CARBON EMISSIONS


How we can accelerate decarbonisation


are bringing climate-aligned products to the market with attractive rates for investment in green buildings and high-performance assets. Lower performing assets will be valued below market price, which in turn will affect the lending available to landlords. This is supported by the regulations that financial institutions must comply with.


The Bank of England’s 2021


Climate Biennial Exploratory Scenario evaluated the effects of early and late actions on mortgage losses for banks through 2050. The findings show that properties with low energy efficiency ratings (EPC ‘F’ and ‘G’) will see high impairment rates, rendering them unmarketable by 2050. In contrast, energy-efficient properties will benefit, while inefficient ones may face reduced rental income. And for higher-risk properties insurance costs will rise and financing options will narrow.


The main change we need to


The UK won’t achieve its decarbonisation targets without addressing the carbon emissions from existing buildings, but what more can we do to persuade companies to make the right investment decisions? Asks Aneysha Minocha


Aneysha Minocha


CEO and founder of Quantaco


www.quantaco.ai H


ow are we going to meet our target of achieving Net Zero by 2050 when we keep going about it in


such a piecemeal way? We need to prioritise retrofitting commercial buildings, as nearly 25% of the UK built environment’s carbon footprint comes from heating, powering and operating these buildings. Also, 80% of our non-domestic buildings – hospitals, schools, universities, offices, stations, cinemas, shops – that will be standing in 2050 have already been built. So we need to reduce the carbon emissions from the buildings that already exist, rather than rely on new builds riding to our rescue.


All of this means that to reach Net


Zero by 2050 we need to retrofit more than 500 non-domestic buildings in the UK every week. (That’s based on properties over 500m2, with D-G EPC and DEC Ratings.) It’s a daunting task. And it’s not going to happen. Not if we approach each building separately with expensive site visits and energy assessments taking weeks at a time.


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Properties with low efficiency ratings will see high impairment rates, rendering them unmarketable by 2050


Complex picture There’s no denying the scale of the challenge. According to research from RICS and the British Property Federation, investors, owners and occupiers each have different needs, different starting points, and different information and data requirements. To complicate things further, the current landscape of retrofitting is complex and fragmented, time consuming and expensive, and not scalable to meet the retrofit numbers required. While this is a challenge that will not be met by just throwing money at it, there is no need to waste money. So much needs to be done quickly, but also accurately. We need – and can have – precise assessments of what will work best for every building, without overspending on the likes of excess solar PV or battery provision. What the owners of non-domestic buildings need is a simple speedy process to help them choose the


most effective way to cut emissions, without buying in pointless excess resources. And if we’re serious about decarbonising, we have to take into account the embodied carbon in all the shiny new kit we invest in. But don’t worry, all that can be easily factored in to your decision-making process too.


Maximum impact By aligning our retrofit projects with asset life cycle management, we can maximise the impact and improve the financial business. This means integrating retrofitting efforts with the overall maintenance and management plan of the asset – so landlords can ensure retrofits contribute to the long- term sustainability and profitability of the estate.


This means that the funds needed


for retrofit can be seen not as a separate expense but rather as an incremental cost. And that cost should then be compared to what would be spent anyway on replacing an existing asset with a similar one. Aligning retrofit projects with asset life cycle management offers the greatest impact for the decarbonisation business case.


On the money We also need to consider the monetary impact of low carbon retrofits on insurance and asset financing costs. Banks and insurers


make is to stop thinking about decarbonising individual buildings one-by-one, and think a lot bigger. We can unlock savings by leveraging the economies of scale by retrofitting energy generating and storage solutions right across property portfolios and making the investment process clearer and shorter. This also means we will be looking


at retrofitting through a broader and more realistic lens, taking into account not only the initial investment cost in retrofits, but also that it paves the way for aligning asset values with regulatory compliance, offering new incentives for investment and making the business case more attractive. This forward-thinking strategy can unlock additional value, avoid stranding risk and drive progress in retrofit investments and reaching Net Zero. We are in a climate emergency.


We need to retrofit to decarbonise fast. And it can be done in a way that also makes sense in the underlying business value that retrofits can bring to landlords and investors alike.


About Quantaco At Quantaco our mission is to challenge the status quo of piecemeal retrofits in the built environment, accelerate decarbonisation and support organisations in making the right investment decisions at scale. The Quantaco software empowers


real estate owners, investors and managers to make strategic and technical decisions to achieve Net Zero at scale with confidence, through empirical, data-driven strategies and rapid cleantech investment options analysis. ■


EIBI | SEPTEMBER 2024


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