End-of-Life Renewal Won’t Get Us There

Climate Credible Commitments in Real Estate

Our clients have made science-based commitments, developed zero carbon transition plans, and implemented capital improvements that radically reduce operating emissions at individual assets. As we support them on these projects, critical lessons are becoming clear.

End-of-Life Renewal Won’t Get Us There

The lowest cost approach to transitioning an asset off fossil fuels is to invest in the transition in sync with the “natural renewal cycles” for existing equipment. As  a simple example - invest in low-carbon heat pumps for space heating when an existing gas-fired heating boiler is at end of life.

To meet science-based emissions targets, a reduction path for a portfolio is something like a 50% (or more) reduction by 2030 and zero emissions by 2050. Achieving this outcome requires that half of a portfolio of buildings are zero emissions by 2030, or more realistically, 2/3’s achieve a 75% reduction in carbon emissions.

Delivering significant emissions reductions at an asset typically takes from 2 to 5 years (study, decision, implementation) and we are now 5 years away from 2030. This suggests that, if beginning today, an asset manager will want to develop a transition plan for all assets by end of 2026 at the latest, and then complete a deep retrofit at more than 15% of their assets every year beginning in 2026. This speed will far outpace end-of-life renewal cycles.

 If the industry wants to keep pace with climate commitments, the focus shifts from aligning deep retrofit investments with existing equipment renewal cycles to aligning with climate requirements.