With the recent release of their V2 decarbonization pathways, we're excited to announce that we've become a Partner of CRREM and can support this important initiative in an official capacity.
To mark the occasion, we'll take a quick look at what you can expect in V2.
CRREM, the Carbon Risk Real Estate Monitor, investigates the energy usage and CO2 emissions of real estate buildings and portfolios. Within the commercial sector, it provides Paris-aligned decarbonisation and energy reduction pathways to stay within the 1.5 and 2 degree Celsius carbon budget, specified per country and property subtype. Originally an EU-funded research initiative that focused on countries within the European Union, is has since expanded to include countries across the globe.
Updates in version 2 can be grouped around a number of topics, detailed below:
Lower global anthropogenic carbon budget and steeper pathways due to carbon overshoot: Cumulative carbon emissions have overshot previous projections. The remaining global carbon budget for our industry has decreased in CRREM version 2, from 519 Gt CO2 in V1 to 468 Gt CO2 in V2. And carbon intensities for all property subtypes are higher than was assumed in CRREM V1. As a result, decarbonization pathways have become steeper across the board (reflecting a need for greater reductions in the short term).
Lower electricity emissions factor: As a result of CRREM joining the SBTi (Science Based Targets initiative), the emissions factor for electricity has been lowered. This is due to a major methodological switch. Whereas distribution and transmission losses were previously included in the emissions factor, they are now excluded. Excluding these losses results in around 20% lower CO2-only intensities in the first year, and an overall 14% lower emission budget from 2020-2050. Compared to V1 pathways, where the share of the global emissions for the real estate sector was 21.42% from 2020 to 2025, it is now 22.90%.
Sector electrification and grid decarbonization: The real estate sector is increasingly moving toward renewable sources of energy, with specific momentum toward electricity. The pathway for the electricity sector, based on the IEA Net Zero 2050 scenario, assumes a net zero electricity sector by 2050, which is reflected accordingly in the carbon budget for the building sector.
Carbon intensities at the energy consumption level see a reduction due to decarbonization of the electric grid and as a result of a lower emissions factor for electricity in the updated pathways. A more ambitious grid decarbonization means lower carbon intensities per m2/sqft of floorspace in future projections. V2 pathways see a levelling out for energy consumption as they assume a fully decarbonized electric grid from 2040 onwards.
Non CO2-related emissions: In V2, a new pathway has been introduced to distinguish between CO2-only pathways (expressed in kgCO2/m²/yr) and GHG pathways (expressed in kgCO2e/m²/yr) to account for the inclusion of F-gases. More granular data on the use of F-gases in the building sector is also available in V2.
Building stock projections remain largely constant: The forecast for the global building stock remains very similar to the projections from V1, with the new projection in the last year having an overall delta of 1.6% compared to 2018. Pathways changed slightly as the actual global building stock was 4% lower in 2020 than was projected in V1.
Additional differentiation in region and sub-property type: Sub-national or regional pathways are now available for the USA and Australia to take into consideration the large size of the countries and the different climate zones they experience. The pathways for distribution warehouses now differentiate between warehouses with cooled storage capacity and those without cooled storage capacity to adjust for increased energy demand due to cooling.
The updated CRREM V2 pathways are an important tool for our industry to make a real and science-based contribution to decarbonizing the global economy. We use the pathways in the Scaler platform to help clients develop roadmaps for their portfolios. With our Roadmaps tool, we project performance at the asset and portfolio/fund level against CRREM pathways for both net zero energy and net zero carbon emissions. Clients are able to identify where they stand today, where they need to go, and model the impact that retrofit measures will have on their projected performance.
UN Secretary-General Antonio Guterres has called for organizations to
"Put forward credible and transparent transitions plans on how to achieve net zero…”
We're eager to do our part and empower the real estate sector to make a positive impact. Get in touch to see how we can help you.