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Carbon in Real Estate 101: Top Questions Answered

What are the top questions in understanding the critical – but complicated – topic of carbon in real estate and construction? Here’s a primer.

What is the building industry’s current carbon footprint? 

It’s bigger than you might realize. Over 10% of global greenhouse gas emissions come from the construction and renovation of buildings. An additional 28% comes from heating, cooling and lighting the buildings. That’s a full 38% of all greenhouse gasses worldwide, coming from buildings alone. 

Why should developers, builders, and contractors care?

To keep up with the Paris agreements — and to avoid the worst-case climate scenario — the construction industry needs to reduce its total carbon emissions by about 45% by 2030. We cannot stop building schools, housing, hospitals and offices. In fact volume is expected to double in the next decade to meet demand, meaning the industry needs to achieve closer to 75% reduction to meet targets.

We only have about 3 building cycles to achieve net zero by 2030, which is less than eight years away.

But we can make smarter decisions about how we build, and we have to act differently now. Buildings typically take 2 to 4 years to complete, which means we only have about 3 building cycles to achieve this goal by 2030, which is less than eight years away.

Builders should also care because, increasingly, other stakeholders care about climate change — and are taking decisive action to reduce emissions. Those stakeholders include construction financing sources, regulatory bodies and other government agencies, and top corporate tenants. Over 21% of the world’s largest corporations have made climate-neutrality pledges, and the number is growing fast. An easy way for them to fulfill these commitments is to switch to occupying carbon-neutral buildings. There’s a prime business opportunity here for builders to meet this demand. 

Are “carbon” and “greenhouse gasses” the same thing?

Not always. When we refer to “carbon,” we’re referring to the greenhouse gas emissions released to build or operate a building. The biggest component of that is CO2, but nitrous oxide and methane are also powerful greenhouse gasses. But it’s not a distinction you’ll need to worry about too much. 

What’s the difference between “embodied carbon” and “operational carbon”?

Embodied carbon refers to the collective carbon emissions tied up in a building’s “body” or existence such as materials, equipment, and other elements of the building process. This includes all the carbon it took to build that structure, renovate it over time, and then demolish when its life cycle ends. 

Operational carbon refers to the carbon a building emits as part of operating it: electricity, heating and cooling, water, and so forth. 

Operational carbon emissions can drop fast if buildings connect to an electricity grid run on renewable resources and make smart operational choices. Carbon Title is focused on helping builders reduce embodied carbon emissions, which is the tougher nut to crack – but a very important one. 

How does Carbon Title help builders achieve carbon neutrality?

Builders start by calculating the carbon emissions of their building project. Carbon Title provides an easy-to-use calculator for this, or you can input an existing LCA (Life Cycle Assessment), a report generated by a consultant to help you get a handle on carbon emissions for a given building project.  

You set a carbon-neutral goal for your portfolio of buildings and then evaluate each building against it. Carbon Title helps you make informed, real-world choices about new low-carbon building materials and other decisions to lower your building footprint. We help you assess the dollar-cost impact of those choices, too. 

Builders can then purchase high-quality carbon credits to offset emissions from their buildings that they cannot reduce to zero any other way. 

Why do we need carbon credits? Can’t we slash carbon emissions enough to make a difference? 

In a word, no. While some emissions can be mitigated by improving processes and implementing low-carbon materials, the reality is that current technology can only get us so far. The only way we can meet our climate-change targets is to close the gap by removing carbon from the atmosphere, to “offset” emissions we cannot otherwise avoid. 

While some emissions can be mitigated by improving processes and implementing low-carbon materials, the reality is that current technology can only get us so far.

This McKinsey chart makes that story clearer. To achieve net-zero emission by 2050, we need to cut emissions (the lowering black bars) but also start removing carbon from the atmosphere now, and step up those efforts over time (the bright green bars below the X axis). The only way to achieve our goal is by doing both.

What are the hallmarks of a high-quality carbon credit?

Carbon credits aren’t created equal, but they do serve an important role. (To learn more, check out our post 5 Myths About Carbon Credits Explained.) 

Carbon credits come in two flavors:

Removal credits: These are projects that actually remove CO2 from the atmosphere, such as reforestation, kelp/algae farming or direct air capture (capturing CO2 from air and permanently sequestering it in rock).  

Avoidance credits: These projects implement technology or process changes to avoid releasing additional greenhouse gasses into the atmosphere. 

Carbon Title focuses on removal credits, although we will likely offer some avoidance credits for sale in the future.

You can think of carbon credits as investment in promising climate-tech projects that remove carbon from the atmosphere or help avoid additional emissions. Those projects need funding to develop their applications, scale them, measure the impacts, and move us closer to our climate goals. 

Carbon credits are an investment in climate-tech projects that remove carbon from the atmosphere.

A high-quality carbon credit should stand up to scrutiny and make a significant impact on climate change. Carbon Title applies these four criteria to projects on our platform:

  • Science-Based & Verified by Third Parties: All our carbon credits are verified and audited by established third parties like Verra to ensure they follow a scientifically rigorous protocol and accurately represent the amount of carbon they remove and store.
  • Clarity Around Durability: Our partners provide a veritable projected duration over which removed carbon will be stored. They also make concrete plans for mitigating any reversal (leakage of stored carbon) that may occur.
  • Additionality: Our carbon credit providers must measure their projects against a baseline of what would have occurred naturally without the revenue from carbon credit sales.  They only issue carbon credits for the additional removal and sequestration occurring above the baseline.
  • Transparency: It is clear where all of our carbon credits come from. Carbon Title can trace every one of our carbon credits back to the project source, and we know that none of them has ever been previously sold.

Why register carbon credits to the blockchain? Isn’t that a crypto thing?

The main thing you need to understand is that a blockchain is a decentralized, public ledger of record. No one person or entity or government controls it. That makes it supremely difficult to manipulate or falsify entries made to a blockchain. 

Web3 is ideal technology for the carbon credit market, which currently suffers from a lack of transparency and trust. How do you know a carbon credit you’ve purchased actually removes carbon from the atmosphere? That it represents a unique and un-fakeable step of progress in the right direction? Carbon Title aims to build a decentralized database of carbon emissions for every building, and make this information both transparent and immutable in a way only the blockchain affords. (Watch this space for a full post on this topic.)

Have other questions we didn’t cover here?

Contact us! We’re happy to answer any questions you have and invite you to request a demo and start your decarbonization journey. Or if you just want to keep in touch, join our mailing list or follow us on LinkedIn or Twitter.

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