CRREM defines SCIENCE-BASED DECARBONISATION TARGETS AND PATHWAYS SPECIFICALLY FOR THE COMMERCIAL REAL ESTATE INDUSTRY. Targets are consistent with the EU commitment to LIMIT GLOBAL WARMING TO 1.5°C OR 2°C but for the first time, broken down per country and by eight property types
• • Current national climate pledges (NDCs) are not enough to meet the Paris goals and could lead to a 2.7 – 3.0°C global warming. More ambitious climate policies are needed and likely to come into force in the future.
• • CRREM emission targets and pathways for individual buildings and portfolios are derived by downscaling the remaining 1.5°/2°C consistent global carbon budget to the EU commercial real estate sector, individual countries and subsectors, for example, office or hotel.
• • European commercial properties will need to reduce their carbon emissions by more than 80% until 2050.
• • The EU commercial real estate sector is 14 years behind schedule: At the current rate of emissions the carbon budget available until 2050 will be fully consumed in 2036.
• • The pathways and targets provide benchmarking roadmaps for individual properties, enabling investors to assess the ‘stranding risk’ of their portfolio and pro-actively address the decarbonisation of their assets.
The transition to a ‘low-carbon economy’ comprises of POTENTIAL WRITE-DOWNS and DEVALUATIONS of inefficient real estate assets
• • The European real estate industry faces increasing ‘stranding risks’ that could equate to trillions of euros and result in fiduciary responsibilities to implement appropriate countermeasures.
• • Stranded assets are properties that will be increasingly exposed to the risk of early economic obsolescence because they will not meet future (regulatory) efficiency standards or market expectations. Buildings exposed to the threat of stranding risk will become less marketable and may require costly refurbishment measures.
STRATEGIC REACTIONS OF THE REAL ESTATE SECTOR TO MITIGATE CLIMATE-RELATED RISKS LAG BEHIND
• • Despite a high level of climate-related risk to the real estate industry, strategic response has been protracted and board attention needs further improvement.
• • Carbon efficiency assessments remains challenging for many real estate investors as a wide range of carbon accounting methodologies are applied, adding to the complexity and inconsistencies in interpretation.
• • CRREM study proposes well-defined guidelines for setting carbon accounting boundaries and reporting scopes, emissions factors, on vs. off-site renewable energy generation, unregulated tenant energy consumption or the climate change impact on heating and cooling demand.
• • Besides emissions resulting from the operation of buildings, the embodied carbon (of energetic retrofits) will become increasingly important as the electricity grid decarbonises and additional carbon savings must be realised to meet 2050 targets
• • CRREM offers a comprehensive framework of strategies for investors to manage and avoid carbon risk.
Source : CRREM