Search for a ‘Carbon Cure’ unearths valuable steppingstones

A growing group of commercial property landlords worldwide is embarking on a journey to make their portfolios net zero carbon (NZC) by 2050, or sooner, by cutting carbon dioxide (CO₂) emissions. While there is no clear climate pathway to NZC for a real estate industry which accounts for nearly 40% of global greenhouse gas emissions, proptech ventures focusing on renewable or recyclable construction materials and other ‘clean technologies’ are mapping the direction of travel.

Investor appetite for decarbonisation innovations within the proptech sector is huge. In December 2022, Fifth Wall, the U.S.-based venture capital firm focused on technology for the global real estate industry, raised $866 (€795) million for the largest-ever venture fund focused on proptech companies. Fifth Wall is backed by a global mix of more than 100 strategic partners from more than 15 countries and the manager has also created a VC fund focusing exclusively on Europe. 

The value of being invested in Fifth Wall’s European Real Estate Technology Fund is the early exposure to transformative proptech solutions, according to Patrick Brenninkmeijer, Business Development Director at Redevco, one of its investors: “The great appetite for its funds underlines the importance of technological innovation for the real estate industry.”

2150, another European proptech venture capital firm founded in 2021 by Copenhagen-based NREP, has also seen a rush by investors eager to back potential ‘gigacorns’ - commercially viable companies that are able to mitigate or capture one gigatonne of CO₂ per year, roughly the equivalent of 12 months of transport emissions, including aviation, in the European Union. Promising technologies include LuxWall’s next-generation window panes that reduce a building’s energy needs by up to 40% and CarbonCure, a Canadian cleantech company with an innovative production process that injects recycled CO₂ into fresh concrete. 

Union Investment also continues to scour the market for innovations that aim to accelerate a sustainable transition of the built environment. The winner of its 2022 PropTech Innovation Award that it holds annually with Berlin-based GermanTech is a case in point: Made of Air is a company that produces a new carbon-negative material that stores carbon from the air to reduce the CO₂ footprint of buildings. 

A Herculean task

The PropTech Innovation Award provides an important platform for multi-layered approaches to sustainability and has already resulted in several exciting collaborations, said Christoph Holzmann, Chief Operation Officer and Member of the Management Board at Union Investment Real Estate GmbH. “Transforming real estate holdings sustainably is a Herculean task for which our industry requires concrete, actionable solutions created by innovative founders.” 

Cement production, accounting for approximately 8% of global carbon emissions, is the largest single industrial emitter of CO₂, and is the focus of many new technologies seeking scalable alternatives. U.S. financial services company Morgan Stanley’s Sustainable Solutions Collaborative is backing CarbonBuilt, a California-based start-up that is delivering low-carbon concrete by reducing the use of carbon-intensive cement inputs and mineralizing atmospheric CO2 created from the manufacturing process. Efforts are also under way to move steel production away from coal-fired furnaces to ones powered by electricity from ‘green hydrogen’. 

Reducing CO2 emissions begins with measuring them – that is the starting point for all decarbonisation initiatives on the road to net zero
Lisette van Doorn CEO at ULI Europe

The real estate industry needs to look at all the options to hit net-zero targets, according to Lisette van Doorn, CEO of ULI Europe. “Materials is only one element and timber is one sustainable alternative for steel, plastic and concrete, but you can’t build everything from wood. More importantly, it is vital to measure exactly how much material a building really needs and proptech solutions can help with reducing the use of materials by calculating more exactly how much is really needed. And in addition, there is a huge opportunity to explore the possibility of recycling existing materials.”

Learning labs

Denmark’s NREP has built the world’s first 100% upcycled concrete building and is now turning to cross-laminated timber (CLT) for the first net zero logistics facility globally, in terms of both operational and embodied carbon, without any external offsetting. The logistics property, under construction in Bålsta in Sweden, also has potential to become ‘energy positive’ during the operational phase by using solar, heat pump and battery storage solutions to return surplus energy back to the grid. The development is the first of three ‘Earth Shot’ projects that will serve as learning labs on NREP’s path to become 100% carbon neutral by 2028, without external offsets.

NREP’s vision extends beyond individual buildings: in Ørestad to the south of the city centre of Copenhagen, it is working on UN17 Village, the first large-scale project to align with all the UN’s 17 Sustainable Development Goals. It is not the only European real estate company developing entire sustainable urban districts: Paris-headquartered Nexity has been working on timber constructions as well as low-carbon concrete, bio-sourced and geo-sourced materials, since 2009, and is now spearheading the Porte de Montreuil programme, a zero-carbon urban quarter comprising offices and residential apartments to the east of the French capital. It is developing a similar mixed-use zero-carbon scheme in Lyon, where neither heating nor air-conditioning will be required thanks to innovative and sustainable construction methods.

Beacons on the winding climate pathway to NZC

New state-of-the-art green buildings have a relatively small role to play, however, in the journey to Net Carbon Zero, given that 80% of our existing stock will still be around in 2050. There is a growing sense of urgency about the need for more retrofitting of outdated properties, especially since energetic refurbishments can save on energy bills as well as reduce a building’s carbon footprint, said Andy Hay, Managing Director, EMEA Property Management at Colliers. 

“The specific energy savings will depend on the age and condition of the building and the specific measures that are implemented, but in general, energetic renovations can lead to significant energy cost reductions.” The possibilities are also becoming increasingly sophisticated, he added: “In Romania we have seen the first example of a building where photovoltaics systems are integrated into the building envelope to generate electricity from solar power.”

The specific energy savings will depend on the age and condition of the building and the specific measures that are implemented, but in general, energetic renovations can lead to significant energy cost reductions.
Andy Hay Managing Director EMEA Property Management at Colliers

A vast and growing range of technologies is available to landlords to decarbonise their portfolios including building management systems and smart metering infrastructure, energy analytics software, Internet of Things (IoT) devices and renewable energy storage. Green leases are also becoming an increasingly important tool. In France, for example, both the landlord and the tenant are held jointly and legally responsible for reducing the energy consumption in a building, ULI’s Van Doorn pointed out. 

“Reducing CO2 emissions begins with measuring them – that is the starting point for all decarbonisation initiatives on the road to net zero,” she concluded.

Title image: Nexity

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