Carbon shift: Why energy is fading as a key performance indicator

One of the benefits of early participation in the GRESB Real Estate Assessment was that it helped real estate portfolios improve their environmental, social and governance (ESG) -related policies and management systems. As ESG policies and management systems have matured, real estate companies and funds that have been early adopters in reporting to GRESB have made continuous performance improvements. But which key performance indicators are most important? Up until now, energy has been the primary indicator for measuring the performance of green buildings and portfolios. More recently, however, another indicator has come to the forefront as the key indicator for measuring real estate sustainability performance: carbon.

The shift from energy to carbon

Energy and carbon are not mutually exclusive, of course. Energy was often used as a proxy for carbon simply because energy data is more readily available, is easier to measure and calculate and is directly related to operating costs. Energy falls short as a proxy for carbon, however, because it fails to consider the variation in carbon intensity between different fuel types and electricity grids.

If the goal of improving a building’s energy performance is ultimately to reduce carbon emissions, metrics such as “total carbon footprint” and “carbon intensity” should be prioritized alongside “energy use intensity” and “energy performance”. It is for this reason that building owners, managers, tenants, service providers, and policymakers need to adopt a subtle yet important shift in focus, from one that exclusively addresses energy to one that prioritizes carbon.

A convergence of top-down policies and bottom-up industry initiative

This shift towards carbon performance is being driven by top-down policies and frameworks. In Canada, for example, the federal government has implemented the Pan-Canadian Framework on Clean Growth and Climate Change, pledging to cut carbon emissions from government operations by 40 per cent by 2030 (relative to 2005); furthermore, the Greening Government Strategy aims to cut carbon emissions 80 per cent by 2050. Carbon emissions from government buildings have already by reduced by 42 per cent compared to 2005. The National Carbon Neutral Portfolio Plan, currently being implemented, will take it the rest of the way. Public Services and Procurement Canada (PSPC), the first department to complete a national carbon neutral portfolio plan, is exploring how to achieve carbon neutrality by 2030 through a variety of measures, including smart building upgrades, deep energy retrofits, fuel switching, and finally carbon offsets (if required). PSPC aims to develop carbon-neutral roadmaps for each asset that outline short-, medium- and long-term carbon reduction strategies.

Policies and frameworks that focus on building carbon emissions have also been implemented at the municipal and regional level, such as the City of Toronto’s Zero Emissions Buildings Framework. Vancouver’s Zero Emissions Building Plan calls for all new buildings to be net-zero carbon by 2030, and all buildings (new and existing) to be all-electric by 2050, a move that benefits from British Columbia’s existing low-carbon electricity grid.

Bottom-up industry initiatives are also leading the carbon shift. In the past year, several zero carbon certification programs have launched, such as the Living Future Zero Carbon Certification and Architecture 2030’s ZERO Code, the first international net-zero carbon standard for new commercial, institutional, and mid- to high-rise residential buildings.

The Canada Green Building Council (CaGBC) recently published a report, Building Solutions to Climate Change, describing how green buildings can help meet Canada’s 2030 carbon targets. A subsequent report, A Roadmap for Retrofits, provides province-specific strategies and recommendations for reducing carbon emissions from large existing buildings. The opportunities identified in these reports have driven the development of a national net zero building standard. In 2017 this became reality as the CaGBC launched the Zero Carbon Building (ZCB) Standard, Canada’s first green building program to make carbon the key performance indicator. Both new and existing buildings are eligible for certification.

Early adopters of ZCB certification have found that the ZCB Standard helps to simplify the carbon calculation process and cut through the confusion of what “zero carbon” means. Early adopters have also commented that completing the Zero Carbon Transition Plan and Embodied Carbon Report – both requirements of ZCB certification – were valuable as an educational tool for property management and project teams. Furthermore, successful certification at one building means that the process can be more easily replicated at others, kickstarting an organization’s transition to a wider low-carbon portfolio.

There are other examples of buildings pursing net-zero carbon performance independent of any certification. One such unique project is the net-zero carbon retrofit of the Ontario Association of Architects’ headquarters, a 22,000 square-foot office originally constructed in 1992. The OAA intends to demonstrate the feasibility of achieving a cost-effective net-zero carbon retrofit.

What’s next?

How building performance is measured is changing. “Percent better than code” is fading as a metric, making way for more nuanced and absolute metrics such as energy use intensity (EUI), thermal energy demand intensity (TEDI), and greenhouse gas intensity (GHGI). The industry’s shift in focus from energy to carbon is changing quickly as well. The carbon intensity of fuels used by buildings – both on-site and off-site – will become a more important part of the conversation. We can expect to see more of this type of low-carbon planning in the near future, especially for real estate portfolios. Ultimately, actual performance is what matters – and increasingly, the performance metric that matters most is carbon.

Photo credit: Steven Evans, courtesy of Ontario Association of Architects