1. Work Out Where You’re At
“We’re not dealing with many clients that are starting from scratch,” says Johanson. “All of the major organizations have done something – they've set targets, have an inventory, have some internal frameworks and may have done some building-level studies. And so the first thing is to understand what they've done to lay the groundwork and what parts of that are working.”
Data mining and analysis is a big part of the upfront work – but so are meetings. “I always recommend developing some kind of high-level strategy quickly, getting good-enough answers, and then doing a lot of stakeholder engagement, to test out the options and see whether or not they’re going to be internally supported,” says Johanson. “You’re dealing with lots of different drivers through the organization. You’ve got finance people, asset managers, building operators, and different drivers on the tenant and the owner side. Sometimes clients want to leap right into the technical solutions, or focus on one building or a handful of buildings – but what if they’re the wrong buildings? Putting together that story and having those conversations early on helps you move into the next stage, which is prioritizing what needs to be done in the short term.”
2. Make a Strategy That Works in Real Life, Not Just on Paper …
Setting short-term priorities is about identifying the easiest, biggest wins: typically buildings with the highest carbon footprint, where there is the greatest potential for reduction with available technologies and funding. “There may be some that are in very poor condition and very inefficient and they need a lot of retrofit work done in the short term,” says Johanson. “Those are ideal candidates.”
But the strategy also needs to work for the organization too, and the obvious candidates are not always the right ones. Johanson has been advising a major Canadian Crown corporation, which has committed to reach net-zero emissions by 2050 and to make a 50% reduction by 2030. It has a massive nationwide portfolio, with some very large buildings and many small ones. As Canada’s power grid is relatively low-carbon, with 68% of its electricity generated by renewables, electrifying the heating systems in those smaller buildings seemed a relatively straightforward, inexpensive way to cut carbon emissions right across the portfolio.
But WSP’s analysis found that to stay on track, the corporation would need to complete 1,000 small retrofits by 2030. “It was the lowest-cost option, and it did get them to the target, but they would never be able to implement that many projects in that period of time because they just didn’t have the resourcing.”
Instead, tackling some of the biggest emitters – very large buildings requiring significant interventions – proved to be the more efficient way to go. “Those are going to be harder, more expensive retrofits, but it means they only need to look at 200 or 300 of their smaller facilities. That becomes a more implementable plan.”
To help with this, WSP has developed a structured methodology that corporate real estate teams can use to prioritize projects across their portfolios.
3. … And be Prepared to Revise It
The gold standard of corporate target-setting is the Science-Based Targets initiative (SBTi), which translates the latest climate science into guidance for organizations, and validates their emissions reduction plans. But the science is developing, and therefore so are the guidance and targets.
“You don't just do the strategy once,” says Johanson. “You can't develop a 40-year plan or even a 20-year plan that's going to be static. You should be doing it on about a five-year cycle. Because technology will change, costs will change, these frameworks and guidance documents will change, emissions factor projections will change. And as work gets implemented, you want to capture the benefit of what you’ve done and the lessons learned.”
During the seven years that she has been advising clients on decarbonization, Johanson has seen the emphasis shift several times. Initially, activity focused on reducing energy use and emissions intensity, by making buildings more efficient or installing on-site renewables. Then, organizations realized that they could make blanket fossil-fuel reductions instead, by buying renewable energy credits and entering into power purchase agreements.
Now, they may have to revisit those strategies. Draft SBTi guidance published in May has proposed that progress towards targets should only be calculated based on the emissions intensity of the local grid, putting actual energy use reductions back in the spotlight. “That’s going to be another major change,” says Johanson. “Clients that have started to implement their strategies may need to go back and make sure that the work they’re going to do will help them meet their goals and align with the latest methodologies.”
4. Look at What Else You’re Spending
Decarbonization cannot be carried out in isolation, it needs to be aligned with other capital investments. “That’s quite critical, not just in terms of available budget, but for seizing those key moments in the life of a building where you have the opportunity to intervene,” says Johanson.
For example, the SBTi’s draft guidance would also require organizations to commit to installing no new fossil fuel heating or cooking equipment after 2025. “If you're dealing with a building that's going to have a major heating system conversion two years from now, you need to be studying your options now.”
Looking at planned maintenance and upgrades can help determine priorities for retrofitting. “If we understand the timing of those decisions, we can start to prioritize the next wave of studies. We can see which buildings are going to have this major conversion in the next five years, and in the five years after that. You don’t need to do the most technical, in-depth study of a building if you’re not going to implement that retrofit for 20 years.”
On the flipside, it also reduces the risk of self-sabotage and, ultimately, stranded assets. “I think the owners in worst shape are the ones who just installed a new natural gas boiler in the last three years,” says Johanson. “Tenants might decide it’s better for them to move to a building where the heating system conversion is coming up in the next five years and the owner is committed to electrifying it, than to stay in a brand-new or recently retrofitted building with fossil-fuel heating equipment. The opportunity to replace that heating system won't come around again for 20 years – unless you pull out fully functional equipment and replace it.”
