Energy efficiency: unsung hero of Net Zero Carbon

The Climate Group

On Wednesday, May 26th, industry leaders gathered by webinar to discuss the importance of focusing first on energy efficiency when advancing decarbonization goals. Panelists included: Ruairi Revell from Aberdeen Standard, Lauren Krause from Grosvenor Americas, Natalie Teear from Hudson Pacific Properties, Elizabeth Kelly from the City of New York, and John Kovach from Siemens. The Longevity and Climate Group teams summarize key takeaways below.

It is now business as usual for the private sector to at least consider sustainability and account for climate change in their operations. However, making ambitious public commitments, like Science-Based Targets or an RE100 goal, is still a mark of leadership.

Over 300 diverse global companies have committed to procure 100% of the electricity needed for their owned-operations from renewable sources in accordance with the rigorous standards of the Climate Group’s RE100 campaign. Many of these companies, in keeping with their track record of leadership on climate and sustainability, are now considering and even going public with “net zero” or “carbon neutral” goals or strategies.

While renewable electricity investments are indeed a critical pillar of overall decarbonization, energy efficiency is equally critical, yet it is still too-often overlooked. Assessing and maximizing the energy efficiency of one’s operations should take place well before any investments into carbon offsets are considered for net zero strategies (essentially putting money into different methods of sequestering carbon, such as tree planting or mangrove preservation, to bring a company to carbon “neutrality”). There will never be enough trees to offset all of society’s greenhouse gas emissions, and while offsets can indeed play a role in a company’s net-zero pathway, they should be the last resort to reduce residual emissions for an interim period. Therefore, reducing consumption through energy efficiency measures is an essential step to developing an overall decarbonization plan for three main reasons:

1) There is not enough battery storage to provide sufficient energy from renewables at peak times

At least for the time being, solar panels generate energy when the sun shines, and wind turbines generate energy when the wind blows. These sources of energy are not constant and don’t always provide power at the times when consumption is at its highest (first thing in the morning and around dinner time), so storing this energy is imperative for being able to meet demand. However, currently electricity grid infrastructure does not have the storage capacity needed to provide adequate energy around the clock, and never will: it is difficult to store energy over long periods, battery storage technologies are often polluting, and overall consumption will likely continue to increase ahead of storage capabilities. As a result, non-renewable sources are unfortunately necessary for meeting demand in the interim. Reducing overall energy consumption helps reduce greenhouse gas emissions while the grid is a mix of renewable and (mostly) non-renewable sources.

2) Transitioning away from natural gas will take some time

The future is electric – we expect most buildings to convert to all-electric heating and cooling, replacing the use of natural gas. However, this is likely to take some time, and can have a significant upfront cost associated (even if the payback period is reasonable). As such, it is important to reduce the amount of energy necessary to heat and cool a building as much as possible while these systems are still reliant on fossil fuels. It is estimated that 13% of greenhouse gas emissions in the US come from burning fossil fuels in buildings (mostly for heating). Reducing this figure is critical for reducing the carbon footprint associated with a building.

3) Reducing energy consumption is a cost-effective way to cut carbon

There are many ways that a company can reduce their carbon footprint, but by far the one that makes the most immediate financial sense is to cut back on consumption from the start. Old and inefficient buildings are programmed to outdated set points. Although energy efficiency programs may require upfront capital investment, the payback period usually makes financial sense. A building efficiency campaign out of the Lawrence Berkeley National Laboratory reduced the collective annual electricity bills of the 100+ organizational participants by $95 million a year. The median participants saved around $3 million annually. Compare this with the cost of offsetting carbon once it has already been emitted (not to mention the potential for a price on carbon) and the business case is clear.

The 100+ members of the Climate Groups’ EP100 campaign represent the world’s leading energy-smart companies. Three of these EP100 corporate members, Grosvenor, Hudson Pacific Properties, and Siemens, joined Longevity Partners and other panellists in the webinar to discuss the benefits of energy efficiency investments for building stock.

The Net Zero Carbon Buildings (NZCB) commitment, jointly run by the Climate Group with the World Green Buildings Council, is one of the target pathways for joining EP100. The Commitment challenges business to reach net zero carbon for all assets under their direct control by 2030, and to advocate for all buildings to be net zero carbon in operation by 2050. Drastically reducing the operational carbon from our building stock will be mandatory for the world to limit global warming to under 1.5 degrees Celsius.

So, how do you get moving on energy efficiency?

As Laure Ferrand explained during the webinar, the first step is to measure your current consumption. For large portfolios, service providers like Longevity can identify the target assets for conducting energy audits, which is the process of assessing a site’s true performance and opportunities for improvement. This may be done via desktop or by conducting an on-site audit. Then there are several simple modifications you can make to your building management system (BMS) to reduce the absolute energy required to heat, cool, and electrify a building. As Laure mentioned, asset optimization can reduce emissions of a building by nearly 50%, so net zero is very much a problem for existing buildings (in addition to new buildings).

Some examples of this include Longevity’s work with RE100 members Credit Suisse in the United States, and Barings on a pan-European basis. In collaboration with Credit Suisse, Longevity conducted high-level energy audits on two office buildings in Houston, TX and Toronto, Ontario. Over the course of three months, Longevity identified asset- and location-specific energy conservation measures capable of more than $150,000 of annual savings. In this example, Longevity helped their client focus on real, tangible improvements to energy management and building systems. Longevity similarly conducted dozens of energy audits for Barings to identify areas for improvement.

Ruairi Revell, from Aberdeen Standard investments, shared in the webinar that his company partnered with a software called Ecopilot, which uses artificial intelligence to plug into the BMS to “stop the systems from working against each other.” The pilot project resulted in a 29% reduction in gas use and 15% reduction in electricity use versus the baseline year in the first year, on an already energy efficient building. “This is simple and good building management,” he said.

In exploring different approaches to improve energy efficiency, panellists shared that stakeholders, especially tenants, supported their energy efficiency initiatives, as Natalie Teear of RE100 and EP100 NZCB member Hudson Pacific Properties, noted “our tenants share our commitment to sustainability, our people and company culture are committed to sustainability, and of course our markets are leading the way in sustainability. Sustainability is good for our business.” Likewise, Lauren Krause of EP100 NZCB member Grosvenor mentioned that making buildings more efficient was an attractive feature for the National Parks Foundation to sign a lease, “they were really excited about the alignment of values. We are seeing tenant behavior that supports this work,” she said. Maximizing energy efficiency not only advances company net zero carbon goals but often gets partners excited to participate and reduce overall emissions.

Cities across the US are also taking leadership roles in energy efficiency and aiming to achieve carbon neutrality, including New York who passed local law 97 (LL97) as part of the city’s Climate Mobilization Act. LL97 places carbon caps on most buildings larger than 25,000 square feet which includes roughly 40,000 residential and commercial properties across the city starting in 2024. As panellist, Elizabeth Kelly from the City of New York mentioned, “by 2030 we estimate that about 80% of these buildings will need to undertake pretty aggressive capital investments in order to improve energy efficiency and/or completely remove onsite fossil fuel consumption.” One example of working toward NYC’s ambitious goals is Siemens’ 1.4 MW solar energy project, which is the largest rooftop solar in New York City installed on the Javits Center. John Kovach from Siemens recommends that companies take an “assess, reduce, produce, procure approach across their portfolio of buildings.” Local laws like LL97 and leadership from the private sector, like Siemen’s solar project, are critical steps towards New York City’s goal of reaching carbon neutrality by 2050, which will need to see energy efficiency and carbon reduction across all 1 million buildings in the city.

RE100 member companies or otherwise looking to accelerate renewable procurement and reduce costs, or considering more ambitious decarbonization goals like net zero or carbon neutral, should put energy efficiency on your radar.

Energy efficiency in buildings is a critical component of decarbonizing the broader economy. More and more, companies such as those featured on the recent panel are prioritizing investments in both quick fixes and major system upgrades to meet their goals. The world is electrifying and becoming more renewable, and reducing energy consumption is a step that everyone can take right now with existing technologies.

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