CO2 reduction in real estate: How CRREM benchmarks drive sustainable development
The Carbon Risk Real Estate Monitor (CRREM) has emerged as a crucial tool for the real estate industry to align with global climate goals and manage transition risks associated with decarbonisation. This article explores the differences in CRREM benchmarks and pathways across various countries, highlighting their significance for sustainable real estate and how CFP Green Buildings can assist in meeting CRREM targets through building retrofits.
Understanding CRREM
CRREM benchmarks provide science-based decarbonisation pathways for the commercial and residential real estate sectors, aligned with the Paris Climate Goals of limiting global temperature rise to 2°C, with ambition towards 1.5°C. These pathways enable stakeholders to estimate carbon and stranding risks associated with changing market expectations and regulations.
The CRREM methodology uses greenhouse gas (GHG) emissions and energy consumption divided by floor area to determine an individual asset’s intensity-based transition pathway. This approach details how specific assets need to become more efficient to align with certain transition scenarios, extending to 2050 with annual trajectories of building-related carbon and energy intensities.
Global variations in CRREM pathways
CRREM covers 28 countries across Europe, North America, and Asia-Pacific, encompassing various sectors including retail, offices, logistics, and residential buildings4. The pathways for different countries and property types vary significantly due to factors such as:
- Energy mix: Countries with a higher proportion of renewable energy in their grid mix typically have lower emissions targets.
- Climate conditions: Buildings in colder climates may have higher energy demands for heating, affecting their pathways.
- Building stock characteristics: The age and efficiency of existing buildings influence the starting point and trajectory of decarbonisation pathways.
- National policies and regulations: Countries with more ambitious climate policies may have steeper decarbonisation pathways.
For example, France, which relies heavily on nuclear energy (a low-carbon source), has much lower emissions targets compared to Germany, where a significant portion of energy still comes from high carbon-intensity fuels like coal.
CRREM’s global impact
The global nature of CRREM benchmarks allows for standardised comparison across different markets. CRREM estimates that the carbon intensity of the building sector globally will need to decline from approximately 52 kgCO2e/m²/pa to below 10 kgCO2e/m²/pa by 2050 to align with the 2-degree global carbon budget6. This global target has significant implications for long-term asset planning and risk management, especially in developed countries where some office buildings currently have a starting point of 100 kgCO2e/m²/pa7. .
Sustainable real estate and CRREM
CRREM’s pathways help real estate stakeholders understand and manage climate-related transition risks, which are becoming increasingly important as governments impose stricter regulations on energy use and emissions from buildings.
CRREM’s approach aligns with large-scale initiatives such as the Task Force on Climate-related Financial Disclosures (TCFD) and the EU Taxonomy for sustainable activities 8. This alignment helps real estate companies and investors comply with evolving regulatory requirements and market expectations.
CFP’s Role in meeting CRREM targets
CFP Green Buildings offers valuable support to real estate stakeholders in navigating the complexities of CRREM and implementing effective strategies to meet decarbonisation targets. Here’s how CFP can assist you:
- CRREM Module in Green Buildings Tool: CFP has integrated a CRREM module into the Green Buildings Tool, enabling investors to align their real estate portfolios with Paris-compliant decarbonisation pathways. This module can quickly identify stranded assets at the individual building level or indicate the distribution of CRREM alignment across a portfolio.
- Future-proofing Analysis: The Green Buildings Tool‘s timeline feature allows users to track the mitigation of greenhouse gas emissions over time and evaluate the progress of investors’ carbon performance. This supports transparency and communication regarding ESG commitments.
- Carbon Intensity Calculations: CFP’s tool calculates the Carbon intensity metric, which quantifies the associated emissions of a building’s energy consumption based on CRREM decarbonisation pathways. This metric, expressed in CO2e/m2/year, provides a simple and effective way to measure energy efficiency progress and identify improvement opportunities.
- Retrofit Planning: CFP Consulting services and the Green Buildings Tool can develop a sound retrofit plan to ensure decarbonisation.
- Data Management: When actual energy consumption data is unavailable, CFP’s tool uses benchmark values to estimate energy consumption. This feature ensures that even with limited data, users can still gain valuable insights into their portfolio’s performance.
Best Practices
Best practices for using CRREM and CFP’s tools to improve portfolio sustainability include:
- Regular assessment of portfolio alignment with CRREM pathways
- Prioritising retrofits for assets at highest risk of stranding
- Integrating CRREM targets into long-term asset management strategies
- Using CFP’s Green Buildings Tool to simulate the impact of various retrofit scenarios
- Monitoring and reporting progress towards decarbonisation goals using standardised metrics.
Challenges and future outlook
While CRREM provides a valuable framework for decarbonisation, challenges remain in its implementation:
- Data quality and availability: Accurate energy consumption data is crucial for precise CRREM alignment assessments.
- Technological advancements: The rapid evolution of green building technologies may require frequent updates to decarbonisation pathways.
- Policy changes: Shifts in national and international climate policies could impact CRREM targets and timelines.
- Market adoption: Widespread acceptance and use of CRREM standards across the real estate industry is still ongoing.
Despite these challenges, the future outlook for CRREM and sustainable real estate is promising. As regulatory pressures increase and market expectations shift towards low-carbon assets, tools like CRREM and CFP’s Green Buildings Tool will become increasingly valuable for real estate stakeholders.
The CRREM benchmarks and pathways provide a crucial framework for the real estate industry to align with global climate goals. The variations in these pathways across different countries reflect the complex interplay of factors influencing building emissions, from energy mix to national policies.
CFP’s integration of CRREM benchmarks into its Green Buildings Tool offers real estate stakeholders a powerful means to assess their portfolios, plan retrofits, and avoid the risk of stranded assets. By leveraging these tools and embracing sustainable practices, the real estate industry can play a significant role in global decarbonisation efforts while also safeguarding long-term asset value.
As the urgency of climate action grows, the adoption of CRREM benchmarks and similar frameworks is likely to accelerate. Real estate companies and investors who proactively align with these standards will be better positioned to navigate the transition to a low-carbon economy, meet evolving regulatory requirements, and respond to changing market demands for sustainable properties.
