As decarbonization efforts take hold across industries of all types and companies everywhere set their own green energy goals, the need for net-zero carbon status buildings to operate in has become a pivotal focus.
Greg Bolino, founder and CEO of DG Reimagined and former Global Head of Sustainability Consulting at JLL, shared his insights on this topic during his talk at LET’S GO! 2024. With over 30 years of experience spanning utilities, transportation, and real estate, Bolino brought a wealth of knowledge to the discussion, emphasizing both challenges and opportunities in building decarbonization.
Here’s a recap of the discussion.
Bolino began his talk by highlighting a startling fact: Buildings are the least digitized asset class in any industry. The good news? That means they’re rife with opportunities for transformation. Leveraging technologies like AI, machine learning, and data analytics can make buildings more efficient, sustainable, and resilient. According to McKinsey, this represents a $6 trillion market opportunity.
However, the path to realizing this potential is fraught with complexity. Bolino explained that 87% of the buildings needed to serve society by 2050 already exist, making retrofitting—not new construction—the central strategy. Despite the urgency, retrofit rates lag far behind what is needed, with only about 1% of buildings retrofitted annually, compared to the 3% required to meet expected 2050 demand.
One of Bolino’s key points was the interplay between corporate carbon commitments and real estate market dynamics. We are at a fascinating (and alarming) inflection point.
Two-thirds of Fortune 500 companies have set carbon targets, and three-quarters of leased spaces are tied to these goals. This is compounded by an unusual market phenomenon: Leases signed during the pandemic—often shorter than the historical average—are coming up for renewal in the next few years. Demand will ramp up quickly. But the supply of high-performance, low-carbon space is inadequate.
The economics of retrofitting are daunting. The effort requires significant investment. Bolino outlined the “math” of deep retrofits, which often demand 15-20% of a building’s asset value.
Yet, this investment pays off: Retrofitted buildings are more valuable and better positioned to meet market expectations. He shared a compelling example of Interface Corporation, which collaborated with a building owner to retrofit their corporate headquarters. The project reduced operational emissions by 50% and embodied carbon by 42%, while also increasing the building’s market value.
Bolino addressed the role of utilities in this transformation of leasable space, emphasizing the need for a shift in engagement strategies. Utilities often focus on tenants, but the real opportunity lies with building owners who are making significant investment decisions. He called on utilities to accelerate renewable energy development and improve state-level regulatory incentives, which are currently misaligned with the goals of decarbonization.
Bolino concluded with a powerful message: “The market pressure for decarbonization is real, and companies cannot walk back their commitments. This is happening, and it will continue to happen.”
The pathway to net-zero carbon for buildings is clear: Retrofit existing structures, digitize and optimize building operations, and embrace collaboration across stakeholders. The challenge is significant, but as Bolino’s insights demonstrate, so is the opportunity.
Want to hear more of what happened at LET’S GO! 2024? Visit HData.com to see more of the on-demand talks.