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Latam's Road to Decarbonization in the Real Estate Sector

By Ruth Corona - JLL México
Energy and Sustainability Services Director


By Ruth Corona | Director - Mon, 06/05/2023 - 10:00

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As the world emerges from the pandemic and seeks to tackle multiple other pressing challenges, ranging from war in Ukraine and food shortages to inflation and cost-of-living pressures, it is vitally important we do not lose collective focus on the catastrophic risks posed by climate change. With the built environment responsible for around 40% of carbon emissions, the real estate industry must play a central role in enabling companies, communities, and cities to deliver their net-zero goals. More broadly, ESG is now a major priority for our investor and occupier clients who are looking to reduce investment risk and increase their resilience in the face of global social and environmental challenges.

It is encouraging to see that our industry’s collective response is spearheaded by the growing number of net-zero carbon commitments, as governments and companies act to limit global warming to 1.5°C, the urgency of which was reinforced by the IPCC’s latest report that calls for immediate, ambitious, and sustained efforts to slash emissions. At the same time, the pandemic and continuing advances in technology have changed how and where we work, with long-term implications for health, well-being, and inclusivity.

In Latin America, cities are responsible for 66% of greenhouse gas emissions. Cities around the world are addressing the climate crisis by making concrete commitments to achieve net-zero emissions, as well as implementing specific policies, regulations and incentive programs to tackle emissions from their most polluting sectors. 

It is estimated that the built environment is about to experience the largest wave of urban growth in history and the world's built-up area is expected to double by 2060. Let's remember that the best building is the one that is not built; we should make use of the properties that are already built as 80% of the office buildings that exist today will still be in use in 2050. 

The relevance of the real estate sector as a decarbonization strategy to achieve emissions reduction targets is because air, water, waste, energy, and land are impacted at a global level. This is why we must join together in the effort. — the real estate sector is not the only industry responsible for emissions; we must include all other contributors. National, regional and local authorities across the world are setting ambitious sustainability targets. Business as usual is not a viable solution and we need to harness the power of synergy to meet our collective goals. 

The Latin American region is already one of the most urbanized in the world, yet some of this growth has occurred without proper planning. This has led to carbon-intensive urban sprawl and has resulted in building systems and infrastructure that are particularly vulnerable to climate risk. 

JLL's new report, Decarbonizing Cities and Real Estate: The Latin American Landscape from a Global Perspective, provides an overview of what 10 of the region's leading cities are doing in terms of climate targets and policies, especially regarding buildings. 

The effects of climate change are already being observed, especially in Latin American cities. We have a long way to go to have a process to measure emissions in operations and emissions in construction processes, which is fundamental for the transition to net-zero emissions.

Decisions made today will determine the successes and failures in achieving Net Zero Carbon (NZC) in the coming decades. That is why Latin American cities should try to adopt regenerative and circular construction principles that can mitigate the negative impacts of new development. It is not enough that pioneering cities are making an effort and implementing actions.

If we recall the Paris Agreement, many policies and regulations that were put forward to achieve the NZC target by 2050 remain largely absent in Latin American cities. It is important that all sectors move toward net zero, not only companies but also the education sector and government. It is useless for pioneering countries to implement measures and go much further if other countries do nothing; hence the importance of having Latin American cities join us. We don’t need to lower the bar for Latin America, but to share strategies and success stories to stay at the same level.

Strategies to decarbonize cities also cannot be done in silos. It is necessary to include aspects around social impact, circularity, urban greening, biodiversity and climate resilience. Latin American cities will need to adopt a truly holistic approach that embraces social value and shared equity alongside net-zero efforts. Mexico, like other Latin American cities, has driven programs and regulations to meet its NZC targets. 

It is also  important to mention that while governments are launching regulations, there are many corporations that have a global presence, and many are in Latin America, including Mexico. This provides a great opportunity for the countries that are ahead of us to pull and push us. It is a good thing that companies are moving toward net zero, but we still need to have mechanisms that make it easier for them to carry out these actions and that they have clarity on where to go and how to start.

From recent JLL research, we have found that the emissions from the main European, Asian and UScities are higher than those reported for Latin American countries. However, how can we be sure that these numbers represent reality? What factors are considered when issuing a report? Is information available in all cases? These questions can only be answered in synergy, sharing knowledge between countries, in such a way that we are compared, under the same standard and following the same methodology.

Mexico City has committed to reducing half of its embodied carbon emissions by 2030 through the C40 Clean Construction Declaration. This will help reduce the impact generated by construction and demolition waste, and it will also boost energy efficiency.

Another program launched in Mexico is the "Mexico City Solar City Program." This is a socially conscious initiative aimed at reducing energy poverty through the creation of distributed energy systems in communities with limited access to conventional electricity. 

On the other hand, Guadalajara is promoting the Guadalajara Metropolitan Climate Action Plan. During COP26, Guadalajara received the United Nations Global Climate Action Award in the Climate Leader category for its metropolitan-scale Climate Action Plan, or PACmetro. 

In Mexico City, a program called Reto Edificios Eficientes(REE) (Efficient Buildings Challenge) was launched to reduce energy consumption in buildings throughout the city. Its goal is to have a 10% saving in the energy consumption of each registered building within one year. 

As we have seen, Mexico is a country where many ambitious initiatives are being implemented across a broad spectrum of environmental and social goals along with decarbonization efforts, such as resilience, biodiversity and circularity. It is essential that other countries perceive us as a country that has a lot to offer, that we are on the right track and that we can meet the same standards. Do not segment all of Latin America as developing countries. With the right strategies, not only Mexico but other Latin American cities can achieve these goals and create more livable and sustainable urban environments.

With the growing threat of climate change among cities and countries, we must leverage partnerships and think as a society to create a more holistic vision and achieve the potential of all the proposals that are being implemented and better replicate success cases. Many cities are doing very well and successful actions should be replicated.

Achieving net zero cannot be done alone. There will be a point where limits will be reached and if the government does not have the infrastructure and does not provide the tools to continue with the net-zero goals, it will be difficult to achieve them individually. Also academia must be in synergy regarding researching new technologies and processes to achieve this goal and, of course, the private sector, which provides most of the investment, must be involved.

Photo by:   Ruth Corona

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