circularity has become an imperative for stakeholders across the value chain. Initially focused on delivering operational energy efficiencies, the conversation is now adopting a more systemic approach to evaluate all aspects of embodied carbon across the value chain." (Arub)

[1] https://www.empa.ch/web/s506/care-project-match

[2] Heilendes Bauen, Baumaterialien als Kohlenstoffsenken, wbw, 5-2022, Prof. Guillaume Habert, ETH

[3] 200803_klimaplan_d, Swiss Green Party

[4] 10767-Klimapositives_Bauen_-_Ein_Beitrag_zum_Pariser_Absenkpfad_-_2021.11_-_Faktenblatt_DE, Energie Schweiz

[5] Der klimavertr?gliche Neubau von morgen, Energie Schweiz

[6] Fundamenta Real-Estate AG, Fundamenta_JB2021_DE, Annual Report 2021

[7] Construction industry needs whole life carbon understanding to hit net zero – new report shows - World Business Council for Sustainable Development (WBCSD)

[8] Sustainable finance_ How EU taxonomy relates to DGNB building certification, DGNB

[9] EU taxonomy circular economy technical criteria, Arup