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Paving the Path to Net Zero: Sustainable Strategies for the Real Estate Industry

As the global climate crisis intensifies, the real estate industry finds itself at critical crossroads.

On a global scale, the real estate sector contributes to 40% of CO2 emissions, wherein 27% emanate from building operations, and an additional 13% is attributed to the creation of building materials, construction, and infrastructure (commonly known as embodied carbon) on an annual basis. Among this 13%, 65% - 85% of embodied carbon emissions are contributed by the manufacture and supply of construction raw materials. It is estimated that between 2020 and 2050, more than half of total carbon emissions from all new global construction will be due to embodied carbon.

Global Status Report for Buildings and Construction (Buildings-GSR) - UNEP

In India the real estate industry contributes to 6-7% of the nation’s GDP, estimated to become 13% by 2025, and accounts for over one-fifth of its carbon emissions.


Scope and limitations of materiality and suitability analysis

The sector has long been associated with significant carbon emissions, resource depletion, and environmental degradation. However, as the push for sustainability gains momentum, the industry must adapt to meet the challenge of achieving net-zero emissions. The path to net zero may be challenging, but it presents a remarkable opportunity for innovation, transformation, and leadership in sustainable development. This article delves into insightful strategies that can guide the real estate industry toward a net-zero future.


Strategy 1:

Embrace Sustainable Building Design

The foundation for achieving net-zero in the real estate industry lies in the construction phase. Embracing sustainable building design is essential for minimizing the carbon footprint of new developments. Utilizing eco-friendly materials, adopting energy-efficient technologies, and implementing green building certifications such as LEED or BREEAM are vital steps.

LEED-certified buildings can achieve energy savings of up to 25%, water savings of 11%, and divert about 80 million tons of waste from landfills.

Moreover, architects and developers should focus on passive design strategies that maximize natural lighting, ventilation, and insulation to reduce energy consumption.

Strategy 2:

Retrofit Existing Buildings

The key to achieving net zero goes beyond constructing sustainable new buildings; it also involves retrofitting existing ones. Approximately 75% of current buildings are projected to remain in operation by 2050. These structures often exhibit lower energy efficiency and are major contributors to elevated levels of greenhouse gas emissions. While numerous hurdles exist, addressing the task of decarbonizing existing buildings is imperative to achieving essential carbon reductions. Therefore, implementing energy-efficient upgrades, such as installing LED lighting, improving insulation, upgrading HVAC systems, and integrating renewable energy solutions like solar panels, will significantly contribute to reducing carbon emissions and energy consumption.

Implementing system-based-retrofit strategies has substantial potential for energy savings, offering an additional 49% to 82% in energy conservation compared to upgrades focused solely on individual components.

Strategy 3:

Promote Renewable Energy Adoption

Transitioning to renewable energy sources is fundamental for achieving net zero. Real estate developers and property owners can invest in on-site renewable energy generation like solar or wind installations. Additionally, collaboration with utility companies to procure renewable energy from the grid or participate in community solar projects can play a crucial role in reducing the industry's carbon footprint. Globally, renewable energy installations grew by 25% in 2022.

The United States has established a goal to establish a "carbon-pollution-free power sector by 2035." This entails a transition away from fossil fuels, which currently constitute 90% of primary energy, towards renewables that would contribute slightly over 75% of primary energy by 2050. This shift is projected to facilitate a reduction of over 35% in emissions by 2025 and more than one-quarter of the reduction required by 2030.

To accelerate the adoption of renewable energy, the United States is poised to implement the installation of 40 gigawatts of renewable capacity annually by 2025. This momentum is set to further intensify, targeting an installation rate of 100 gigawatts per year for renewables by 2030, a threefold increase compared to the current rate.

Strategy 4:

Foster Sustainable Transportation

By 2050, total transportation activity is projected to more than double compared to 2015 levels, following the current trajectory. Passenger transport is anticipated to experience a 2.3-fold increase, while freight transport is set to grow by 2.6 times. The real estate industry can play a vital role in promoting sustainable transportation. Integrating bike lanes, electric vehicle charging stations, and public transportation hubs within developments can encourage residents and tenants to opt for greener transportation alternatives, thereby reducing emissions from personal vehicles.

Bold decarbonization agendas have the potential to enable cities to reduce their CO2 emissions from urban mobility by up to 80% relative to 2015. With their dense population, services, and infrastructure, cities are at the forefront of the drive towards adopting low- or zero-emission transportation alternatives and implementing efficient demand management strategies. This shift could potentially circumvent 22% of urban transport activity compared to the current projected path.

Strategy 5:

Encourage Behavior Change

While sustainable building design and technology are essential, encouraging sustainable behavior among occupants is equally vital. Implementing education and engagement programs can raise awareness about energy and water conservation, waste reduction, and the importance of sustainable practices in everyday life.

As the number of passengers on a bus or train increases, the emissions per passenger mile decrease. For instance, consider U.S. bus transit, where approximately 28% of seats are typically occupied on average. In this context, greenhouse gas emissions per passenger mile are estimated to be 33% lower compared to the average emissions from a single-occupancy vehicle in the U.S.

Strategy 6:

Employ Smart Building Technologies

Embracing smart building technologies can significantly enhance energy efficiency and sustainability. IoT (Internet of Things) sensors and automation systems can optimize energy consumption, heating, cooling, and lighting, adjusting them based on real-time occupancy and environmental conditions. This can lead to substantial energy savings and a reduction in carbon emissions.

  • Cost Saving
  • Enhance Productivity
  • Sustainability
  • Competitive Advantage

The implementation of smart technologies is anticipated to result in energy savings ranging from 8% to 18% across various subsectors, encompassing Class B offices, small chain and independent retail stores, middle-tier franchise hotels, and regional nonteaching hospitals.

Strategy 7:

Adopt Circular Economy Principles

The real estate industry must shift from a linear to a circular economy model. Adopting circular economy principles involves reusing, refurbishing, and recycling materials to minimize waste and extend the life cycle of buildings and their components. This approach not only reduces environmental impact but also creates opportunities for cost savings and innovative business models.

According to the Ellen Macarthur Foundation, only 20-30% of the construction and demolition waste is currently recycled or reused. Methodical deconstruction enables the re-utilization and recycling of materials, a combined effort that has the potential to avert emissions of 0.6 billion tonnes of CO2 annually.

Strategy 8:

Collaborate and Share Best Practices

Achieving net zero is a collective effort that requires collaboration across the real estate industry. Developers, architects, investors, policymakers, and tenants must work together to share best practices, innovations, and challenges faced in the journey toward sustainability. Collaborative platforms can be established to facilitate knowledge exchange and accelerate the adoption of sustainable strategies.

The real estate industry has a unique opportunity to become a leader in the global transition to a net-zero carbon future. By embracing sustainable building design, retrofitting existing properties, promoting renewable energy, encouraging sustainable transportation, and fostering behavior change, the industry can significantly reduce its environmental impact. Moreover, by employing smart building technologies, adopting circular economy principles, and fostering collaboration, the real estate sector can pave the path to a more sustainable and resilient future for generations to come. The journey to net zero may be challenging, but the rewards are immense in terms of environmental preservation, social responsibility, and economic viability. Let us seize this moment to create a brighter and greener tomorrow for our planet.