#sustainability, #pathtozerocarbon

05 – Carbon, Risk + Time

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Why have the years 2030 and 2050 been chosen for many climate-related goals? Why have members of the United Nations agreed to try to limit global warming to 1.5°C (2.7°F), or 2.0°C (3.6°F)? These guideposts help align action on the urgent transformation to a low-carbon economy to avoid the risks of catastrophic climate change.

Why 2030, 2050, 1.5C, and 2.0C? Our Carbon Budget.

Our earth’s surface has warmed by around 1.0°C (1.8°F) since preindustrial times, and continues to warm, aligning within climate scientists’ predictions based on natural and human-caused emissions. The warming trajectory is currently around 0.2°C of warming per decade. This is due to both new emissions each year as well as past emissions that will continue to cause warming for decades or longer (The Science of Global Warming).

According to the IPCC’s 6th Assessment Report (2022), human actions since the widespread use of fossil fuels began have raising the average carbon dioxide (CO2) in the atmosphere from approximately 285 ppm to 410 ppm since 1850. Since carbon dioxide is the majority of human-caused emissions and atmospheric carbon dioxide levels track historically with global temperature changes, it is a reasonable proxy for overall greenhouse gas emissions.

To limit warming to around 1.5°C we can only release another 340-400 GT CO2e, a figure often referred to as our carbon budget. With a current human-caused emissions rate of around 60 GigaTons of CO2e/year, we have a limited number of pathways (scenarios) to stay within the budget. They all require urgent, near-term carbon reductions: they generally include important targets around 2030 and result in a nearly carbon-neutral economy around 2050. If we quickly reduce emissions over the next decade (scaling existing practice and technology), we give ourselves more time to spend this budget. This is important because it gives us more time to decarbonize the areas of the economy that will be more technically challenging and those where decarbonization planning and policy will take decades to be fully realized.

For the building sector, most the pathways for staying within our carbon budget include:

  • New buildings avoid burning fossil fuels for heating and hot water very soon, at least by 2030
  • Deep energy retrofits of existing buildings occur from now through 2050
  • Increase renewable energy production at the building and utility scales toward 100% by 2050
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Our Carbon Budget is 340-400 Gigatons CO2e to stay below 1.5°C warming by 2100. These scenarios show just a few pathways to meet that target, but all require significant near-term action that we are beginning to see in leading design teams, governments and corporations. Scenarios S2 and S5 overshoot the budget and then rely on future development and scaling of carbon removal technology, while S1 and LED rely on steeper carbon reductions over the next two decades. Scenarios from IPCC AR6

Urgency, Risks + Tipping Points

What are the major risk categories of climate change at 1.5°C, 2.0°C, or more? Extensive climate modeling has predicted various outcomes for how the earth, oceans, and atmosphere respond, answering many questions and illustrating impacts and risks graphically.

  1. Risk of increased ‘natural’ disasters – climate change increases the frequency and intensity of many weather-related natural disasters, adding to human suffering and financial cost from hurricanes, floods, heat waves and droughts. While global warming increases the frequency of extreme weather and disasters, it is difficult to correlate causality with specific events, which is why we talk about increased risk.
  2. Risks of climate change occurring too quickly for humanity and ecology to adapt. If slow climate changes occurred over centuries, we could more easily migrate and adapt. But changes in agricultural systems, locations and intensity of flooding and water scarcity, sea level rise, and other changes are occurring over as little as a decade, causing significant displacement and destruction.
  3. Risks of tipping points that irreversibly alter climate patterns or ecology as well as feedback loops that increase speed and intensity of warming.

We are already feeling many effects that have been predicted by climate scientists. For example, heat waves are increasing; they are the deadliest weather hazard in the US, responsible for an average of 65,000 hospital visits and 600 deaths annually, primarily children, the elderly, and the poor. Rivers – and drinking water – are often supplied by mountain snowpack as it melts in the summer; climate change is decreasing mountain snowpack across the western US and the globe, leading to significant population displacement and contributing to armed conflict.

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Risks increase with warming. This is a sample of some risks identified by the IPCC based on average warming scenarios. For instance, 99% of tropical corals are projected to be lost with warming of around 2.0C

Tipping points may occur at many scales, simultaneously:

  • Melting permafrost not only releases additional methane from decomposition, it also reduces snow areas that reflect solar heat back into space.
  • Ocean currents are based on seasonal temperature fluctuations. While we don’t know at what level of warming they may change, regional weather patterns would be drastically altered when they do.
  • It is estimated that 99% of corals will die at 2.0C. Since corals provide food and shelter for many species, this will significantly deplete fisheries around the world.
  • Stressed ecosystems tend to emit more carbon than they absorb. For example, warmer winters in the Rocky Mountains have allowed the bark beetle to kill millions of acres of trees. Additionally, wildfires from stressed ecosystems provide additional carbon releases into the atmosphere.
  • Since the solubility of CO2 in water goes down as temperature rises, the planet’s oceans will be able to absorb less of the climate pollution than they do now.

(Almost) Everything in the Future will be lower Carbon

When LMN remodeled our office in 2014, carpet tile embodied carbon was responsible for nearly a quarter of the emissions. Eight years later, carbon neutral carpet tiles are widely available. Significant carbon reductions across our industry are occurring in real time, driven by passionate materials scientists and our industry’s specification of lower carbon construction products and energy sources.

  • Energy Use: a majority of the electricity production in the US is pledged to be renewable by 2050, still early in the lifetimes of any building or renovation being planned. With no national plans to decarbonize gas use in buildings at scale, only all-electric buildings have a path to get to zero emissions. The time of day and year that energy is used is of growing importance as the electricity grid includes more renewables; grid-interactive programs are addressing this to reduce the carbon intensity of energy use.
  • Embodied Carbon: Building owners and design teams are working together to reduce their embodied carbon footprint. Building material manufacturers across our industry are engaged in research to reduce their embodied carbon as leading companies and governments demand these better products to take action within their portfolios. The free EC3 tool allows comparisons between construction products, allowing architects to find and specify products with low embodied carbon. Many manufacturers are working to improve their manufacturing process to be among the best on this platform. Dynamic LCA will be covered in Post 08.
  • Refrigerants: While many refrigerants have a Global Warming Potential in the 1,000s, CO2 has a GWP of 1, and new classes of refrigerants are being tested and used for different equipment, including A2L refrigerants. The MEP 2040 is doing research in this area.
  • Carbon Sequestration is part of many IPCC scenarios, and generally refers to removing carbon from the atmosphere. It is an emerging field that includes carbon sequestered and stored by trees and plants, technical carbon capture from air, and an increasing number of building materials.
  • Beyond technology, many companies and organizations are reducing their emissions and are working toward carbon neutrality, bringing other companies along with them. The SEC has proposed rules requiring companies to disclose their carbon risk. And many policies and regulations are also requiring carbon disclosure and reduction such as the Buy Clean policies and efforts of the Building Performance Standard Coalition.

Will we help drive each of these areas to decrease emissions quickly enough to keep us under 1.5C? As leaders of the design and construction industry, we have an outsize influence in creating a low-carbon future directly through our design, specification, procurement, and advocacy. Each area will decarbonize at a different rate, of course, and some areas of the economy are going to be more difficult to decarbonize.

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New lower-carbon products are changing our decision-making to reduce total carbon emissions. This chart compares the initial embodied carbon with the operational energy use carbon due to heat losses through the façade. Rigid insulation products have historically had a long carbon payback but new products using improved blowing agents have drastically changed the equation on the carbon payback of additional insulation. These charts do not include future energy use carbon reductions, embodied carbon reductions of mechanical components, or reductions in new off-site renewable energy induced by a new energy demand.

Living Within Our Carbon Budget: Time + Value

Living within our remaining carbon budget requires near term and sustained reductions, but if we hit our targets it will be the total quantity of emissions, rather than the timeframe, that will determine the long-term global warming temperature increase. For this reason, understanding the highly complex field of the time value of carbon is much less important than understanding carbon reduction strategies. However, there are three aspects where time value is important for the construction industry:

  1. Since nearly everything in the future will be lower carbon than today, delaying any action (such as construction) that emits carbon is very likely to reduce total emissions. Deep energy retrofits and other significantly carbon negative actions, however, should not be delayed.
  2. Using temporary carbon storage, such as within carbon storing building materials. While there is debate about the calculations, LMN’s view is that future handling of today’s biogenic carbon-storing materials will avoid releasing most of the carbon at the end of life.
  3. Incorporating a cost of carbon into design and construction decisions should involve a time value.
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Cumulative greenhouse gas emissions including embodied and operational carbon for the following scenarios: 1) new, code-compliant building; 2) new, high-performance building; 3) an existing building energy retrofit; and 4) an existing building with a planned energy retrofit in 10 years. Each scenario includes a 15-year tenant improvements cycle with decreasing embodied carbon due to widespread new techniques and products. The electricity grid starts at 300 kg-CO2e/MWh (left) or 100 kg-CO2e/MWh (right), and is assumed to be 100% renewable by 2050, flattening the energy curves in the future. This example is not generic: the order of the curves depends on the embodied carbon for each construction/TI stage, the building EUI (pre- and post-construction), and the local grid carbon emission rates.

The remainder of this section will focus on incorporating the cost of carbon into design and construction decisions, as this is the most direct way to value carbon over time. As noted in Post 01, many entities use different values for the cost of carbon based on different models. A recent paper suggests the damages from carbon emissions are around $185 per tCO2e.

Since emissions occur across all economic sectors, private and government policies will determine how the remaining carbon budget is spent. The simplest policy would include the economic considerations from carbon emissions within decision-making. Some leading companies are already adopting an internal carbon price to inform their decisions. Once a cost of carbon is established, economics can supply a way to project the economic time value of carbon, commonly using a discount rate. A discount rate prioritizes near-term costs over future costs and is already common in real estate financing.

For the cost of carbon, there are two main methods, with a third that combines them:

  1. Pay for damages. The first post mentioned the social cost of carbon (SCC), which is a method of incorporating current and future harms caused by carbon pollution into financial calculations. If carbon is not expected to be removed by the polluter, this cost should be distributed to those affected by climate change for resilience and adaptation strategies.
  2. Pay for carbon removal. We can also use the actual cost of removing the carbon from the atmosphere (ie, carbon sequestration). Technologies to remove carbon from the atmosphere (Direct Air Capture) are currently very expensive ($135-$340/tCO2e) and not scaled. Biological carbon removal (planting trees, for example) is an important part of the solution but cannot be scaled radically.
  3. Emit today, remove later. The first two can be combined if a robust bond or contract for future carbon removal is purchased. The damages for the emissions can be prorated for the time they are in the atmosphere causing climate change, added to the bonded future cost of removal.

Carbon removal costs are expected to drop significantly but with serious risks: some carbon removal companies may not be able to deliver the future carbon sequestration at cost, or perhaps at all, meaning claims of ‘carbon neutrality’ carry a risk of being unfulfilled. And since carbon is not readily visible, proving sequestration and storage will be difficult with some methods. Much more information on carbon removal will be in Post 08.

Incorporating the cost of carbon into project decision-making has several advantages. The cheapest carbon emissions reductions will be prioritized. In fact, all emissions reductions that cost less than carbon damages or removal will be incentivized and likely realized. These include many embodied carbon extraction and manufacturing reductions, operational energy use reductions, and more. The EC3 Tool, for example, allows a cost of carbon to be included when comparing bids.

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In this diagram (reprised from Post 01), emissions are re-prioritized to value near-term reductions based on time using a cost of carbon emissions (damages) and a discount rate. Economics uses a discount rate to value the present over the future (a discount rate of zero would value them equally). In this case, the diagram illustrates that if a company purchased bonds in year 0 to remove carbon for the first 60 years (with a fixed cost for carbon removal) at an economic discount rate of 3%, the cost for years 16-30 would be ‘discounted’ around 40%. The calculations are much more complex than discussed here, but illustrate one method of valuing carbon economically over time.

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We anticipate that the intersection of these three time curves will determine the most cost-effective methods for climate action once low-cost emissions redutions are exhausted. The cost of carbon removal (including carbon-storing materials) is heavy in Research and Development now, and will come down in the future. The social cost of carbon (damages) will increase as our climate nears several tipping points, including the increased cost of constructing buildings and infrastructure that is resilient to climate change and sea level rise. Lastly, the cost of reducing carbon emissions is currently low but will increase as options are exhausted.

Conclusions and Recommendations

We understand many of the climate risks, we have a very small budget remaining, and we have very little time to act to avoid the worst consequences of climate change that occur above 1.5°C. The next three Fundamentals posts cover the major pieces of the IPCC scenarios: Buildings, Energy Use + Carbon (Post 06), Embodied Carbon 101 (Post 07), and Carbon Offsets, Sequestration + Honesty (Post 08).

  1. To reduce carbon emissions, consider delaying construction or remodeling instead of building new.
  2. Use a cost of carbon with discount rate in project carbon and economic decisions.

 

Please email any questions or comments to Kjell Anderson, kanderson@lmnarchitects.com

Thanks to our external collaborators and peer reviewers
Phil Northcott, C-Change Labs; David Mead, PAE; Michelle Amt, VMDO; Alex Ianchenko, Miller Hull; Efrie Escott, Kieran Timberlake; Erin McDade, Architecture 2030; Indro Ganguly, University of Washington; Larry Strain, Siegel & Strain

LMN Architects Team
Huma Timurbanga, Justin Schwartzhoff, Jenn Chen, Chris Savage, Andrew Gustin, Kjell Anderson

The text, images and graphics published here should be credited to LMN Architects unless stated otherwise. Permission to distribute, remix, adapt, and build upon the material in any medium or format for noncommercial purposes is granted as long as attribution is given to LMN Architects.

 

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