Net Zero Carbon vs. LEED: Key Points to Consider

No matter your thoughts on the green building initiatives being rolled out, it is almost a foregone conclusion that these practices will be implemented in the coming five to ten years.

From the regulatory authorities and developers to investors and corporate tenants, most, if not all, of the Parties involved are pushing to decarbonize their real estate footprints and do their part in minimizing waste, reducing costs (both direct and indirect), and improving efficiencies.

While the economic landscape may not be conducive to the up-front investments required to meet one of the green building certifications, there are some major long-term benefits to doing so.

Constructing or retrofitting industrial properties to be LEED or Zero-Carbon can not only provide a sizeable reduction in operating costs (which themselves have increased meaningfully over the past year) but they can make a property more attractive to investors and tenants when it comes time to lease or sell your building.

In the execution of these new policies, we have already seen numerous new developments targeting LEED or ZCB status, and this trend will only grow as we get closer to 2030 and 2050. New construction is obviously the low-hanging fruit, but, there are also ways to take advantage through renovation or redevelopment; something we will cover in our series on green buildings.

A key roadblock to this trend is simply the understanding of it. What do the various terms mean? How can one qualify to be certified? And how do the up-front investments translate into long-term benefits?

So with all that said, let’s dive deeper into various green building certifications being rolled out across the commercial real estate sector.

Zero Carbon vs LEED vs Carbon Ready – What’s the Difference?

You may have seen the terms ‘zero carbon,’ ‘carbon ready,’ and various LEED certifications in the marketing of new developments over the past several years. At first glance, it may be confusing as to what they mean, how they are related, and what the differences may be. Below, we will try to parse out the nuances to help you better understand their definitions, their criteria, and what the end-results look like.

Canada Green Building Council – Paths to Zero Carbon

What is a Zero Carbon Building?

Well, let us turn to the Canada Green Building Council (CAGBC) for their definition: “A zero-carbon building is highly energy-efficient and minimizes greenhouse gas emissions from building materials and operations. Until all emissions can be eliminated, high-quality carbon offsets can be used as a counterbalance.”

Further, “buildings of all types, from office towers to arenas, warehouses, multi-unit residential buildings, and schools, have been certified under the standards.”

According to CAGBC, there are currently two pathways, or standards, to achieving zero carbon status. While the exact criteria and specifications can be found on their website, we will highlight some of the nuances below.

Zero Carbon Building – Performance Standard

CAGBC’s ZCB-Performance certification is focused on a building’s operations, such as heating and cooling, and looks at utility and other data sources to issue an annual certification. While the Design standard focuses on the actual construction processes, input materials, and recapture mechanisms for new and renovated properties, the Performance standard can apply to all buildings looking to transition or ‘decarbonize’ through the balancing of Carbon and Energy factors.

Eligibility requirements indicate that for projects that achieve the ZCB-Design certification, they can achieve the ZCB-Performance certification within one year. Otherwise, to be eligible for the performance standard, a building must be in operation for at least three years. 

Zero Carbon Building – Design Standard 

In tandem with the Performance Standard, the ZCB-Design Standard helps to “guide the design of new construction and major renovations to help buildings achieve zero carbon operations.”

The third version – Design v3 standard – “establishes a clear path to zero operational carbon and a 40 percent reduction in new construction embodied carbon by 2030”; in anticipation of new regulations.

‘Carbon Ready’ – What Does it Mean?

We have seen this language used in the marketplace of late and, to be honest, weren’t completely sure of the exact definition. In fact, there is no administrative or regulatory body that has coined the term. Digging further, we found the below definition, courtesy of one of our AI friends, which places the term “Carbon Ready” in context with “Net Zero Carbon” – the World Green Building Council’s somewhat equivalent concept to CAGBC’s Zero Carbon Building.

“There isn’t a specific, universally recognized administrative body or formal certification process exclusively for “Carbon Ready” status for buildings. The term “Carbon Ready” is more of a concept or a goal that building projects aim for, focusing on minimizing the carbon footprint throughout the building’s lifecycle. This concept is generally integrated into broader sustainability and environmental performance standards.

“While not identical, “Carbon Ready” and “Net Zero Carbon” are closely related in their objectives. A Carbon Ready building is designed and built with the future capability to achieve net zero carbon emissions. This means that while it may not initially be net zero carbon, it has the infrastructure, design, and capability to reach this status as technology advances or as more renewable energy options become available.”

LEED Certification – How does it work?

Leadership in Energy and Environmental Design, otherwise known as LEED, is a globally recognized green building certification system, providing a framework for environmentally responsible building design, construction, operation, and maintenance.

Founded in 1993, the U.S. Green Building Council would develop the LEED certification program. Its Canadian counterpart, the CAGBC – formed later in 2002 – adapted the LEED program for Canada, with consideration for its different climate, construction practices, and regulations. 

Key Components of LEED for Industrial Buildings:

1. Sustainable Site Development: This includes minimizing the impact on ecosystems and water resources, managing stormwater, reducing light pollution, and encouraging alternative transportation.
2. Water Savings: Strategies to reduce water consumption and improve water efficiency in industrial processes and facility operations.
3. Energy Efficiency: Implementing energy-efficient systems and renewable energy sources to reduce greenhouse gas emissions.
4. Materials Selection: Using sustainable building materials, reducing waste, and implementing recycling and reuse programs.
5. Indoor Environmental Quality: Ensuring good indoor air quality, thermal comfort, and access to natural light to create a healthy and productive work environment.
6. Location and Transportation: Encouraging development of high-priority sites with surrounding density and diverse uses, as well as access to quality transit, green vehicles, bicycle facilities, and a reduced parking footprint.

Levels of Certification:
LEED certification is awarded at different levels based on the number of points a project earns in these categories:

• Certified: 40-49 points
• Silver: 50-59 points
• Gold: 60-79 points
• Platinum: 80+ points

Conclusion:

Understanding the nuances of green building design, construction, and operation can be tricky, especially as criteria are updated on an ongoing basis and as the marketplace uses various terms to describe them.

What’s important to note is that the industry as a whole is shifting towards a more sustainable approach for several reasons. Not only is the market trying to decarbonize to meet environmental goals, but incentives – from taxes to lending requirements – are also being considered to be phased in or already in place.

Furthermore, as the economy faces some tailwinds, owners can benefit from the long-term savings in operating costs as a byproduct of more efficient systems and design (if they can swallow the required investment). Finally, regulations continue to push investors and developers towards a zero carbon building status, and, as a result, it may simply not be possible to construct using traditional methods in the coming decades.

If you are interested in learning more about this, we encourage you to speak with a qualified professional, such as an architect or builder, and we would be happy to provide an introduction.

Next week, we will look more closely into design considerations and highlight a few key developments across the GTA targeting Zero Carbon Building – Design status.

For a confidential consultation or a complimentary opinion of value of your property please give us a call.

Until next week…

Goran Brelih and his team have been servicing Investors and Occupiers of Industrial properties in Toronto Central and Toronto North markets for the past 30 years.

Goran Brelih is an Executive Vice President for Cushman & Wakefield ULC in the Greater Toronto Area.

Over the past 30 years, he has been involved in the lease or sale of approximately 25.7 million square feet of industrial space, valued in excess of $1.6 billion dollars while averaging between 40 and 50 transactions per year and achieving the highest level of sales, from the President’s Round Table to Top Ten in GTA and the National Top Ten.

Specialties:
Industrial Real Estate Sales and Leasing, Investment Sales, Design-Build and Land Development

About Cushman & Wakefield ULC.
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries.

In 2020, the firm had revenue of $7.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com.

For more information on GTA Industrial Real Estate Market or to discuss how they can assist you with your real estate needs please contact Goran at 416-756-5456, email at goran.brelih@cushwake.com, or visit www.goranbrelih.com.

Connect with Me Here! – Goran Brelih’s Linkedin Profile: https://ca.linkedin.com/in/goranbrelih