This audio is automatically generated. Please let us know if you have any comments.
Dive brief:
- Building portfolio owners can do this identify opportunities to decarbonize construction more quickly by applying machine learning, artificial intelligence and physics-based modeling, according to a Nov. 29 report published by McKinsey.
- By using satellite data, geospatial analysis, regulations, labor and equipment costs, and evaluating heating and cooling systems, insulation levels, and the feasibility of solar or geothermal energy, the algorithms they can analyze and propose solutions for construction portfolios to achieve net zero emissions.
- With this new approach, financially optimized plans, which take into account the regulatory environment and the unique characteristics of the building and lease structure, can be developed for an entire portfolio in a matter of weeks, according to experts at the report
Diving knowledge:
Since buildings are responsible for 40% of global combustion-related emissions, it is essential to reduce 50% of direct emissions from buildings and 60% of indirect emissions by 2030 to achieve a stock of net zero carbon buildings by 2050, McKinsey experts said. Traditional methods of decarbonization, including physical energy audits and building-by-building net-zero strategies, are considered laborious and expensive, McKinsey said. Besides, the lack of centralized inventory and standardization contributes to the perception that the decarbonisation of buildings is not cost-effective.
Compared to traditional energy audits and net-zero studies, AI-driven approaches deliver a 100-fold increase in the pace and scale of decarbonization planning, eliminating the need to rely in vague building archetypes, according to the report.
The authors highlighted the potential of an AI-based approach to generate neutral to positive investment returns for real estate portfolios, assuming the absence of factors such as incremental future regulations, carbon pricing and green premiums on rent or property valuation. Implementation of energy efficiency and electrification. Building-by-building measures, while optimizing the acquisition of renewable energy at the portfolio level, allow building owners and occupants to recoup their investment by realizing energy savings, optimizing their capital costs and avoiding regulatory penalties, underline the document.
Characteristics of an optimal building decarbonisation plan
McKinsey emphasized that achieving the most effective building decarbonization plans involves seven components that can be optimized through the use of AI and machine learning methods:
- Efficient net zero planning: Landlords can ensure coordinated and comprehensive plans for their entire portfolio through joint procurement and strategic sequencing, unlike traditional decarbonisation plans that often target select buildings based on emissions or existing regulations.
- Asset specific plans: Tailored plans that take into account aspects such as building layout and type of insulation are needed for cost-effective decarbonisation. Each building requires a unique strategy that takes into account its starting point, local conditions and asset specifics such as tenant composition and lease structures.
- Complete paths to net zero: This means avoiding partial plans that compromise long-term results. Companies need to make global and forward-looking decisions, as short-term strategies run the risk of increasing costs and overlooking synergies such as insulation measures that affect future HVAC requirements.
- Scope 1 and Scope 2 Integrated Plans: According to the report, disjointed approaches to energy efficiency and electrification hinder efficiency. Failure to exploit interdependencies can lead to slower and more expensive renewable energy acquisition.
- Actionable steps: Building plans should provide accurate instructions for facility managers and allow easy communication between vendors and facility management teams to ensure fast execution.
- Quantification: Plans should be specific enough to provide detailed information for financial planning, covering net zero goals, capital investment challenges, operating costs, potential debt, and the allocation of costs and benefits between property owners and tenants. building, so leaders can understand the exact costs of achieving net zero emissions.
- Zero Net Oriented Decision Making: Owners and operators can integrate decarbonization plans into organizational operations by adjusting processes, incentives and governance structures. This involves updating capital plans, budgeting for low-emission systems and incorporating decarbonisation analyzes into new asset acquisitions.
Decarbonization challenges related to scaling supply chains to meet new demand and training skilled workers to implement modifications and other electrification efforts also affect the industry, according to the report.
Fortunately, adopting an AI-supported full life-cycle approach to decarbonisation simplifies planning, accelerates processes and reduces costs, enabling significant progress in addressing building-related emissions, said McKinsey.
