Carbon is the Trojan horse of building sustainability programs

For real estate professionals who are feeling confused about the plethora of green building rating systems, standards, corporate green brands and who is green washing, or not, there is a simple path to clarity. 

What everyone in the green real estate industry strives to understand is how much energy, and other resources, a building consumes.  Energy consumption is a cornerstone of the analysis because it is the metric associated with quantifying green house gas (GHG) emissions the cause of climate change and a precursor to measuring carbon.

A first step therefore regardless of the rating system, standard or green brand a building owner needs to pursue is determining a buildings performance in a way that can be validated by a third party.   This is a painstaking, time consuming process of collecting data on every conceivable energy and environmental variable associated with a building and tracking it over a period of years.  According to those in the industry this process cannot start too soon and there is a growing demand for it from real estate companies.

“There is a flight to sustainability,” says Doug Hitchcox, Vice President, Office Leasing Division, Sustainability Practice Group, Cushman & Wakefield LePage Inc.  speaking at the Green Real Estate Conference held on April 30th in Toronto. The example set by new green office buildings such as 25 York and the RBC tower in Toronto has raised the standard and "now real estate companies want to have their buildings evaluated", he said.

 “LEED and BOMA Best have led the way.  The green building rating systems will continue to be used but the lines between them will begin to blur,” said Hitchcox. "Some building owners don't know what they have committed to with a rating system. All LEED Silver buildings are not the same" he explained. Hitchcox foresees a day when the green building rating systems will converge.

A standard method for calculating carbon usage would facilitate the expansion of the existing voluntary carbon trading in North America and lay the groundwork for a regulated carbon market.    In a regulated carbon exchange commercial building owners are expected to have carbon offsets that can be sold to large emitters of green house gases like oil extraction companies in the tar sands. 

A carbon offset for trading purposes is likely to be calculated from the date on which a building owner can benchmark a building's performance and have that validated by a third party. 

A ‘green building’ that performs better than an average building might generate a carbon offset that represents its ‘superior performance’.  Similarly an energy conservation program, and other kinds of environmental programs also tied to carbon usage, might also create a tradable offset.

A regulated carbon market in North America is considered to be inevitable and therefore the real estate industry in Canada should be prepared for this eventuality.  There is a regulated market in Europe and in the U.K. large property owners are subject to carbon related laws.

An important aspect to a fully functional, regulated carbon market is pricing. According to Jerry Yudelson, Principal of Yudelson Associates and a former National Board Member of the U.S. Green Building Council “There is a need to put a price on carbon. We are not going to get anywhere without it. It is a long-term certainty.  It is a necessity.” He added  “There is also a need for complimentary government policy.”

At the point that carbon is regulated in North America it is likely to follow a path of continuous price appreciation.  Establishing offsets that would increase in value over time is incentive to consider carbon issues now. Yudelson traced a theoretical path for the price of carbon starting at $18 per tonne in 2010 reaching $176 per tonne by 2050.

“Carbon is the Trojan horse of building sustainability programs” was a phrase used by different presenters at the Green Real Estate Conference.  Carbon offsets are the unseen metric that can emerge from a well-developed building sustainability program.

“There is a move toward developing a system where buildings can be compared on a global basis,” said Eliza Turner, CEO of The Continuum Network also speaking at the conference. In the U.K. Denmark and France it is mandatory to disclose energy and environmental usage. “It will be mandatory here as well,” she said.

"For corporations who have real estate portfolios they are considered critical assets in their sustainability programs because buildings are often the top carbon emitters. There is value in carbon, carbon offsets and trading and whatever it is, there will be some kind of ROI (return on investment). Therefore corporations through whatever programs are available are looking at carbon issues,” said Turner.

“There is going to be move toward a holistic approach to sustainability,” said Turner and cited Canada Post as a corporation that has embraced this approach.

“It is going to get a whole lot more confusing and it would be a mistake to think that there is only one answer,” said Turner referring to the quagmire of available green building programs.  “But in the interim corporations will publish CSR (Corporate Social Responsibility) reports. There is a demand for CSR (that typically include sustainability) by corporate clients and shareholders," Turner added.

CSR are moving toward a standard global format that has been pioneered by organizations such as the Global Reporting Initiative (GRI) .  The GRI has recently initiated a study to develop a reporting methodology for the construction and real estate sectors as reported in RENX. Carbon can be measured using guidelines established by the GHG Protocol.

The GHG Protocol is described on its website as the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions. The GHG Protocol, a decade-long partnership between the World Resources Institute and the World Business Council for Sustainable Development.

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