The energy transition is the greatest challenge facing our society and reducing the carbon emissions to net zero seems to be rather a strategy than a priority. Almost all the countries are involved in this matter that is brought to the attention through international agreements. The Paris Agreement, negotiated in 2015 and signed in 2016, is an international treaty on climate change and directly affects the real estate sector.
According to The Royal Institution of Chartered Surveyors, Paris Agreement on climate change sees UK, EU, US and many others targeting carbon neutrality by 2050. The World Green Building Council’s Net Zero Carbon Building Commitment is even more ambitious: carbon neutrality by 2030 for all assets under participants’ direct control.
The Real Estate industry has a key role to play due to the fact that buildings are among the world’s biggest emitters of carbon dioxide (CO2). The built environment is responsible for almost 40 % of all greenhouse gas emissions. A lot of actors involved in this sector from engineers, architects, construction companies to asset managers have already joined it and by the end of 2021, $1,2 trillion real estate assets under management were part of Race to Zero.
According to World Population Review, in USA alone, the office, retail and industrial sectors (cca. 2 billion sq m) have generated around 4,5 billion metric t of CO2. Our estimations show that in Republic of Moldova, the modern stock of office & retail premises (around 0,95 million sq. m.) generate on a yearly base around 2,17 million t of CO2, which is around 2,28 metric t per square meter.
How can Real Estate actors face this matter? The Race to Net Zero represents a significant market trend for real estate and constrains it to a crucial transformation.
In practical terms it means that building construction and refurbishment projects now need to be designed in a way that will reduce the future need for heating and cooling. Buildings will need to use a range of different technologies including air-source heat pumps, district heating and cooling and solar thermal panels. An overall carbon balance sheet will be a compulsory part of building projects and even the European Union has set up energy and carbon emission benchmarks. Greater technology, energy-storing batteries, PV solar panels and all kind of «smartness» should go along with new construction projects. Real Estate actors and Governments must act as partners in shaping more sustainable cities, governments through recycling projects and the private sector to become more collaborative.
Improved planting of surrounding areas and green roofs are signals that the real estate industry is moving in the right way.
These represent just some of the market transformations associated with Net Zero and all the parts involved have to ensure a safe and prosperous future for everyone and everywhere.