'Without immediate and deep emission reductions across all sectors, limiting global warming to 1.5°C is beyond reach.' So concluded the UN’s Intergovernmental Panel on Climate Change (IPCC) in its latest report assessing progress on climate change.

Global emissions, which continued to rise between 2010 and 2019, need to peak before 2025 and fall to zero (net zero) in the early 2050s in order to meet the primary objective of the Paris Climate Agreement. Pursuing 1.5°C means that global use of coal must decline by 95 per cent by 2050, oil by 60 per cent, and gas by 45 per cent.

A mix of individual and government responsibility is required to achieve these targets. Individuals can adjust their travel routines and diets, for example, retrofit their homes, or lower their thermostats and driving speeds. Concurrently, governments need to provide incentives by subsidising retrofitting, introduce tax exemptions for electric vehicles and higher carbon taxation, and invest more in green energy and transport, to encourage or mandate households and businesses to change.

The report makes a series of recommendations on how agriculture, travel, and other industries should transform, including chapters on urban systems, managed land and the built environment; the latter accounting for over 20 per cent of total greenhouse gas emissions in 2019. At the same time managed and natural ecosystems are highlighted as a carbon sink, offering significant mitigation opportunities, provided the sector adapts to climate change.

Interventions proposed by the IPCC to reduce real estate emissions include repurposing existing unused buildings, limiting growth in the floor area per capita by, for example, prioritising multi-family over single-family developments, making better use of the circular economy and exploiting the thermal mass of buildings.

The required interventions vary across developed and developing economies, with the former challenged by the renovation of existing stock and the latter by the rapid construction of new buildings. Policy meanwhile should focus on developing energy efficiency standards and other design requirements to reduce emissions.

As a result of the above, in the developed world we expect more investment in retrofitting and repurposing of existing buildings, with investors focusing on decarbonising their portfolios to meet regulatory requirements and ESG targets. In the developing world, increased focus will be both on energy efficiency standards and on the social impact of new developments.

We’re also likely to witness an increase in the application of smart city solutions, especially in major urban agglomerations facing overpopulation, heavy traffic, low-quality housing and pollution challenges. To reduce car use, governments need to invest more in public transport in order to improve inter- and intra-city connections. Planning systems and zoning need to enhance the mix/conversion of uses in order to achieve easy access to amenities and work through sustainable transport.

All these measures will be complemented by green energy generation and technological innovation for the reduction and removal of emissions, but it’s clear that the IPCC expects the real estate industry to accelerate activity to help the world reach its goals. Collectively, we’ve made some tangible progress in recent years, but we need to do more, and quickly.

Further information

Contact Eri Mitsostergiou

Savills Energy & Sustainability