The definitive guide to decarbonization planning for commercial
real estate

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Decarbonization planning is the bridge that takes you from measurement and reporting to executing on your net zero goals.
It is the act of building and refining a costed, time-sequenced and actionable roadmap that:
01
Meets your business requirements
02
Transitions you from your carbon baseline today to the future carbon end state that is required to hit your net zero targets.
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From The Founder

The biggest levers of decarbonization can actually be inferred using recognizable design patterns, and extracted with a few simple questions. This is the key to unlocking scalable decarbonization planning to meet the demands of a zero carbon economy.

As an energy auditor, Christopher Naismith was hired by building owners to find efficiency improvements. Collecting onsite building information was a critical part of the job, but more often than not, busy operators would forget key design details during short site tours.

So, he tried a new tactic: starting with interviews before the tour. Bringing just a blank sheet of paper, he would meet with operators over coffee. Together, they would sketch a design schematic of the building and its carbon-emitting systems, which were then verified during the tour.
It was a major unlock. By simply focusing on the major systems and operating conditions that most materially drive building performance, Christopher created an approach that was faster, simpler and ultimately helped secure more capital for decarbonization.
Image of Christopher Naismith, CEO and Founder of Audette
Christopher Naismith
CEO & Founder
The Road Ahead

Where do we go from here?

Decarbonization planning is increasingly a table stakes activity.

In response to institutional investor demands and new building performance standards, industry leaders have already:

  • Established ongoing carbon accounting
  • Set targets, across their portfolio or specific funds
  • Begun annual reporting and disclosures
  • Integrated ESG into due diligence
  • Incorporated low carbon design into new developments
  • Implemented the obvious, low-hanging fruit, like LED lighting

Here’s the problem: even after all of that, they are still a far ways off from achieving their net zero targets.

Which begs the question…

“Now what?” is where decarbonization planning comes in.
To achieve your net zero goals, you will need to:
01
Identify
the applicable projects at every building
02
Quantify
the impact & cost of those projects
03
Assemble
portfolio-level &
property-level roadmaps
04
Justify
the investment with a strong business case
05
Refresh
annually with every capital planning cycle

Real estate leaders who can do this successfully will be way ahead of the competition.

At Audette, we are privileged to work with the trailblazers who are thinking ahead to where the market will be - not just next year, but 5, 10, 15 years down the line. By connecting decarbonization to value creation, value protection, and risk mitigation, we enable them to realize their visions.

CURRENT STATE OF AFFAIRS

Why is decarbonization planning so hard to do?

Let’s face it - this work is complex and there’s no getting around it. There are multiple reasons even the leading ESG teams struggle when it comes to building decarbonization plans.
01
Poor property-level data
The lack of reliable property-level data blocks you from doing the preliminary analysis needed to inform your portfolio-wide strategy.
02
High stakes
Given the capital-intensive nature of retrofits, decarbonization is a big-ticket item. It’s expensive - so expensive that you can’t afford to get wrong.
03
Technical expertise
Without in-house building scientists, it is hard to know that you’ve gotten it “right” and, more often than not, have to work with a third party to access this expertise.
04
Stakeholder buy-in
Securing capital for decarbonization is a team sport. To successfully align your stakeholders, you’ll need to come prepared with a defensible, data-driven business case.
05
Inadequate tools
Buyers are forced to compromise on either actionability or scalability. Energy audits are actionable but don’t scale, and without building science expertise, software solutions are scalable but not actionable.
SQAURE PEG in a ROUND HOLE

Energy audits:
Yesterday's solution to yesterday's problem

For lack of better alternatives, real estate owners and investors are primarily relying on onsite energy audits to guide their decarbonization planning.

But, energy audits were never intended for decarbonization planning. We know this as a team of former energy service providers who delivered ASHRAE 1/2/3s, net zero feasibility studies, re-commissioning studies, retrofit designs and more.

Audits are intended to inform project implementation and design at an individual building that you have already prioritized for investment.

At a price tag of $20,000-$60,000 per building and taking an average of 3 months to complete, they are not designed to analyze hundreds or thousands of buildings at a time, nor are they intended to build programmatic decarbonization strategies at scale.

Moreover, audits are static, point-in-time studies delivered most often via PDF, making them impossible for ESG teams to easily integrate into their workflows and annual capital planning cycles.

They also turn stale in 3-5 years due to changing economic, regulatory, and technological conditions. At this point, you’ll need to do it all over again to keep your plans up to date.

To achieve your portfolio-wide net zero targets, you need decarbonization planning tools that are purpose-built to analyze buildings at scale, quickly and cost-effectively.

DOING IT RIGHT

What does a good decarbonization plan look like?

An investable decarbonization plan meets 5 criteria:
01
Generated using energy-calibrated, physics-based modeling
Each building has unique parameters that dictate its carbon performance and path to zero carbon. To identify these, it’s important that your energy models are calibrated to a building’s current state with 12+ months of whole-building utility data.
02
Bottoms-up plan tied to individual, replaceable building systems
A building is a series of systems, spanning walls, windows, HVAC, lighting, automation, etc. Any decarbonization plan for existing buildings should consider replacing all of these components systematically and build the business case for each. 
03
Sequencing accounts for measure interactivity, grid transition & useful life over 10+ years
To identify the most capital-efficient pathway to zero carbon, you have to be thoughtful about which systems you replace, in what order (relative to each other) and when (relative to remaining useful life). Your plan should account for these effects.
04
Applies pre-construction cost estimations usable for capital budgeting
For change to happen, it must be budgeted. Your plan will require budget-level cost estimates for every major upgrade in order to move forward to execution with project teams, financiers, and incentive providers.
05
Uses utility-level, policy-based grid carbon intensity projections, where available
The transition of the grid significantly impacts the type and timing of retrofits. Real estate teams need to ensure their plans are using the most reliable, localized grid transition data available, in order to make decisions about where, when and what to retrofit.

How we build decarbonization models

At Audette, we pre-modeled the built environment such that we are able to accurately infer how your buildings are performing — starting with just an address list.

It’s not magic. Despite how different they might look, buildings are designed for specific purposes and so follow detectable patterns that can, when paired with building science expertise, be used to deduce the major systems inside that drive emissions. Moreover, known decarbonization solutions already exist for every building system.

By using software to bring these concepts together and applying the power of AI, we can analyze buildings for decarbonization at scale.

Audette’s physics-based modeling platform has encoded the same methodologies used by traditional energy auditors into scalable software that can analyze thousands of buildings at a time. Developed by building scientists and trained on 800,000+ unique building simulations, Audette generates decarbonization plans that you can trust.

Putting it into action

How do you use a decarbonization plan?

0
1

Capital planning at the property level for decarbonization projects

This is what most people think of when they think of decarbonization planning (and how they use energy audits today). You have a particular property you have prioritized for work, and you need an investable, time-sequenced plan to guide investment decisions and determine which projects get funded, when.

This is what most people think of when they think of decarbonization planning (and how they use energy audits today). You have a particular property you have prioritized for work, and you need an investable, time-sequenced plan to guide investment decisions and determine which projects get funded, when.

0
2

Decarbonization planning at the portfolio (or fund) level

If you have hundreds or thousands of properties, it’s simply not pragmatic or feasible to work on 100% of your properties all at once. So the key question becomes, “where do I start?”

By quantifying the carbon reduction potential and cost to decarbonize for every building in your portfolio, a good tool will surface the myriad of possible criteria to assist in your prioritization efforts (e.g., tCO2e reduced, tCO2e per $ spent or per sqft, GHG intensity, ROI/IRR, payback, abatement cost and more).

From there, you can then apply the criteria that are most aligned to your business needs to identify your highest-priority properties. Ideally, whatever tool you use should also be flexible enough to reflect the realities of how your business is run, allowing you to view and filter your results by fund, geography, asset manager, property manager or any other custom cut.

If you have hundreds or thousands of properties, it’s simply not pragmatic or feasible to work on 100% of your properties all at once. So the key question becomes, “where do I start?”

By quantifying the carbon reduction potential and cost to decarbonize for every building in your portfolio, a good tool will surface the myriad of possible criteria to assist in your prioritization efforts (e.g., tCO2e reduced, tCO2e per $ spent or per sqft, GHG intensity, ROI/IRR, payback, abatement cost and more).

From there, you can then apply the criteria that are most aligned to your business needs to identify your highest-priority properties. Ideally, whatever tool you use should also be flexible enough to reflect the realities of how your business is run, allowing you to view and filter your results by fund, geography, asset manager, property manager or any other custom cut.

0
3

Carbon due diligence during acquisition of new properties

Most of the leading real estate ESG teams have already incorporated some level of ESG assessment into their due diligence process. Onsite energy audits are typically too slow to fit into the due diligence window and too expensive for a property that you may not end up owning. With the advent of tech-driven tools like Audette, it is now possible to conduct a deep decarbonization analysis prior to acquisition. An investable, time-sequenced decarbonization plan not only enables the deal team to more confidently underwrite the investment but, for the ESG team, it also ensures that every acquired property entering the portfolio has a proactive decarbonization plan and budget from day one.

Most of the leading real estate ESG teams have already incorporated some level of ESG assessment into their due diligence process. Onsite energy audits are typically too slow to fit into the due diligence window and too expensive for a property that you may not end up owning. With the advent of tech-driven tools like Audette, it is now possible to conduct a deep decarbonization analysis prior to acquisition. An investable, time-sequenced decarbonization plan not only enables the deal team to more confidently underwrite the investment but, for the ESG team, it also ensures that every acquired property entering the portfolio has a proactive decarbonization plan and budget from day one.

If you’re going to hit your net zero targets, you don’t have time to waste.

Let us help you find the fastest, most capital-efficient path to hit your targets with confidence.