GPE’s internal carbon price of £95 per tonne, which originally launched in 2020, is transforming behaviour and driving innovation in the race to net zero. Covering both embodied carbon and operational emissions, this internal carbon price goes further than others in the UK real estate sector. All contributions feed into a Decarbonisation Fund, created to support the deep retrofitting of the existing portfolio, further accelerating the transition to net zero and building in climate resilience for the future of London.
£95 per tonne internal carbon price
£403,750 Decarbonisation Fund in first year
Lower carbon spaces for occupiers
Reduced risk of stranded assets for investors
As one of the founding signatories of the BBP Climate Commitment, GPE has developed a roadmap to decarbonise its business and be net zero by 2030. This followed on from the launch of its Sustainability Statement of Intent, ‘The Time is Now’, which sets out the four pillars of GPE’s approach to sustainability.
In developing this roadmap, first published in November 2020, GPE identified that, even if it achieved its ambitious targets to reduce both embodied carbon and energy intensity by 40% by 2030, there would still be around 18,000 tonnes of projected emissions to offset annually. This focused attention internally on how to decarbonise faster.
Drivers for becoming a net zero carbon business include:
GPE’s sustainability team completed a review of best practice, peer activity and the latest research around net zero carbon. This led to a series of recommendations, including:
The sustainability team took these recommendations to the Sustainability Committee, which is chaired by Chief Executive Toby Courtauld and comprises Executive Committee members from across the business. There was full support for the internal carbon price and a desire to move even faster.
The Sustainability Committee upgraded the internal carbon price to cover not only embodied carbon on developments (Scope 3), as initially recommended, but also operational emissions (Scope 1 and 2). This scope exceeds what others in the UK real estate sector are doing, demonstrating industry leadership.
GPE is integrating the internal carbon price into development appraisals, incentivising design and development teams to reduce carbon throughout project build stages. This drives circular economy progress through reuse of materials, positioning of cores and pre-fabrication. Contributions into the Decarbonisation Fund are calculated at definitive appraisal and paid at practical completion.
50 Finsbury Square will be the first development project to feed into the Decarbonisation Fund. Due to complete in Autumn 2022, it will contribute an estimated £600,000. However, as the project team is now financially incentivised throughout the build to cut carbon, this could be reduced. Embodied carbon savings have already been achieved by retaining the structure, recycling cladding and reusing glazing. The project is also designed to be highly operationally efficient and adaptable for a wide range of potential future uses.
In the first year, the internal carbon price from Scope 1 and 2 operational energy use contributed £403,750 to support decarbonisation initiatives across the existing portfolio. This is allowing property and technical services teams to be more ambitious around retrofit opportunities, rather than being limited by service charge constraints. The property and technical services teams submit the business case for proposals, as they are closest to what each building needs. The Sustainability Committee then assesses proposals.
Building Management System (BMS) upgrade: Replacing existing BMS controls in an energy-intensive building with a self-learning BMS controls and optimisation system. This monitors and optimises BMS performance, drawing on a range of data, including energy meter inputs and daily weather forecasts, to determine the building’s thermal response and automatically adjust set points. This would replace the current system around five years ahead of the end of its economic life. The shortlisted provider offers an insurance-backed guarantee that stated savings will be achieved.
All-electric heating solution: Replacing a gas-fired boiler with an all-electric heating system and replacing radiators with direct electrical heaters. This solution incorporates DX coils with a low-energy, reverse integral refrigeration circuit that can heat or cool supply air from Air Handling Units (AHUs). Additional benefits include reducing maintenance requirements by around 50% and improving resilience.
How to engage with occupiers on retrofitting improvements?
Major retrofitting projects impact on occupiers in different ways, so occupier engagement is needed at a range of levels, including portfolio managers, property directors, occupier services managers and technical property services teams. For instance:
Early discussions with occupiers have been very positive, with improvements supporting occupiers’ own ESG goals and often providing service charge savings over the long term. The initial response from joint venture partners is also promising, with willingness to match investment to improve assets.
Janine Cole, Sustainability and Social Impact Director at GPE
“The introduction of an internal carbon price of £95 per tonne has been transformational. With a carbon cost now included in all our development appraisals we have ensured that embodied carbon is considered alongside financial performance for all developments, this change in approach has created behavioural change in our business and as a consequence brought forward the delivery of our first net zero carbon building.”