What is embodied carbon in the real estate sector and why does it matter?

Embodied carbon refers to the greenhouse gas (GHG) emissions, measured in carbon dioxide equivalents (CO₂e), associated with materials and construction processes throughout a building’s lifecycle.

Buildings generate 39% of annual global GHG emissions, with 28% coming from operations of buildings and 11% coming from building materials and construction processes (i.e., embodied carbon). Embodied carbon emissions are expected to become more representative of the annual global GHG emissions from the real estate sector over time as operational energy efficiency increases and local grid decarbonization drive reductions in operational emissions.

According to Architecture 2030, an independent non-profit organization, an addition of 230 billion square meters of new floor area to the global building stock is expected by 2060 to accommodate the largest wave of urban growth in human history. This is the equivalent of adding an entire New York City to the world every month for 40 years.

Breaking down embodied carbon

These emissions occur throughout different lifecycle stages of a building, as illustrated in the image below.

Embodied carbon, therefore, includes upfront, use stage (excluding modules B6 and B7), and end-of-life emissions as represented in the image above from the World Green Building Council (WGBC) report “Bringing embodied carbon upfront.”

Upfront embodied carbon

Upfront embodied carbon refers to the emissions from buildings that have already been released into the atmosphere before the building is even occupied. These emissions are related to materials production (modules A1-A3), transportation to site (A4), and construction-installation processes (A5).

This subset of embodied carbon emissions is most material for new construction assets, as upfront carbon is ‘locked-in’ from the moment the asset is built and cannot be reverted. However, understanding the upfront emissions associated with the usage of the material can be used by standing investment portfolios to inform future decisions – such as whether to renovate or demolish an asset or how to better dispose of building elements, etc. – as this can be balanced against the reduction of future downstream embodied carbon emissions.

Use stage and end-of-life embodied carbon

Use-stage and end-of-life embodied carbon are downstream emissions and occur after the practical completion of a building. These emissions are related to materials and processes for maintaining the building during the use stage and end-of-life treatment of building elements/materials after its use (identified in modules B1 to B5 and C1 to C4). Modules B6 and B7 are operational emissions and are therefore not accounted for as downstream embodied carbon emissions.

Downstream embodied carbon is material to both new construction and standing investment portfolios.

More than construction

In addition, it is important to note that embodied carbon is not only material for new construction assets but also for major renovation projects. In light of operational net-zero targets and retrofit programs that accompany them, embodied carbon from energy efficiency refurbishments will also become more significant and have to be accounted for in one’s carbon budget.

The Institute of Structural Engineers illustrates that a building’s embodied carbon footprint is not uniformly spread throughout different lifecycle stages. This means that not only do different lifecycle modules of embodied carbon apply to new construction assets and major renovation projects, but also that the magnitude of their impacts can vary significantly.

GRESB is sending a signal to the industry with a new indicator

In order to continue to push the real estate industry forward and to support the collection of embodied carbon data as part of carbon accounting and commitments, the GRESB Foundation has approved the changes for the 2023 GRESB Standards, and a new indicator on embodied carbon was added.

The GRESB Standards will start collecting embodied carbon emissions data from new construction assets and major renovation projects separately, alongside the life cycle stages and building layers included in the entity’s embodied carbon analysis for assets/projects completed during the reporting year.