Decarbonizing building operations and manufacturing requires a shift in mindset and capital planning to ensure both cost-effectiveness and alignment with organizational goals. Commercial and industrial building owners, including those in hard-to-electrify sectors, can drive value through a phased approach to decarbonization using the Resource Efficient Decarbonization (RED) framework. This flexible framework, starting with energy reduction, allows for adaptive planning as technologies and regulations evolve, empowering building owners to take control of their decarbonization journey.
The RED framework, born from the Empire Building Challenge (EBC)—a collaboration with industry leaders—initially focused on low-carbon retrofits in New York’s tallest buildings. While the EBC provided invaluable insights, the framework’s lessons can be applied to various commercial, industrial, and multifamily buildings throughout New York State. Here’s how facility managers and business leaders can make the case for decarbonization.
Shifting Mindsets: Viewing Decarbonization as an Opportunity
To gain organizational buy-in, it’s crucial to reframe decarbonization from a cost burden or compliance requirement to an economic opportunity.
"Misconceptions about decarbonization can delay progress," says Sophie Cardona, Senior Project Manager at NYSERDA. One common misconception is that decarbonization requires an immediate, one-to-one replacement of fossil fuel systems with heat pumps.
The RED framework offers a flexible, technology-agnostic approach, allowing building owners to explore alternatives like thermal energy networks, geothermal, or wastewater heat recovery systems—especially for large buildings. This flexibility enables owners to choose the best decarbonization options for their needs, fostering confidence and openness.
Additionally, owners should move beyond simple payback periods and focus on long-term capital planning through discounted cash flow (DCF) analysis. This approach evaluates the net present value (NPV) of decarbonization upgrades versus a business-as-usual scenario, highlighting the long-term financial benefits and motivating action.
Taking Action Toward Decarbonization
Decarbonization begins with understanding a building’s energy usage, particularly fossil fuels. A condition assessment evaluates factors like building design, equipment life cycles, tenant turnover, and waste heat. This information guides engineering solutions and ensures decarbonization aligns with asset and market conditions.
The RED framework employs a four-step approach to decarbonizing thermal systems: reduce, reconfigure, reuse, and replace. Each step is designed to progressively reduce the carbon footprint while optimizing energy use and cost-effectiveness.
Reduce: Start with energy efficiency improvements (e.g., envelope upgrades, optimized systems, ventilation) to lower costs and reduce future equipment sizing.
Reconfigure: Transition to low- or moderate-temperature heating and cooling and reposition distribution systems for heat recovery, such as replacing high-temperature steam heating with hydronic systems.
Reuse: Capture and repurpose waste heat to reduce emissions and save energy.
Replace: Gradually replace fossil fuel systems with all-electric technologies, prioritizing equipment nearing the end of its useful life.
Economic Considerations: Net Present Value (NPV)
Instead of focusing on short-term payback, decarbonization projects should be evaluated based on NPV. This includes avoided costs (e.g., equipment replacement, maintenance, future fuel costs) and factors in energy savings, avoided penalties, and non-energy benefits such as improved air quality, higher property value, and enhanced occupant comfort and productivity.
Catalyzing Decarbonization Action
Shifting mindsets and implementing comprehensive capital planning are crucial for successful decarbonization. Since decisions evolve over time, starting with energy reduction and system reconfiguration allows organizations to make progress before committing to full electrification.
Many Empire Building Challenge projects have demonstrated positive NPVs for their decarbonization efforts. Additionally, tax credits from the Inflation Reduction Act can help reduce costs.
NYSERDA offers technical support through the FlexTech Program and funding through the Heat Recovery Program to assist organizations with evaluating and implementing decarbonization projects. Through collaborative design charrettes, organizations can accelerate their progress toward decarbonization goals.
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