Skip to content
Search

News & opinion

7 JUN 2019

Decarbonisation in real estate: EU support and recognition of RICS' role

The European Commission supports the EU Carbon Risk Real Estate Monitor (CRREM) which helps industry tackle ‘stranding risks’* associated with high energy consumption and carbon emissions and foster investments in energy efficiency. It also looks at how aware is the real estate sector of the increasing carbon risk.

This EU-funded monitor points out that the EU commercial real estate sector is 14 years behind schedule: at the current rate of emissions the carbon budget available for 2050 will be consumed in 2036. Buildings will need to reduce their carbon emissions by more than 80% until 2050.

The first report of the CRREM research consortium “highlights the status quo of emission reduction efforts, climate change-related ‘stranding risks’, mitigation strategies and potential pitfalls in carbon accounting and management, says Prof. Dr. Sven Bienert on behalf of the CRREM Project Team. – “CRREM provides the industry with clear decarbonisation pathways and targets broken down per country and property type.”

The report refers to the ‘International Property Measurement Standards (IPMS)’ as a widely adopted floor area measurement standard. It mentions the fact that this standard is adopted or recommended by RICS and informs about our IPMS standard conversion tool. 

Indeed, when it comes to the allocation of carbon reduction responsibilities, the report underlines that the restricted data coverage of a building’s total floor area is a very common challenge of carbon assessment and an operational challenge is the lack of a standardised European floor area measurement system. Even a slight difference in the methodology of calculating floor area will change the denominator intensity value, in turn impacting carbon assessment.

We welcome the recognition of IPMS and RICS in an EU-funded Carbon Risk Real Estate Monitor, which privileges the reduction of carbon-risk factors associated with premature obsolescence and potential depreciation due to changing market expectations and legal regulations.

Furthermore, the report includes an industry survey to identify to what degree carbon assessments are currently integrated into daily business and management decisions. The survey concludes that there is a high-level of climate related risk to the real estate industry and a low level of strategic response. The survey main results show that:

  • Investment in green buildings can result in higher rental and occupancy rates, lower operating expenses and higher asset values.
  • Requiring a risk-premium for properties with a poor carbon footprint is no longer exceptional as they will face rising energy prices, increasing regulation, higher construction costs, etc.
  • Stakeholders lack sufficient information on their assets’ actual carbon performance regarding property-specific and science-based decarbonisation targets.

* Risks associated with high energy consumption and carbon emissions: many assets will become ‘stranded’ properties that will not meet future energy efficiency standards and whose energy upgrade will not be financially viable.