climate calculation vs financial calculation 1/2

In projects with students, it regularly clashes between economic and environmental cq climate objectives, and thus also between real estate and building physics tutors. Or between ‘the project developer’ and the ‘energy calculator’. And the battle is fought over the heads of the students ; they have to find a way out: put in black and white: go for the money of go for the Earth?

Anyway, the real estate development obviously wants a return on their investment in buildings. With our current flawed monetary system, there is no other way. While the energy calculator naturally wants the climate impact to be as low as possible, and preferably positive. Note: climate neutral here includes embodied energy! In other words, the building must be operationally energy neutral over a year’s time, but the Embodied energy invested (from fossil energy) must also be recovered (in renewable energy) by a certain date. For new buildings, its set at 2030. [1] As we would spread it out over even longer time, we are fooling ourselves and only increasing our problems. In fact, new buildings should no longer have any impact in terms of embodied energy, as since the Netherlands has already run out of its share of the 1.5 degree budget. Climate neutral at delivery is possible, but for practice a very big step. So 2030 it is.

But what I’m getting at is that this provides interesting discussions and insights of energy/climate in relation to real estate cq project development: project development requires a minimum number of m2 to be realized to make investment profitable. While climate neutral leads to the fact that you can only realize a limited , that is a maximum number of m2 to be able to earn back your investment (of fossil EE) in time (within the same building site boundaries). In fact, the approach physically and economically use exactly the same approach, only with a different measuring unit and result!

On the economic side you have investment, operational cost and return on investment, and on the physical side you have energetic investment, operational energy and return on investment, energetically. As follows:


As said, that of course provides interesting discussions, but mainly shows that the economic approach is not linked at all to a climate cq environmental approach, Both go in a different direction, economically more m2 is interesting, energetically less m2 is relevant, or at least a maximum to be able to be climate neutral within the project area.

In other words, money as a unit of measurement is just not suitable to deal with our resources cq Earth in a sustainable way.

The financial system has over the centuries only become further removed from that physical reality..

But by comparing them so directly does offer starting points for discussions between parties, since in principle the comparison is clear and understandable for everyone. Perhaps it would also help if in the discussions about investment both from economics and from energy thus we would work with this kind of the same similar concepts… From there explore how we can satisfy both (although it would help a lot more if the money system would be established on an actual physical basis (instead of on glitter gold as before, or on ‘nothing’ as currently).

Incidentally, if we would succeed in making climate-neutral buildings on delivery,  then the energetic maximum is less relevant and project development can also be satisfied. Then perhaps there can be an annual profit in both euros and energy. So in that case climate neutral buildings might be the solution for real estate developers to continue work….!

However what has not yet been included, both on the left in the energy equation, and on the right in the euro equation, are the effects outside the system boundary of a building, such as, but not only, the deconcentration of resources, i.e. depletion beyond the limits of recovery times. (including materials for renewable energy generation) Which is both energetically unaccounted for, and  rarely even has a price. Just as, for example, the gas and oil in the ground is free of cost, as is the fish in the sea. Only the pumping and “fishing” is valued and counted, not the “commodity”.

This basically means that there should be a maximum quota for resources, in the sense that no more can be extracted than can be grown or recovered annually in the same concentrations. About these effects outside the ‘building boundary’, in relation to project development, more next time.

Author: ronald rovers