INTRODUCTION TO CARBON RISK REAL ESTATE MONITOR ... · Pathway CARBON RISK ASSESSMENT & MANAGEMENT BASED ON QUANTITATIVE PERFORMANCE DATA AND TARGET SETTING DECARBONISATION PATHWAYS

This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement no. 785058

INTRODUCTION TO

SUSTAINABLE FINANCE

AND INCORPORATING

CARBON RISK AND BUDGETS

INTO CAPITAL PLANNING

GBCI Europe Sustainable Finance RoundtableSteelcase Munich | 07.11.2019

CARBON RISK REAL ESTATE MONITOR

DR. JENS HIRSCH | HEAD OF RESEARCH

IIÖ INSTITUTE FOR REAL ESTATE ECONOMICS

Slide 2

© CRREM 2019


CRREM | CARBON RISK REAL ESTATE MONITORDr. Jens Hirsch| IIÖ Institute for Real Estate Economics

GBCI Europe Sustainable Finance Roundtable| 07.11.2019 | Steelcase Munich

CLIMATE RISK

PH

YS

ICA

LR

ISK

TRANSITION RISK

1.5°C - 2°C

>6°C

PHYSICAL RISK + TRANSITION RISK

High risks of physical and social disruption

High risks associated with rapid transition (e.g., energy cost, obsolescence)

Source: TCFD Technical Supplement, 2017

“STRANDED ASSETS are properties that will be exposed to the risk of early

economic obsolescence due to climate change because they will not meet

future regulatory efficiency standards or market expectations.” (CRREM, 2019)

Slide 3

© CRREM 2019




SCIENCE | REGULATION | RISK

EU SUSTAINABLE FINANCE TAXONOMY

Sustainability Metrics and Thresholds

Indicates sustainability of assets and impacts

investibility / attractiveness to investors

‘Taxonomy eligibility‘ of activities and assets

New mandatory and voluntary requirements to (sustainable) finance & carbon risk

Climate science: Climate impact and carbon emission budgets/pathways compatible with limiting global warming to x.xoC

Politics: Commitment to limit global warming to 2oC or better 1.5

oC

CARBON RISK REAL ESTATE MONITOR

CRREM pathways

• Paris-aligned decarbonisation & energy reduction pathways

• Per country and building type

CRREM Tool

• Assess the carbon and energy performance of buildings and portfolios

• Benchmark against CRREM pathways and peers

• Derive indicators for risk management, reporting, disclosure

Slide 4

© CRREM 2019




STRANDING RISKS & CARBON

Science-based decarbonising of the EU commercial real estate sector

CRREM REPORT

available onwww.CRREM.eu

available onwww.CRREM.eu

Slide 5

© CRREM 2019




CRREM RISK ANALYSIS

Property

Grid Decarbonisation

Climate Change (HDD/CDD)

Stranding

Retrofit€€€

Carbon Price€€€

GHG Intensity [kgCO2e/m²a]

Year2050

Decarbonisation Pathway

CARBON RISK ASSESSMENT & MANAGEMENT BASED ON QUANTITATIVE

PERFORMANCE DATA AND TARGET SETTING

DECARBONISATION PATHWAYS

Aligned with 1.5oC and 2oC global warming, country- and building type specific

Energy consumption, carbon emission factors, grid decarbonsation), changed heating and cooling demand,

normalisation

BUILDING‘S CARBON PERFORMANCE

+

=CARBON RISK ANALYSIS

Year of stranding, excess emissions, carbon costs, energy costs, benchmarking

Slide 6

© CRREM 2019




CRREM RISK ANALYSIS

Property

Grid Decarbonisation

Climate Change (HDD/CDD)

Stranding

Retrofit€€€

Carbon Price€€€

GHG Intensity [kgCO2e/m²a]

Year2050

Decarbonisation Pathway

CARBON RISK ASSESSMENT & MANAGEMENT BASED ON QUANTITATIVE

PERFORMANCE DATA AND TARGET SETTING

DECARBONISATION PATHWAYS

Aligned with 1.5oC and 2oC global warming, country- and building type specific

Energy consumption, carbon emission factors, grid decarbonsation), changed heating and cooling demand,

normalisation

BUILDING‘S CARBON PERFORMANCE

+

=CARBON RISK ANALYSIS

Year of stranding, excess emissions, carbon costs, energy costs, benchmarking

CRREM TOOL STRANDING DIAGRAM

Slide 7

© CRREM 2019




CRREM TOOL | RISK INDICATORS

Energy targets based on (i) country-specific sector-wide and (ii) individual building-

specific emission factor reflecting energy mix and evolving grid decarbonisation

Based on energy and carbon price projections (IEA, EU etc.)Based on (optionally) normalised baseline

consumption and projected data considering changed heating and cooling demand

ENERGY REDUCTION PATHWAYSCOSTS OF ENERGY AND CARBONENERGY CONSUMPTION

QUANTITATIVE CARBON PERFORMANCE AND RISK INDICATORS

Slide 8

© CRREM 2019




CRREM TOOL | RISK INDICATORS

Shares based on number of buildings, floor area or asset value.

SHARE OF STRANDED ASSETS OVER TIME COSTS OF EXCESS EMISSIONS ABOVE TARGET

Analoguous to the NY City model with penalties for each ton of emission above emission limit (and possibility of trading emission credits)

QUANTITATIVE CARBON PERFORMANCE AND RISK INDICATORS

Slide 9

© CRREM 2019




CRREM PATHWAYS

Global GHG budget and emissions pathway (consistent with a certain amount of global warming)

EU emission pathway (convergence of per capita emissions until 2050)

EU commercial real estate (CRE) sector

Country-specific targets (convergence of GHG intensity)

gggggggggggggggggggggggg

Sector-specific GHG targets for each country

ggggggggggggggggggggggggggggggggggg

Energy reduction pathway

DO

WN

SC

AL

ING

0

20

40

60

80

100

120

140

160

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050

GH

G IN

TEN

SITY

TA

RG

ETS

[kgC

O2e

/m²/

yr)

EU PORTUGAL

GERMANY NETHERLANDS

SPAIN UK

GHG INTENSITY TARGETS CRE

CRREM DOWNSCALING: FROM GLOBAL EMISSIONS TO CARBON INTENSITY PATHWAYS

Slide 10

© CRREM 2019




CRREM RISK ANALYSIS & BENCHMARKING

Identify outperforming assets with a high carbon performance / low carbon footprint

Visualise your long-term decarbonisation pathway together with individual assets or portfolios performance until 2050

Slide 11

© CRREM 2019




CRREM RISK ANALYSIS & BENCHMARKING

Identify challenges to target achievement, potential (transition) risks and potential for improvement

Current and projected future position compared with peers from the annual GRESB assessment

Institut für Immobilienökonomie GmbH

Josef-Steinbacher-Straße 1

A - 6300 Wörgl

[email protected] | +43 5332 239 26

Institut für Immobilienökonomie | 6300 Wörgl | Austria

DR. JENS HIRSCH

HEAD OF RESEARCH | IIÖ INSTITUTE FOR REAL ESTATE ECONOMICS

CRREM | CARBON RISK REAL ESTATE MONITOR

WWW.CRREM.EU

This project has received funding from the European Union’s Horizon 2020 research and innovation

programme under grant agreement no. 785058

Documents

INTRODUCTION TO CARBON RISK REAL ESTATE MONITOR ... · Pathway CARBON RISK ASSESSMENT & MANAGEMENT BASED ON QUANTITATIVE PERFORMANCE DATA AND TARGET SETTING DECARBONISATION PATHWAYS