Climate Change “Opportunity”: Work from Home, More IT, Less Real Estate

Commercial real estate has had somewhat of a funny love affair with IT over the years. Remember back in the 80’s, when we were warned about the paperless office? It was still all good with IT, even though the paperless office never really happened — we never took the projected real estate angles seriously, anyway.  How about the 90’s, when folks claimed that the internet would kill the shopping mall? Then IT made us sort of nervous. Now another wave of ‘less real estate/more IT’ ideas are back, but this time with a climate change angle and, also with a smarter sounding term that can get you more attention at the cocktail party — at least until people figure out what you’re really talking about…

The Climate Group has just issued a new report that lays out the many opportunities available to the information, communications and technology (”ICT”) sectors to help reduce carbon emissions. Like many issues associated with reducing carbon emissions, buildings get a lot of attention in this report, too. Hence, my interest in understanding how the opportunities could interact with commercial real estate.

One main concept, called dematerialization, stands for using technology to replace high carbon activities with low carbon alternatives. A simple example of dematerialization would be replacing face-to-face meetings with videoconferencing for example. A farther reaching example would be e-government.  Dematerialization’s attractiveness lies in its ability to be applied to a wide range of business activities.

For the commercial real estate world, the report highlights telecommuting as one of the biggest opportunities for ICT sectors because it is a dematerialization application presenting the largest opportunity for carbon emissions reductions and absolutely requires ICT to be effective:

“Currently the largest opportunity identified within dematerialisation is teleworking – where people work from home rather than commute into an office. Although other dematerialisation opportunities may come to prominence in the future, based on historic trends, the analysis found that teleworking would have the largest impact, up to 260 MtCO2e savings each year (detailed assumptions in Appendix 3). For example, in the US, if up to 30 million people could work from home, emissions could be reduced 75-100 MtCO2e in 2030, comparable to likely reductions from other measures such as fuel efficient vehicles.”

So think about it –

what could happen in commercial real estate if 30 million people eventually worked from home?

The trick to realizing substantial emissions reductions from telecommuting appears to be in how far-reaching the employer’s work-from-home program extends. A company would need to have a significant number of employees working from home more than three days per week to generate substantial energy savings of 20%-50%. Less than that level of telecommuting means that the company still maintains significant office space for periodic office-workers, and therefore, less energy cost reductions.

Persuasive ‘Everyday’ Sustainability Case Studies

To lots of companies, sustainability can seem like a pretty exotic exercise. This perception can make it hard for us to convince clients and colleagues about the benefits of green building. That may not have to be the case.

‘Tackling the Energy Monster’ was today’s Wall Street Journal report on how soaring energy prices have triggered a reality check among small businesses, which often pay higher utility rates than large companies and are less able to pass their cost increases on to their customers.

This article was packed with eight great case studies of specific ways, backed by cash results, that companies re-tooled their businesses to cut or avoid energy costs. I call these actions ‘everyday sustainability’ because they’re rather unflashy, but are accessible to many businesses and deliver long term positive results.

Here’s a partial list of the winning actions:

• Missouri delivery company: Using GPS-route mapping software from United Parcel Service, Inc. to eliminate excess miles driven by drivers. 25,000 miles were cut. Even though unleaded gas prices rose 31% last year, this company only experienced a 1% increase in fuel costs for that period (!). The company even saved more than that since the drivers were paid by the hour. Less miles driven = less payroll expense.

• Oregon shoe manufacturer: Had new facility built using designed-in energy saving options. The energy-saving improvements cost an additional $149,140. An energy audit revealed that the company saved $32,000 annually with the new facility. In addition to that, the new building qualified for $52,000 in state tax credits to offset the costs. The company figures it will recoup its entire (additional) investment within three years.

• San Francisco civil engineering firm: 40 employees and a second office in New York. Employees now travel 70% less than before due to web conferencing. The web camera and projector cost $70 and $850 respectively. The firm saves $30,000-$40,000 annually.

• Interest-free financing from public utility: Southern California Gas & Electric and San Diego Gas & Electric offer interest free loans of up to $50,000 to small-business customers if they use the funds for energy efficiency upgrades and equipment. That’s in addition to the free utility audit.

So, check the article out and add it to your arsenal of proof that sustainability initiatives are real world actions and save lots of money.

If you’ve got any good case studies to share with the rest of us, send them along so everyone else on the Green Journey can benefit from your good experience.

The Carbon March Visits Moosehead Lake, Maine

A few posts back, I depicted climate change concerns within urban planning as becoming the ‘new civil rights movement’. It was a stark metaphor, illustrating the degree to which greenhouse gas emissions within real estate development has become a defining issue for our industry.

The Christian Science Monitor has just devoted lengthy column space to a development dispute in Moosehead Lake, Maine, where environmental groups raised concerns over the potential negative carbon impacts from the proposed 2,300 housing and apartment units. By their calculations, the development would produce 9,500 tons of carbon dioxide annually – putting an additional 1,850 vehicles on the road. A representative from one of the groups cites their concerns as several and interrelated – not only are they unhappy with the the size of the development, but also with its location being far from town and only accessible by car, encouraging lots of driving.

Particularly timely for the Green Journey was the article’s update on states’ efforts to formally tie real estate development activities to climate impacts and state emissions reductions targets.

“Climate change has kind of permeated everything with regard to land use”.
-Scott Morgan, senior planner with the California Governor’s Office, as quoted in the Christian Science Monitor.

Carbon March Status: Regions That Formally Connect Real Estate Development to Climate Impacts

• 35 states have climate action plans or are in the process of developing them.
• Of the above, 17 states have set emissions targets for greenhouse gases. However, far fewer have laws that presently allow direct action on the basis of greenhouse gas emissions.
• California is seen the nation’s leader in pushing towards the inclusion of greenhouse gas assessments within local development plans and taking legal action against municipalities and/or companies, which it believes are not taking sufficient action to reduce their greenhouse gas emissions.
• Across the US, only California, Massachusetts and King County, Washington have established climate change analysis into the state environmental review process that applies to land development.

In previous posts, we recommended that real estate investors learn about a) any climate change plan in effect in jurisdictions where they develop and operate investments and b) proactively managing the carbon footprint of their assets as the regulatory environment evolves.

So far, there is no need to change that suggestion.

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Please let us know your thoughts. Our Green Journey is a forum for sharing and your perspective is valuable.

Photo credit: Flicker/Jonathon Brennecke - Moose

Help! Need to Lose Two Tons Fast

So I just learned that I have a carbon score of 415 and must lose two tons of carbon output, just to put a mere 10% dent in my estimated individual carbon emissions.  Ouch! And that’s after taking into account that we don’t even drive our car more than once a week.

When I heard that Earthlab was providing Al Gore’s Alliance for Climate Protection website with a carbon calculator, I decided to give it a test drive. There are quite a few out there, and I am still on the lookout for the ultimate user friendly model that my clients and colleagues can work with without much difficulty.

Earthlab’s Live Impact Calculator provided an interesting experience, since it satisfied the need for instant gratification on a key level: you get immediate info on how specific lifestyle changes reduce your carbon output plus you are encouraged to make a personal pledge to improve your carbon footprint.  Most calculators just move you over to the ‘buy offsets here’ screen and send you on your way.

Learning that, as a frequent flying business traveler, my carbon score is much higher than the average 325 score for Americans or 305 for Canadians and that I alone generate approximately 20 tons in emissions was depressing, to be honest.  But I am now armed with info on how to behave my way out of the problem.

And unlike any fad diets out there, at least I can ‘offset’ the weight that I can’t lose entirely.

Do you know your carbon score? Have any experience with reducing and offsetting your emissions that you would like to share?