The study addresses a practical investment question: how much of an asset’s future decarbonization can be delivered by changes in the electricity grid, and where will additional investment in efficiency, electrification and on-site clean energy be most impactful?
The findings point to four recommendations for real estate capital planning:
- Know the grid. Investors and managers need to consider both the current emissions intensity of the grid serving an asset and how quickly it is expected to change. Holding asset performance constant, grid changes reduce modeled annual emissions by approximately 55% on fast-changing grids by 2040, compared with 10% on slow grids.
- Plan investments around grid conditions. Where electricity is already comparatively clean, electrification can be prioritized. Most slow-changing grids analyzed are also clean enough for electrification to reduce emissions, while reducing energy demand first may be more effective where grids remain particularly emissions-intensive.
- Base decisions on asset-level data. Property type, energy intensity, fuel use, and local grid conditions determine which interventions are most effective. Portfolio averages can obscure these differences and lead to capital being directed away from the assets where it could have the greatest impact.
- Consider cumulative emissions, not only the endpoint. Pathways that reach similar annual emissions in 2040 can produce substantially different emissions along the way. In the study, the rapid improvement pathway produces 287 million metric tonnes fewer cumulative emissions than the slower pathway.
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