IXO INSIGHTS | Buildings Sector Guidance by SBTi
IMPORTANCE
Science Based Targets initiative (SBTi) unveiled draft guidelines for the building sector in December 2023.
The new guidelines are underpinned by 1.5˚C-aligned targets, designed to trigger a far steeper reduction in greenhouse gas emissions generated by the building sector.
Given buildings account for ~34% of global energy related carbon emissions, buildings is a crucial sector to decarbonize to meet overall 1.5˚C-aligned targets. The guidelines are aimed at providing framework and alignment for emission reductions across the sector’s entire value chain.
The guidelines are intended to be used by those companies for whom buildings-related emissions are significant in relation to their overall activities. Thus it encompasses a diverse array of building industry stakeholders: developers, owner-occupiers, owner-lessors, tenants, property managers, financial institutions.
Pilot testing is currently ongoing and expected to conclude in quarter 1 of 2024, meaning we will expect to see the outcomes published very soon.
Core pillars defined in the draft guidelines are:
Whole Building Approach - The guidelines require consideration of operational emissions not only from landlord but also from tenant-controlled spaces within the target boundaries. This approach encourages collaboration between landlords and tenants to achieve overall emission reduction goals.
Embodied Emissions Pathway - facilitates reporting by both the developer and/or first owner (or purchaser) and the financier of the construction (or purchase) via two defined streams: 1. New Buildings’ upfront embodied emissions (A1 to A5); 2. Existing Buildings’ in-use embodied emissions (B1 to B5).
Fugitive Emissions - defined as accidental or unintended releases of gases or vapors from pressurized equipment such as HVAC, refrigeration systems, valves, pipelines are the most important greenhouse gas emissions after carbon dioxide. This marks the first time such emissions are covered in a reporting framework.
There are a great many good things captured in the new guidelines, particularly around embodied carbon targets and reporting. However, the fact that some of these requirements may not be mandatory (example - target setting for upfront embodied carbon), depending on the distribution of emissions across scope 1, 2, and 3, limits the potential scale of immediate decarbonization in the industry.
IMPACT
The new guidelines are tilted at demonstrating >50% reduction in upfront embodied carbon emissions by 2030 compared to ~20% reduction by 2030 under prior, 2˚C-aligned, targets.
This represents a significant step change for our industry, of the likes we have not seen since the Industrial Revolution.
These kinds of targets cannot be achieved with green technology alone, or downstream design optimization alone, or material replacement alone, or upgraded/retro-commissioned plant alone.
The anticipated shift towards systems-based thinking and planning in target-setting and reporting must effectively respond to real-world economic pressures, particularly in light of: asset design life, material durability, safety-in-design risks, evolving environmental patterns, construction programme sensitivity, contractual role definitions, insurability, warranties, supply chain disruption, procurement pathway dependencies.
If you need a partner to co-develop a practical and rapid response plan to the operational and embodied emissions within your asset or across your portfolio, contact IXO.
Reach out to Vimal or Lizette for more details, and access the full SBTi draft here.
