Hello real green estate gang š You might have noticed Iāve taken a break from writing. This was due to some extended travels and an especially busy time that left me a bit frazzled. Iāve switched up the format of this newsletter to make it a bit more manageable, focussing on smaller bits of green built environment goodness that Iāve found interesting in the past week or so, rather than my longer form deep dives. Thanks so much for sticking with me, I hope you enjoy this new format!
š§ Dubai experiences 2 x annual rainfall in one day
I canāt figure out whether itās irony or karma at play here, considering the comments made by Sultan Al Jaber, head of Abu Dhabiās state oil company, who was president of COP28 last year. Remember, he said: āthere is no science out there, or no scenario out there, that says that the phase-out of fossil fuel is whatās going to achieve 1.5Cā. It was around the same time that leaked documents revealed plans to pitch oil and gas deals at the climate summit. Sorry, not pitch - āengageā with governments and oil and gas companies. Thereās clearly a difference. In any event, the UAE will need to use a lot of that oil and gas money to upgrade their infrastructure. The country has historically underinvested in drain water systems, while the sheer amount of concrete thatās been poured over the sand prevents natural water absorption. The president of UAE has indeed called for a review of the countryās infrastructure, so it looks like thereāll be a mini gold rush for engineering consultancies over the coming months.Ā
šø CBRE raises ā¬750 million green bond
I saw this story a little while ago and it caught my eye because 1) thatās a chunk of change, and 2) great, itās all going towards financing decarbonisation. But then I thought to myself, why arenāt there more green bonds? And, particularly, why arenāt there more green bonds for retrofitting? That seems like a perfect match: lots of upfront capital with long payback periods put towards financing projects with clear, measurable additionality. So, I did a bit of digging. It turns out that:Ā
most green bonds issuers finance new buildings š¤ØĀ
fewer explicitly finance retrofit projects š¦
even fewer publish detailed information on retrofit impact š² and,Ā
most retrofits are not aligned with Paris Agreement pathways šĀ
A 2021 green finance report from CBRE aligns with this: half of the green projects are new developments. The problem with financing new developments with green bonds is that there is no real additionality: i.e. the emissions reductions or removals would not have occurred without the green bond - kind of the whole point of using them to decarbonise real estate. Considering building regulations in developed countries require stringent energy efficiency standards for new constructions, itās questionable as to why green bonds are being issued for these in the first place. Then I found out that green bonds are voluntary anyway. Okay, what are we doing here? Are we doing green bonds properly, or not? Iād love to know if anyoneās seen some viable solutions here.Ā
š UK housing cannot cope with hotter summers
The Climate Adaptation in UK homes report from the Green Alliance came out towards the end of March, arguing that there is too little emphasis on how our homes need to adapt to our changing climate. Most of the focus at the moment is on mitigation: how we can avoid global temperature rise to limit the most extreme effects of climate change. But, as we all remember back in 2022 when Heathrow hit 40C, more extreme weather is already here. Home insurance increasing by 20% is my current Roman empire. I wrote about it in my last longer post; it's what I was thinking about when I wrote about Dubaiās rainfall at the start of this post, and itās all I was thinking about when my Dad sent me a picture of the tree that fell down just inches away from his house the other week due to strong winds - especially when he told me his insurance wouldnāt have covered the damage if it had actually hit.Ā
ā½ The real estate industry is about to eat the gas station industry
One of Brendan Wallaceās latest takes:Ā
ā1. Real estate assets are going to become core power plants (buildings will become micro utilities in it of themselves)
2. The real estate industry is about to eat the gas station industry and generate revenue while doing it: the gas station industry is a 1% net margin business -- when you make that a real estate business with EV chargers and buildings become power plants, that becomes a 20-30-percent net margin businessā
Climate Tech VC wrote an article on buildings as power plants around a year ago, which I highly recommend reading. The commercial model makes sense, and the technology is here, so whatās the hold up? According to MIT, itās still quite confusing for customers to engage with companies offering decentralised energy, also known as āvirtual power plantsā. Regulation and policy also need to catchup, which is reflected in a report which came out last year from Innovate UK on the future of decentralised energy. With that said, National Grid predicts 30% of our energy by 2030 will be decentralised, so it really does feel like weāre on the cusp of something big here.Ā
Thatās all for this week! Iād love to know what you think about the new format, even if you donāt like it very much.Ā