We have witnessed public perception around climate change evolve significantly in recent years. According to Pew Research Center, “The share of Americans calling global climate change a major threat to the well-being of the United States has grown from 40% in 2013 to 57% this year,” and 70% of Americans believe that environmental protection is more important than economic growth when it comes to policy decisions.
As we begin this new decade, a major front line for combating climate change will be through increasing building energy efficiency. Commercial buildings account for more than a third of all U.S. electricity consumption and are responsible for a staggering 18% of all U.S. carbon dioxide emissions. Modernizing our current built environment and reducing the energy we currently use is absolutely crucial for reaching a net-zero carbon economy and meeting the goals of the Paris Agreement.
While we cannot completely stop the impact of climate change, we can still mitigate its worst impacts, though we’re short on time. Looking ahead at 2020, here are my predictions:
1. Energy efficiency will be a key tool in combating climate change if improvements to energy intensity continue to expand. Energy efficiency requires one of two things: new or improved technologies, or new business models. Innovation is occurring in both areas. The next wave of success will come by way of communities imposing significant efficiency requirements on building owners.
2. Cities and states will continue leading the way when it comes to sustainability. In the past three years, cities and states have been the leaders in developing and implementing energy efficiency and carbon reduction strategies. For example, in 2017, Washington, D.C., was named the first LEED for Cities Platinum city in the world.
3. Carbon pricing will heavily impact the climate conversation. If we are serious about climate change and the necessity of decarbonizing our economy, a price on carbon has to be part of the conversation. Various markets that have created a price on carbon have been successful, so we need to take a thoughtful look at the value of pricing carbon in the U.S. economy.
4. The private sector will retain a long-term view despite the reduction in regulations related to energy and carbon emissions. While a few countries, notably the U.S., have rolled back regulations that relate to energy and carbon emissions, the response of the private sector has been limited. The private sector tends to make capital allocation decisions with a long-term horizon. For instance, car manufacturers and utilities plan decades ahead, so a short-term change in emissions policies won’t likely change their decisions or thinking. I predict the private sector will see regulatory rollbacks as temporary, creating no pricing or investment signals to modify their long-term plans.
5. Proptech investors will seek solution-based companies first. Investment in real estate technology companies hit a record high of $14 billion in the first half of 2019. In 2020, we will continue to see proptech investments that apply to all aspects of real estate. However, I suspect we will also see investors become more discerning as they seek companies with experienced management that are solving the real and significant problems.
6. Big data will expand thanks to proptech. In 2020, proptech will continue to utilize big data for better and faster decision-making. A few years ago, businesses collected data manually to find information that could be used for future decisions, but today, businesses can use big data to identify insights, make immediate decisions and measure their successes. The improved ability to work faster and stay agile creates a competitive edge they didn’t have before. In the coming decade, I hope we will see continued innovation toward companies capturing, analyzing and synthesizing existing data.
With a record number of Americans now increasingly alarmed about the wide-reaching consequences of climate change, leaders in both the private and public sectors are feeling immense pressure to focus on increasing sustainability as a core business strategy and to be good stewards of our planet. At the start of this new decade, we need to focus on truly modernizing the structures we inhabit daily by making our built environments more resilient. Let's operate in the green.