CO<sub>2</sub> reduction goal and pathway

CO₂ reduction goal and pathway

In the reporting year, Swiss Prime Site developed a detailed CO₂ reduction pathway for its entire property portfolio. With planned investments of more than CHF 650 million by 2050, particularly in cladding renovations and heating replacement measures, the goal is a CO₂ reduction pathway significantly above the 2-degrees goal of the Paris Climate Accord. In order achieve carbon neutrality in line with the goals of the Swiss government, Swiss Prime Site will also consider CO₂ compensation measures.

Background

Scientific scenarios such as those published by the Intergovernmental Panel on Climate Change (IPCC)1 predict that the effects of climate change already seen today will speed up and worsen by 2050. The forecasts assume that the costs of rectifying damage to the climate and adaptive measures will rise significantly. The consequences of unchecked climate change will affect Switzerland, too. According to the climate scenarios published by the National Center for Climate Services (CCS)2, Switzerland can expect major changes such as more drought, more frequent extreme weather and significantly more heatwaves.

The political situation will change, too. In August 2019, the Swiss Federal Council increased its climate goals, which form part of the discussion about revising the CO₂ law. The climate goals state a reduction pathway for Switzerland by means of which net emissions can be reduced to zero by 20503. The Swiss Government’s energy strategy4 and the Energy Law that was introduced in 2018 represent significant legislative changes. In addition, many cantons and cities are debating initiatives which would increase requirements for buildings and mobility. The assumption is that city and site developments will insist on medium-term climate budgets which contain emissions limits for real estate developments and managers. Against the background of these developments, Swiss Prime Site has defined its own far-reaching reduction goal and a CO₂ reduction pathway for its own property portfolio.

Initial situation

Swiss Prime Site supports the goals of the Paris Climate Accord5 (2-degrees goal) and a long-term, carbon-neutral Switzerland, to which business needs to be a significant contributor. Previously, the Company pursued a wide range of initiatives and projects to reduce CO₂ emissions. These ranged from energy control, organisational optimisations, potential analyses for the installation of photovoltaic systems through to promoting e-mobility, but most of them proceeded independently from one another. Swiss Prime Site therefore set itself the goal in 2017 of developing a CO₂ reduction pathway for the property portfolio which would align existing projects and initiatives with a long-term, overarching goal, linked by clear guidelines.

The energy management project initiated in 2012 served as the basis for the creation of a standardised CO₂ balancing process across the whole group, which significantly improved the availability and quality of data. The resulting transparency regarding energy consumption and the associated CO₂ emissions contributed significantly towards the development of the reduction pathway and enabled future progress to be reviewed.

The focus of the CO₂ reduction pathway is on the energy consumption (scope 1 and 2) of the property portfolio, which constitutes far and away the greatest part of the Company’s CO₂ emissions. The reduction pathway factors in a total of 165 properties and an annual portfolio growth totalling 20 000 m². As Swiss Prime Site’s property portfolio is comparatively young and technologically advanced, energy consumption and CO₂ emissions are relatively low, making the challenge of further improvements much harder.

Developing the reduction pathway

The first step in working out the reduction pathway was to look at all the different areas in which Swiss Prime Site has a direct impact on CO₂ emissions and in which effective measures can therefore be defined. The influence of external factors, such as break-through technologies, was not initially included. The key action areas are in electrical energy, heating and cladding renovations. Swiss Prime Site takes into account the renovation cycles of the existing properties and the assumed annual growth of the stock (10 000 m² à × kg CO2e/m²) and new build developments (10 000 m² à × kg CO₂e/m²).

By looking at a range of possible actions in the four main areas of activity, Swiss Prime Site was able to calculate three reduction scenarios. Based on these, Swiss Prime Site decided to follow the most ambitious scenario as a reduction pathway and reduce its relative CO₂ emissions by 75% by 2050. This goal is clearly more ambitious than the 2-degrees goal of the Paris Climate Accord.

In order to achieve this defined reduction pathway, a drastic reduction in relative CO₂ emissions is required, from an annual 22.27 kg CO₂per square metre (2019) to approx. 5 kg CO₂ per square metre by 2050. The investment costs already budgeted for cladding renovations (windows, façades, roofs) in the property valuations total CHF 610 million. A further CHF 40 million has been budgeted for heating replacement measures. Any additional costs will need to be elaborated on in stages as part of an analysis of the individual property and spread appropriately over the period of 30 years. Swiss Prime Site is also striving to distribute clusters of measures, such as those planned for 2029 and 2030 according to property valuations, for example, (cf. Figure 3), more evenly over the years, making the reduction pathway smoother.

Currently, Swiss Prime Site does not believe it will be possible to reduce CO₂ emissions to net zero by 2050 through these reduction measures alone. That is why the Company is intending to offset the remaining unavoidable CO₂ emissions through compensation measures, particularly projects within Switzerland. Swiss Prime Site estimates that from 2050, annual compensation costs to offset unavoidable CO₂ emissions will total around CHF 2 million. This calculation is based on the assumption of a future CO₂ tariff of CHF 200 per tonne.

How the reduction pathway will be realised

In order to realise its ambitious reduction pathway, Swiss Prime Site has set clear objectives to be implemented in existing properties and future projects. The Company is guided in this process by the Swiss Sustainable Building Standard (SNBS). New build projects and total renovations will include sustainability aspects as early as possible in the planning phase and will factor these in throughout the property’s life cycle. In the event that certification becomes a requirement, since 2019 all new build projects must qualify for SNBS Level 4.7 The requirements for this level will become even stricter in the future, with the primary objectives focusing on CO₂ intensity.

In addition to these quantitative targets, Swiss Prime Site can also define other criteria to ensure that new builds are emission-free in the medium-term and generate energy in the long-term. These targets include density of use, life cycle costs, mobility, flexibility of use, summer heat protection, accessibility and densification. Complying with additional criteria, however, will depend on the progress of innovation in construction. Swiss Prime Site follows this market carefully and regularly assesses which innovations can be used to increase energy efficiency and reduce the CO₂ balance.

For existing properties, the greatest reduction potential lies in the procurement of electricity and heat as well as in renovation measures. Swiss Prime Site has defined short-, medium- and long-term targets for existing properties which are based on SNBS criteria and must be included in the individual property strategies. Building certifications are checked on a case-by-case basis, particularly in total renovations. Complying with the CO₂ reduction pathway requires the measures set out in Figure 4 to be implemented from 2020. Additional reductions can be made by implementing stricter measures from 2025 and 2035.

Operationalise climate goals

To operationalise the quantitative and time-based goals set out in the CO₂ reduction pathway to reduce CO₂ emissions in the buildings portfolio, Swiss Prime Site developed a holistic energy concept. This contains specific recommended actions to implement the CO₂ reduction strategy for properties. Measures for new build projects relate to both the procurement of energy and how it is produced, stored, distributed, consumed, measured and billed.

In the case of existing real estate, the holistic energy concept will determine the specific property strategies and multi-year plans across the whole portfolio, in which investments to reduce CO₂ emissions are planned long-term and aligned with the valuation.

The holistic energy concept will therefore ensure that the CO₂ reduction pathway is operationalised, measured and evaluated as a defined goal within the Company. It should be clear at any given moment where the Company is on the reduction pathway and under what circumstances any timely compensation measures may need to be carried out.

¹ The Intergovernmental Panel on Climate Change (IPCC): AR5 Synthesis Report: Climate Change 2014, Online, source: https://www.ipcc.ch/report/ar5/syr/

² CCS (Ed.) 2018: CH2018 - Climate scenarios for Switzerland. National Centre for Climate Services, Zurich.

³ Swiss Federal Office for the Environment 28.08.2019: 2050 Climate Goals, Online, source: https://www.bafu.admin.ch/bafu/en/home/topics/climate/info-specialists/climate-target2050.html

⁴ https://www.bfe.admin.ch/bfe/en/home/policy/energy-strategy-2050.html

⁵ Swiss Federal Office for the Environment 2018: Paris Accord, Online, source: https://www.bafu.admin.ch/bafu/en/home/topics/climate/info-specialists/climate--international-affairs/the-paris-agreement.html

⁶ For comparison: The CO2 price in the EU Emissions Trading System was around EUR 24 per tonne in 2019.