Tuesday, March 10, 2009

Making an Office Building Carbon Neutral

The question of making a building carbon neutral is coming up more and more frequently today, particularly since CB Richard Ellis committed to be carbon neutral by 2010. CBRE joins HSBC, Barclays Bank, the World Bank, salesforce.com, Nike and many other well known names that have made a committment to having carbon neutral facilities.

But what does being carbon neutral for a building really mean? Well, the precise answer is “it depends on who you ask.” Simply, a building that is carbon neutral has no “net” carbon dioxide (CO2) emissions to the atmosphere. (N. B. While it is common to focus on CO2 emissions since they are the major component of greenhouse gas emissions, other greenhouse gas emissions (such as methane and nitrous oxide) are also included, but typically are wrapped into the CO2 number by referring to CO2 or CO2 equivalent emissions.)
Having no net CO2 emissions to the atmosphere does not necessarily mean that the building itself does not emit any CO2 to the atmosphere. In fact, a building can release CO2 into the atmosphere and still be carbon neutral, but the building’s emissions must be balanced (or offset) by a CO2 reduction elsewhere on the planet. How are these offsets generated? Well, offsets are typically generated by carbon reduction projects financed by industries governed under cap-and-trade limits or by entrepreneurial carbon offset providers. Offset projects might include for example, installation of renewable energy facilities – particularly solar and wind, the collection of methane (a powerful greenhouse gas) generated by farm animals or landfills, or even reforestation such as currently taking place in Central America, Brazil, Indonesia and parts of Africa.

The first step for a building to become carbon neutral is to identify the building’s carbon footprint, or where CO2 is being emitted as a result of building operations, e.g., from the electricity consumed by building operations (assuming of course the local utility uses fossil fuels to generate electricity), or from fossil fuel combustion at the building itself, for example, burning fuel oil or natural gas for space heating.

Unfortunately, identifying a building’s carbon footprint is not as easy as it sounds. It is complicated by the fact that a building’s carbon emissions can be direct or indirect. Direct carbon emissions (such as electricity and fossil fuel consumption) are directly associated with building operations. Indirect carbon emissions, however, are not, and may, for example, take into consideration carbon emissions resulting from employee or tenant automobile travel to and from work, and even employee business travel. So the first step has to be to decide which carbon sources (direct and/or indirect) are to be included in determining the building’s carbon footprint.

It should be evident that even before determining a building’s carbon footprint, it certainly makes sense to get all building operations as energy efficient as possible to result in the smallest carbon footprint. This will save money because to become carbon neutral, it is highly likely that offsets will have to be purchased to offset the building's carbon footprint, and these offsets could in the U.S. at today’s pricing cost anywhere from $8-17 per metric ton of CO2 offset. To provide perspective, if you have just a single coffee pot in your office and it operates all day for a year, the electricity it consumes will be equivalent to almost half a metric ton of CO2 that will need to be offset!

So it should be evident that making a building carbon neutral may not be as simple as it sounds, and will most likely cost money (to improve building energy efficiency and purchase offsets). But more and more companies today are committing to be carbon neutral and more and more tenants are indicating a preference to move into carbon neutral space. There is no question, this is the direction we are heading and is something all of us in the commercial real estate industry will soon be facing!