Real estate is not often associated with climate change, but it actually contributes to 40% of CO2 emissions, making it a significant player in the fight against climate change. The sector is facing challenges due to rapid urbanization, aging infrastructure, and the increasing frequency of extreme weather events. Responsible for 40% of global greenhouse gas emissions, the real estate sector is already at high climate risk and will need to undergo fundamental changes as the global economy shifts towards decarbonization to meet climate goals.
The built environment is a major contributor to annual global CO2 emissions, with buildings accounting for about 42% of these emissions. Furthermore, the energy usage of buildings in the United States alone amounts to 40% of all energy consumption. Construction also adds to emissions, with the industry generating a significant amount of waste and CO2 emissions. It is evident that significant changes need to be made within the real estate sector to combat climate change and meet global emission reduction targets.
In order to achieve global net-zero targets, CO2 emissions need to decrease by around 6% per year according to the International Energy Agency. However, without changes in real estate practices, emissions associated with the sector are projected to increase. With the population growth and increasing construction activities, emissions from buildings and construction are expected to rise if no action is taken. This highlights the urgent need for the real estate sector to adopt sustainable practices and reduce its environmental impact.
Emissions from real estate primarily come from building operations and construction activities. Building operations alone contribute approximately 70% of emissions, while construction activities make up the remaining 30%. Large cities often have a few big buildings responsible for a significant portion of emissions, while a large number of small buildings also contribute to the overall emissions in cities. Materials such as concrete, steel, and aluminum are key contributors to global emissions from the built environment, highlighting the need for reducing their environmental impact.
To address emissions from real estate, focus can be placed on energy efficiency, electrification, and renewable energy solutions for new and existing buildings. Other actions that can be taken include building retrofits for improved energy efficiency, heating, cooling, and lighting upgrades, and technologies for demand and consumption management. There are various climate solutions available for the real estate sector, such as low-carbon development, building retrofits, upgrades to technology, and electrification efforts. Companies, consumers, entrepreneurs, investors, and policymakers all have a role to play in implementing these solutions and accelerating the transition towards climate-friendly real estate practices.
Several companies and investors are already taking steps towards sustainable real estate practices, including energy service companies, property management groups, carbon architecture firms, and climate tech companies. Consumers can consider retrofitting their buildings, improving energy efficiency, and electrifying their spaces, while entrepreneurs can develop solutions in these areas. Investors can support climate-friendly real estate initiatives, and policymakers can provide incentives, regulations, and taxes to encourage sustainable practices. By working together, we can make a significant impact on reducing emissions and combating climate change within the real estate sector.
