Interview
It’s not so complicated!
Marcel Kucher, CFO, Swiss Prime Site AG
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What are the most important levers for decarbonizing buildings?
In the construction and renovation process, reducing embodied emissions is very important. Recycling or leaving whatever you can of the existing building in place when you upgrade it, using timber over steel and concrete where possible, and leaning into the circular economy is effective. Almost 80% of a building’s emissions are produced during its operational life, with heating and hot water responsible for the largest amount. Switching from fossil fuels to low-carbon, renewable energy options is therefore very important, as is producing energy onsite, for example through solar PV or heat pumps, and finally better insulation. For us the most challenging aspect as a building owner is the part we can’t control, which is how the building is used. We address this by working with our tenants, for example through green leases. This requires mutual commitment from owner and tenant, who jointly agree on measures like the heating level, waste disposal, etc. Changing behaviors is the second most important thing.
What has been your experience of decarbonizing your own building portfolio?
It’s not so complicated – the most important thing is that the management of a real estate company has it on its radar and wants to achieve the decarbonization! There may be slightly higher investment costs upfront, but the economics do work over the long term. We have set ourselves a goal of being operationally carbon neutral by 2040 and the cost of doing so is already included in the valuation or all our 160 buildings. The other important element is that you have a long-term plan and include the green transformation of the buildings in their regular upgrade planning, which can lower the cost significantly. Switzerland is well-positioned for key building decarbonization technologies like geothermal heat networks because it has been deploying them for 20 years. There is a functioning ecosystem of equipment suppliers, engineers, and installation specialists as well as clear rules where you can drill. Plus: the Swiss electricity production is almost 100% carbon neutral with its strong focus on hydro power.
When upgrading the efficiency of existing buildings, how important are incentives and subsidies, especially from an economic perspective?
We fundamentally belief that decarbonizing is our company’s corporate responsibility. For us, subsidies are not the most important driver in our decision making – but obviously we appreciate support. However, we also need to make profits, so we cannot tear out five-year-old equipment with a 40-year lifespan. In addition to carrots and sticks, what is needed is more talk about the benefits rather than more regulation. It’s about knowledge, transparency, and education. And it’s about changing mindsets. We talked to the architects about the prospects of circular economy for one of our buildings, and they said: «that’s complicated, we can build new for the same price.» We insisted and eventually they started to embrace our thinking. So, glass that would have been thrown away was used to create a light installation. Concrete from the old building was turned into benches – these were new things. Changing from a mindset of «everything new,» to «let’s work with what we have.»
How much of a difference does a building’s location make in your equation?
Type of building use is probably more important than location when it comes to decarbonization. Commercial buildings have two advantages: They are larger which makes it easier to plan things with the teams that manage them, and tenants are typically large companies who are more likely to value environmentally minded upgrades – and embrace them also by signing green leases or other cooperation agreements. In terms of location: Centrally located buildings might have the advantage that they can often be connected to district heating systems – which makes decarbonization easier and cheaper.
