Speeding up the transition to future-proof construction
To build and renovate in a way that meets the Paris climate objectives, real estate’s CO2 emissions must be reduced drastically. By Patrick de Baat.
Building within the Paris climate objectives is the challenge facing the construction and real estate sector. To build and renovate in a way that meets these objectives, the sector’s CO2 emissions must be reduced drastically. That is why a CO2 budget has been determined: the CO2 the sector can emit until 2050.
The built environment is responsible for a large portion of CO2 emissions, making it a major contributor to global warming. In the Netherlands, it is responsible for 39% of total CO2 emissions, of which 28% can be attributed to operational emissions – the energy consumption of buildings.
The remaining 11% is attributable to material-related emissions. These are CO2 emissions resulting from the extraction, production, transportation and assembly of building materials. And also from construction, demolition and dismantling materials at the end of their useful life.
It was agreed in the Paris Climate Accord that global warming must be limited to a maximum of 1.5 degrees Celsius above pre-industrial levels. Following the whole-life carbon (WLC) approach, including operational and material-related emissions, a CO2 budget was determined for the Netherlands. This budget allows for 100 million tons of CO2 emissions for the entire construction sector to stay within the Paris climate objectives.
Asr follows several strategies to meet these targets and speed up the transition to future-proof construction.
Operational and material-related emissions
The construction and real estate sector has already been working to reduce operational emissions for years. The Carbon Risk Real Estate Monitor (CRREM) sets out international pathways for energy- and greenhouse gas intensities by country and asset type. When these are met, the real estate sector stays within the CO2 budget for operational emissions, but because they are being reduced, the share for material-related emissions is increasing.
The construction and real estate sector can collaboratively set reduction targets, comparable to the operational emissions.
The role of a real estate investment manager
As a real estate investment manager, asr can influence both new developments and the renovation of existing assets. This provides an opportunity to integrate the reduction of operational and material-related emissions.
For operational emissions, we developed Paris Proof road maps based on asset-level implementation plans. The road map is reviewed annually, based on progress and advanced technical understanding.
‘An integrated strategy on operational and material-related emissions will contribute to future-proofing real estate.’
Patrick de Baat, asr real estate
In 2022, a study was carried out to determine our influence on material-related emissions and the current standards used to measure and limit them.
Organisations that have developed international standards for the real estate sector include the Royal Institution of Chartered Surveyors (RICS), the Royal Institute of British Architects (RIBA), Ramboll, the Low Energy Transformation Initiative (LETI) and the Dutch Green Building Council (DGBC).
The DGBC standard is currently the most suitable for our real estate funds in the Netherlands. The standard sets limit values per asset type for material-related emissions by means of a Paris Proof material-related indicator (PPm indicator). This indicator can be used alongside the CRREM standard for operational emissions, challenging market parties to take an integrated approach to reducing both types of emissions.
Asr real estate implements three strategies for the transition to future-proof construction.
1. Retaining existing real estate
First, we take a critical look at existing real estate. All existing assets should be used for as long as possible. This ensures the longest possible use of materials and prevents new material-related emissions. After all, the biggest impact is made by preventing emissions in the first place.
When a building no longer meets the demands of the market, renovation is preferred over demolition. By using an integrated strategy on operational and material-related emissions, renovations can be done within the CO2 budget.
When renovation is excluded for specific reasons, the building can be demolished in a circular way to conserve as much of the existing materials and value as possible.
2. Using bio-based materials
Bio-based building materials can reduce material-related emissions during projects. Both the supply and demand side for bio-based materials are developing rapidly.
Investing in bio-based materials is an important step to reduce CO2 emissions and accelerate the transition to a bio-based construction industry. By implementing the limit values of the PPm indicator in all our projects, asr real estate is challenging the market to increase the use of bio-based materials.
At each stage, design choices should be made with this integrated strategy in mind. In doing so, development partners will increase their experience of working with bio-based building materials. In turn, the bio-based construction industry will expand.
3. Involving the agricultural sector
One of the challenges around using bio-based building materials is availability. At the moment, these materials are mainly imported. Dutch agriculture also has to become more sustainable. The agricultural sector can help to address both these challenges and play an important role in the bio-based construction industry.
Asr manages a portfolio of agricultural land that is leased to farmers. Together with these leaseholders, asr has explored business cases which involve a switch to high-fibre crops. These crops are already being grown on various plots managed by our agricultural fund, to be used as building materials in construction.
Meeting climate objectives is a major challenge. An integrated strategy on operational and material-related emissions will contribute significantly to building within the CO2 budget and to future-proofing real estate. This requires leadership, new collaborations and a willingness to innovate.
Patrick de Baat is sustainability manager at asr real estate
