Buildings are responsible for 40% of global carbon emissions, which is a significant contributor to climate change. To achieve the goal of net zero emissions by 2050, a 50% reduction in direct emissions from buildings and a 60% reduction in indirect emissions by 2030 is required, according to a recent McKinsey research.
However, traditional methods of decarbonisation such as natural energy controls and strategies to ensure net-zero emissions buildings are often seen as laborious and costly. The lack of centralization and standardization further contributes to the perception that decarbonisation is unprofitable.
Fortunately, AI-based approaches can provide more than a 100-fold increase in the pace and scale of decarbonization planning compared to traditional energy audits and net-zero studies. This eliminates the need to rely on vague building archetypes.
Moreover, an AI-based approach can support the generation of neutral to positive investment returns for real estate portfolios. By applying energy efficiency and electrification measures to each building and optimizing renewable energy supply at portfolio level, building owners and occupiers can recover their investment by realizing energy savings, optimizing their capital costs, and avoiding regulatory sanctions.
According to McKinsey, the most effective decarbonization plans for buildings involve specific existing parameters that can be substantially optimized through the use of artificial intelligence and machine learning methods. However, it should be noted that applying this approach assumes the absence of factors such as regulatory strengthening, carbon pricing, and green rent or property valuation premiums.
Coordinated and integrated planning
Building owners can ensure a coordinated and integrated plan for their entire portfolio by adopting joint procurement and linking their strategies. Traditional de-emission plans often target select buildings based on emissions or existing regulations, which is not an effective approach.
To achieve cost-effective decarbonization, tailored designs that consider building layout and type of insulation are required. Each building requires a unique strategy that considers the starting point, local conditions, and asset specifics such as tenant composition and lease structures.
It is essential to avoid compromising long-term results by focusing on short-term strategies as they can be risky and lead to increased costs. Companies must make comprehensive decisions with a focus on the future, taking into account synergies such as insulation measures that affect future HVAC requirements.
McKinsey stresses that disjointed approaches to energy efficiency and electrification hinder efficiency. Failure to exploit interdependencies can lead to slower and more expensive supply of electricity from renewable sources.
Building plans must provide accurate guidance for facility managers and allow for easy communication between vendors and facility management teams to ensure faster execution. In addition, plans must be specific enough to provide detailed financial planning information, include net zero goals, capital investment challenges, operating costs, potential debt, and the allocation of costs and benefits between building owners and tenants. This way, leaders can understand the exact costs of achieving net zero emissions.
The full life-cycle approach supported by artificial intelligence
Owners and operators can incorporate plans to reduce their carbon footprint by adapting organizational processes, governance structures, and incentives. This includes updating capital plans, budgeting for low-emission systems, and integrating decarbonization analyses during new asset acquisitions.
As highlighted in the report by the international consultancy agency, expanding supply chains to meet new demand and training skilled workers are some of the challenges related to decarbonization affecting the industry. However, taking a full life-cycle approach supported by artificial intelligence can simplify planning, speed up processes, and reduce costs, enabling significant progress in addressing building-related emissions.
