Developing a Comprehensive Decarbonization Strategy
10 High-Impact Moves to Reduce Total Cost of Occupancy
Pursue new energy-purchase agreements and leverage wholesale contracts amid continued market volatility and higher demand for renewable power and voluntary offsets.
With companies around the world making sustainability commitments, Corporate Real Estate & Facilities (CRE&F) leaders must develop comprehensive decarbonization strategies for the workplace. Those strategies will reduce not only carbon footprint, but also Total Cost of Occupancy (TCO).
Depending on location and property type, CRE&F leaders can work with energy suppliers and renewable-energy companies to negotiate energy purchase contracts that drive cost savings, hedge future price volatility and increase budget certainty.
Where energy markets are deregulated (e.g., 17 U.S. states, certain Western European countries), occupiers are able to hedge energy price increases and secure energy from renewable sources. This strategy supports a credible path to decarbonizing the built environment—one of the largest drivers of carbon emissions.
How to Begin?
- Determine which facilities in the portfolio are in deregulated energy markets.
- Engage an energy procurement advisor to review current supply agreements.
- Ensure that energy suppliers align with company priorities. This will include price stability, renewables mix and cost savings. Communicate these expectations to supplier partners.
With the right contracts and strategy, CRE&F leaders can improve their mix of renewable power, reduce emissions and hedge against rising energy prices, which is particularly urgent in Europe, where the war in Ukraine has exacerbated energy price increases and raised the specter of shortages this winter.
- A global technology client with aggressive sustainability and renewable energy goals partnered with CBRE to secure a 24/7 renewable-supply agreement. CBRE is providing the client with renewable supply advisory services including market price validation, financial cashflow analysis, supplier negotiation support and industry knowledge.
- CBRE is the energy supply advisor for a U.S. insurance corporation and assists in the purchase of National RECs and carbon offsets. CBRE identified a drop in the National Green-e Renewable Energy Certificates market price and recommended the corporation take advantage of the price decrease by purchasing at least 50% of estimated annual volume.
- CBRE assisted a California-based client with an application to the state utility’s deregulated Direct Access program. Once accepted, the client secured an 18-month fixed-price contract, saving $415,000.
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