Decarbonization: Benefits and Strategies for Building Energy Optimization

According to the U.S. Department of Energy[1], “Buildings need to be flexible, resilient, and smarter. They use 74% of our nation’s electricity, accounting for $370 billion in annual energy costs. Improving the energy efficiency of buildings is critical to lowering energy costs, strengthening resilience to extreme weather events, improving grid reliability, and making residential and commercial buildings more comfortable and affordable for all Americans. At the same time, buildings can also be a part of the solution”.

Decarbonization is simply the process of reducing carbon dioxide (CO₂) or carbon emissions. It typically involves reducing fossil fuels, like vehicles or buildings, to power something. It replaces fossil fuels energy sources like coal, gas, or oil with renewable or alternative energy sources, such as wind, solar, geothermal, hydropower, or biomass. The change from fossil fuel to renewable or alternative energy is not always feasible due to cost. The best way to determine a strategy or plan to reduce the carbon emissions for a commercial or industrial building is to conduct a decarbonization study.

A Decarbonization Study is a technical analysis of a building or portfolio of buildings that assesses its carbon footprint and lays out a strategy for reducing carbon emissions. When Energy Sciences works with a commercial or industrial client to conduct a decarbonization study, a target reduction amount or percentage and an end date are established to meet the goals established at the beginning of the study.

One of the most compelling benefits of performing a decarbonization study is that it outlines a path to reducing operating costs and optimizing resources by implementing energy efficiency measures. Our engineers at Energy Sciences have vast experience identifying energy optimization measures that can typically drastically reduce operating expenses, freeing up capital to divert to other mission-critical resources. Establishing priorities for implementing energy efficiency measures and resource optimization strategies identified through the study is critical. Our engineering and technical team are industry experts in the energy efficiency field and can provide ongoing customer support to streamline the process. We function as an invaluable extension of your team to fill technical gaps and supplement our client’s unique resources.

Decarbonization studies can provide value to different stakeholders, depending on their role and perspective. For example, a CEO or CFO primarily focuses on stock value, bottom-line financial, and operating resilience. For these C-Suite leaders, the top three benefits may be something like this:

• Shareholder value: a focus on operating efficiencies, resource optimization, and a carbon emissions reduction strategy will likely attract investors, and increase the market valuation of the company.
• EBITA (Earnings before interest, taxes, and amortization): operating margins improve when you reduce operating expenses because operating costs decrease relative to earnings.
• Operating resilience: Over the last several decades, much focus has been placed on dependence on fossil fuels. As new technologies evolve, giving our clients options to choose the best-fit technology solutions, businesses will reduce risks, protect themselves from market volatility, and recover from changing conditions.

We must examine each category to fully understand the scope of a decarbonization study, which typically involves analyzing the three scopes created by the Greenhouse Gas (GHG) Protocol.

• Scope 1 emissions are direct emissions from sources owned or controlled by the company. Examples include emissions from burning fuel in vehicles, boilers, and furnaces.
• Scope 2 emissions are indirect from purchased energy, like electricity, steam, heat, or cooling. Examples include emissions from generating electricity used in buildings.
• Scope 3 emissions are indirect emissions in the company’s value chain, including upstream and downstream emissions. Examples include emissions from buying, using, and disposing of products from suppliers 

In addition to the three GHG Scopes, there is a separate voluntary concept called “avoided emissions” which includes reductions from producing more energy-efficient products. In addition to the different scope categories, there are five pillars of decarbonization, as outlined below.

• Energy Efficiency: Reducing energy consumed by a given asset or assets, for example, a commercial or industrial building, by implementing energy efficiency measures.
• Clean Electricity: Reducing the intensity of carbon emissions in electricity generation.
• Electrification: Switching end uses to electricity.
• Clean Fuels: Reducing the carbon emissions intensity of liquid and gaseous fuels.
• Carbon Capture: Capturing carbon dioxide (CO₂) from a facility or removing CO₂ from the atmosphere.

The key to success is having an actionable plan as part of the study. A good starting point involves a priority list of low-cost, no-cost, or easy-to-implement energy efficiency measures. Often, the cost savings from implementing these measures can provide a means to fund more capital-intensive projects that yield higher energy savings opportunities. One of the ways that Energy Sciences has identified low-cost or no-cost energy efficiency measures is through commissioning or retro-commissioning building systems. This process involves a thorough evaluation and inspection of building systems, including but not limited to using Building Automation Systems (BAS).We can also evaluate ways to optimize industrial processes  using similar efficiency improvement methodologies.  Utility rebates are often associated with retro-commissioning, depending on the local utility programs. We typically find an average of three percent (3%) annual energy reduction just by optimizing the BAS and frequently find much higher savings.  According to the U.S. Department of Energy, “The Building Technologies Office (BTO) is supporting research, development, and demonstrations that accelerate the adoption of high-performance interoperable controls solutions that are responsive to occupant and grid needs. Successful implementation of high-performance control has been shown to reduce HVAC energy use in commercial buildings by 30%. Nationwide deployment would correspond to an absolute reduction of >3% of total U.S. energy consumption. That is roughly equivalent to the energy produced by all U.S. solar and hydropower combined in 2021”[2]. 

Once the low-cost, no-cost measures are defined and implementation has begun, a strategic framework for capital projects can be completed. A capital plan can be developed over a specific timeframe. Throughout this process, if the client is interested, our team can evaluate opportunities for leveraging cost offsets. Some examples of cost offsets are utility incentive programs and rebates, low-interest loans, PACE funding, and energy-related tax strategies. Regulatory and compliance issues should also be considered.

One challenge we encounter when conducting a decarbonization study is data collection. We have developed several ways to collect and analyze the data necessary to complete a successful study. Our highly trained technical staff is adept at determining the best method, which varies depending on the number of buildings involved and the complexity of the systems. Proper data collection, measurement, and verification are critical to analyzing the baseline and the associated energy savings for each measure implemented.

Numerous efforts have been made to drive new technology to help reduce carbon emissions. The U.S. Department of Energy established the ETCB, the Emerging Technologies Collaborative for Buildings Stakeholders. The ETCB has a base of stakeholders from key areas who collaborate to drive technology to support decarbonization. The stakeholders include manufacturers, regional energy efficiency organizations, researchers, state agencies and energy offices, trade associations, utilities, and private sector funding resources.

As energy consultants, we always weigh the costs, benefits, and risks when making recommendations. With any strategy, we consider regulations and code compliance, overall financial costs vs. benefits, customer constraints, etc. Energy regulations and policies are constantly evolving. As a cost-benefit example, it is essential to note that energy efficiency will reduce energy demand, but increasing electrification will increase it. In 2050, power demand is expected to be more than double what it is today.[3] Planning with your future goals for five years, ten years, or beyond in mind, and then backing into a strategy from there is often the best way to move forward.

Article written by: Diana Nash, Customer Engagement Manager

[1] U.S. Department of Energy. (n.d.). Emerging Technologies. Retrieved from https://www.energy.gov/eere/buildings/emerging-technologies

[2] U.S. Department of Energy. (n.d.). Building Controls. Retrieved from https://www.energy.gov/eere/buildings/building-controls

[3] International Energy Agency. (2021). Net Zero by 2050: A roadmap for the global energy sector. https://iea.blob.core.windows.net/assets/deebef5d-0c34-4539-9d0c-10b13d840027/NetZeroby2050-ARoadmapfortheGlobalEnergySector_CORR.pdf