Zero Net Energy Buildings Could Become The Norm … Eventually

The built environment is a crucial part of the equation to fight climate change and reach energy security, but there are challenges to achieving pervasive sustainability measures, especially for buildings targeting zero net energy status.

In June 2015, the California Public Utilities Commission launched a new residential zero net energy action plan designed to make all new residential construction zero net energy by the beginning of 2020. The due date subsequently elapsed, and instead of the finish line being anywhere in sight, the coronavirus pandemic’s onset resulted in a diversion of resources away from sustainability measures.

Yet the state’s secondary goal to make all new commercial construction zero net energy by 2030 could still be in reach as commercial real estate companies eye energy efficiency as part of a broad repertoire of initiatives to improve communities through intelligent buildings.

In particular, Grosvenor Group has vowed to adhere to the World Green Building Council’s zero net carbon buildings commitment, which would mean that all aspects of the global company’s portfolio directly under its control would be zero net carbon by 2030, followed by becoming fully zero net by 2050. It is important to note that zero net energy differs from zero net carbon in that the former refers to a building that produces the same or more energy than it uses, while the latter means that a building’s energy consumption needs are met by renewable energy sources as opposed to fossil fuels.

“Long-term, what I hope and what I'm hearing from institutional capital partners and people who are looking decades out is that the pandemic has highlighted the need for us to think about these big global questions like climate change, pandemics and racial inequality,” Grosvenor Americas ESG Director Lauren Krause said. “In the long term, the pandemic actually may be kind of a spotlight on things that people knew we needed to focus on, but maybe they weren't a top priority.”

Krause said that Grosvenor made the zero net carbon commitment in 2019, along with a push for greater institutional social equity. The parallel efforts yielded mutual benefits. In addition to the high upfront costs of implementing zero net carbon measures, another barrier is that tenants often have much control over a building’s spaces and how they are used. The part of the portfolio controlled by Grosvenor versus tenants is roughly about 15%, hence Grosvenor’s two-tiered goal of not aiming for the portfolio to be fully zero net carbon until 2050.

However, the company’s work to increase diversity internally and across its supply chain has bolstered its relationships with tenants and other companies and enabled Grosvenor to engage in conversations about energy consumption and doing greener retrofits, Krause said.

These relationships can go hand-in-hand with costs. Once sustainable building features are more widely used, they become more familiar and less daunting to the industry, thereby leading to even more use, which drives down cost.

“I've seen companies how they dip their toe in the water — try to do it with a project that has the most likelihood of success so we can really try to understand, try to set ourselves and set our teams up for the best outcome,” Krause said. “The more projects we see that are net-zero, Passive House or things like that, contractors become more responsive and more comfortable using these technologies, and the skill level of everyone increases so we can tackle more complex projects.”

Having already developed four zero net energy buildings in Sunnyvale, Navitas Capital Managing Partner Gary Dillabough is well-versed in what it takes to employ new and emerging technologies to make it happen. He said the goal is to ultimately make the entire portfolio zero net energy.

Although the efforts are still in the early stages, much interest has been generated to extend the building technologies on a broader scale in the Bay Area. As part of the development team, Urban Community, his current step in the plan is a multibillion-dollar one to transform downtown San Jose by acquiring 30 properties, five of which are going through the planning process for mixed-use developments geared for zero net carbon with environmentally friendly construction and all-electric systems.

“What we care most about is really trying to create community and create a better quality of life for people,” Dillabough said. “And this is an area that should be on the edge of innovation. If you go to cities like Seattle, you feel a little different vibrancy there. That's what we think San Jose is knocking on the door of — ushering these kinds of transformations. That's what we're going to try to drive as hard as we can.”

While the plans are in the early process, Dillabough will likely draw upon some of the best practices gained from the Sunnyvale projects, including the first two at 435 Indio Ave. and 415 North Mathilda Ave. Passive measures featured prominently in those projects, such as electrochromic glass, building automation systems and ceramic finishes on the exterior designed to shed heat.

“We were fairly lucky that the tenants and CEOs who saw those buildings had a great appreciation,” Dillabough said. “We did some of the things that bigger companies like Google or Apple do, but it's available to smaller users. It helped them recruit and retain their employees.”

Data tracking is a vital component of zero net energy and zero net carbon efforts. Dillabough said that sensor systems were employed in the Sunnyvale projects to track energy flow throughout the buildings. Platforms like Carbon Lighthouse are also working to help the CRE industry reduce its carbon footprint. The company recently released an efficiency production service that uses artificial intelligence to establish a continuous data stream for carbon emissions reduction optimization and decreases in net operating income, according to a press release.

"With net-zero initiatives on the rise, actionable strategies to quickly reduce carbon emissions emitted from the building systems themselves (which account for about half of the building's energy use) are critical to any commercial real estate portfolio," Carbon Lighthouse CEO Raphael Rosen said in an email. "The good news is that technology advancements in AI and data analytics, sensors, measurement, and reporting are providing the tools CRE needs to achieve real carbon reduction impact — all while still driving toward business goals."

Other technologies are emerging to help reduce the carbon intensity of buildings. San Jose-based Blue Planet is using sequestered carbon to produce an aggregate for use in concrete mixes. A study by University of Maryland researchers published in Science Advances shows a method for fabricating transparent wood that could be used in place of glass for better energy efficiency.

Developing the technologies to more easily achieve zero net energy is one part of the puzzle. The other is making them cost-effective enough for them to be attractive to developers and tenants alike. Another crucial piece is education about how vital these green building measures are for the environment, health, energy resiliency and even economic sustainability.

“If you can invest an extra $100K in a more efficient mechanical system today, then that means in 10 years, you're not going to be paying offsets for it,” Krause said. “I'm challenging our team to think about the full building life cycle when they think about costs. Don’t just think about going with the traditional route that's cheapest instead of going with something that's more energy-efficient that typically does have a cost, but we'll be paying for it anyway.”