A decarbonization roadmap is ultimately intended to guide its users to a single destination — a targeted reduction in greenhouse gas (GHG) emissions — but, to do so, it plots the arduousness of the journey for every traveller. In commercial real estate, that means charting out a route for each asset in a portfolio.
“The roadmap covers all the projects needed to get each building to its target, and the organization’s portfolio-wide target is then the aggregate of all these buildings’ targets,” James Dice, founder and chief executive officer of the buildings information forum, Nexus Labs, advised during a recent webinar. “You consider the achievable targets that you plan to hit in each individual building and what that means in terms of the carbon emissions of your portfolio. That’s really what’s required to get a real roadmap.”
To forge such a roadmap and then proceed along it, real estate operators are also likely to need some navigational support. As part of his firm’s mission to objectively highlight technologies and resources that can advance building decarbonization and digitalization, Dice outlined some of the industry services that can be instrumental to both a portfolio’s big-picture analysis and asset-level decarbonization measures.
He explored the roles that consultants, turnkey contractors and software can fill at various stages of developing and implementing a decarbonization roadmap, and suggested some considerations to help prospective purchasers match services to their needs. Meanwhile, service providers who shared their experiences in an associated panel discussion noted that chance detours still lead many building owners/managers to action.
“A common project scenario is that it starts with one engineering pain-point. When we fix it, we find other stuff as well,” observed Tom Arnold, chief executive officer and co-founder of Gridium, a provider of energy upgrade projects through efficiency-as-a-service and on-bill financing. “I never walk in and say: We’re here to decarbonize your building. I walk in and say: What’s broken in your building and can I help you fix it?”
Typically, decarbonization consultants supplement an organization’s in-house staff, provide expertise for a range of technical and project management functions and tend to be involved over the longer horizon of devising and implementing the roadmap. They may be tasked with overarching coordination of various different professional disciplines and action areas within an organization, ensuring consistency when staff turns over and gaining and maintaining buy-in from sometimes diverse interests.
“It’s a longer-term partnership for keeping the program updated over time and helping with the prioritization of projects,” Dice suggested. “The roadmap needs to be realistic to the people who are running the buildings so it gets taken seriously by them and it needs to be realistic to the people in the boardroom so it gets funded. That’s the gap that good consultants need to fill — the ability to talk to both in different languages to make these projects happen.”
Turnkey contractors also assume a multiplicity of roles within a project-specific scope that shifts risks and upfront capital burden off their clients. At the asset level, they can focus on case-by-case achievement of the emissions reductions identified in a portfolio’s roadmap, but they are also tapped to play a larger enabling role in the low-carbon transition.
“They do design; they hire subcontractors; they work with utilities to gather incentives; they work with finance providers to get funding; they work with building owners to provide these projects — off balance sheet, essentially — and sometimes they even guarantee the savings,” Dice tallied. “For the building owner, it’s simplifying the process and reducing risk. For lenders, they often aggregate and thus derisk smaller deals. For the supply chain, they’re helping contractors reduce their customer acquisition costs. For the utility, they are providing a new capability and value stream for the customers.”
That’s also occurring in what he terms a “highly dynamic space” for retrofit financing options with both emerging and “super time-tested” mechanisms to reduce the capital expense. Nevertheless, panel discussion participants report that many clients are skittish.
“In the context of turnkey retrofits, we have a hard time getting our clients to take on third party financing in almost every case. It’s super scary for them for whatever reason,” affirmed Jim Meacham, a principal with the energy and smart building consulting firm, Altura Associates.
“The barrier is, people are scared of financing so they will need a very careful and judicious explanation,” Arnold acknowledged. “Our experience is, once the asset manager understands the financing, it gets easy. In fact our project sizes go up because they want to pile more wish-list items onto the financing.”
Finally, software informs all aspects of roadmap development and implementation and is critical for gathering and interpreting the data that drives decision-making. It provides energy use and cost projections, design and project management insight and also facilitates reporting, feedback, real-time adjustments and sharing of insight from multiple sites and players in the portfolio.
“This is a place where, theoretically, you could have a bunch of different people logging in and interacting around the roadmap. Things are changing all the time so you really need a digital collaboration tool,” Dice said. “The roadmap should be data driven, and the consultants and contractors you hire should be using data and software in there processes, or else you should find different ones.”
Beyond that rather obvious tip, he recommends that portfolio managers assess their in-house capabilities and consider where extra outside expertise may be required and/or how some job descriptions could be refined to better support the roadmap. For example, procurement is one area where guidelines and stated expectations are warranted. As well, communications is key for conveying the roadmap’s intent and gauging staff’s ability to deliver on it.
“Folks at the portfolio level, who often don’t talk a lot to people on-site, really need to be able to close that gap and cross that line. It’s really about change management,” Dice submitted.
