As we celebrate Earth Day this coming Monday, we would like to shine a light on encouraging progress in addressing climate change in the built environment. While the news cycle often focuses on challenges and headwinds, it is important to celebrate the wins as well! The following stories and announcements over the last year stood out to our team as having great potential to catalyze change and advance decarbonization in the CRE sector.

Significant Breakthrough for Offshore Wind
Located 35 miles east of Long Island, NY, the South Fork Wind Farm began operations this year as the first commercial-scale offshore wind farm in the U.S. While offshore wind farms have been proposed in the U.S. for decades, permitting delays, local opposition, and litigation have delayed progress. Our hope is that this project will build public support and momentum for other planned windfarms in the northeast U.S. and beyond.

SEC Adopted Climate-Related Disclosure Rules
The Securities and Exchange Commission (SEC) adopted rules to enhance and standardize climate-related disclosures by public companies. The rules will require public companies to disclose material climate-related risks and Scope 1 and 2 emissions, resulting in greater transparency and more consistent reporting so that investors can properly assess corporate exposure to climate-related risks and potential financial impacts. While the final rules were diluted when compared to initial drafts that required the disclosure of Scope 3 emissions, they will hopefully establish carbon as a fundamental investment criterion and advance decarbonization through free market dynamics.

Government Organizations are Advocating for Multifamily Utility Disclosure
The Environmental Protection Agency (EPA), Housing and Urban Development (HUD), and Department of Energy (DOE) signed a joint letter requesting that utility companies make whole-property energy and water usage data available to multifamily property owners. In most communities, individual apartment units are metered directly to local utilities, so owners do not have access to whole-property utility performance data. The availability of this data is critical for utility performance benchmarking, assessing the impact of energy and water efficiency projects, monitoring ongoing performance, and for complying with local building performance standards. While utilities are not required to comply with the request, we see this as a step in the right direction that will hopefully keep moving the needle.

The White House Released a Definition for a "Zero Emissions Building"
The White House is seeking to create a standardized, verifiable definition for a "zero emissions building." A draft definition was recently released for public feedback and the final version is anticipated in 2024. As this announcement states, “a broadly accepted common minimum definition for a zero emissions building, as well as a pathway for verification, is foundational to efforts by public and private entities to transition the building sector to zero emissions.”

The Inflation Reduction Act (IRA) is Accelerating the Shift to Clean Energy
Since the passing of the landmark Inflation Reduction Act (IRA) in 2022, the U.S. has set records for clean energy deployment. The following is a 2023 report card of clean energy progress in our country:

  • Solar: In 2023, a record 31 gigawatts (GW) of solar capacity was installed, a nearly 55% increase compared to 2022. While supply chain issues and high interest rates still plague industry growth, solar accounted for about half of all new utility-scale energy generating capacity through Q3 2023.
  • Wind: Utility-scale wind capacity increased by a modest 8 GW in 2023, lagging 2022 deployment levels. The total installed wind capacity reached 147 GW by Q3 2023, representing approximately 11% of total energy generating capacity in the U.S. However, industry analysts project an additional 17 GW of wind energy will be deployed in 2024, building on the momentum of successful installations like the Long Island, NY project mentioned above.
  • Battery storage: While still hindered by economic factors including low electricity blended rates in many areas of the U.S., battery storage grew significantly in 2023, with additional capacity through Q3 2023 exceeding all installations in 2022. Analysts are projecting battery capacity will double in 2024.

Figure 1. Utility-Scale Energy Generation Capacity Additions in the U.S. (2021-2024)
World Resources Institute. Source: US EIA 

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The construction of new renewable energy generation facilities continues to be more cost-effective than fossil fuel alternatives. As a result, renewable energy continues to lead new utility-scale generation, representing more than 75% of new capacity brought online in 2023.

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By Kyle Patterson- Senior Project Manager- breea

-GRESB

About breea
We are breea, a boutique ESG advisory company that advises sophisticated real estate portfolios on corporate responsibility and the transition to a lower carbon future. We take great pride in the expertise, responsiveness, and dependable service we provide our clients.