The five key takeaways from COP28 -What they mean for the real estate sector?

Following a couple of weeks of heated discussions, bold statements and hopeful negotiations, the world’s most anticipated climate change conference, UN’s COP28 2023, has come to an end. As mentioned in a previous article, some of the most interesting topics were the first ever global stocktake, specific strategies and tactics for reducing the carbon emissions and phasing out fossil fuel, which is especially important considering the conference takes place in the United Arab Emirates.

What are the top 5 key takeaways from COP28?

Dr. Sultan Al Jaber, COP President, said during the event “If anything, judge us on what we will deliver at the end of COP28”. In this article, we systemize the key ideas, decisions and actions from the COP28 Climate Summit and discuss what they mean for the real estate sector.

1. Climate finance initiatives

One of the significant announcements was the creation of a $30 billion fund by the UAE President Mohammed bin Zayed Al Nahyan for global climate solutions, aiming to attract $250 billion of investment by the end of the decade. The enthusiasm of the parties to COP28 led to pledges amounting $700 million to assist lower-income countries in coping with the impacts of climate change. These initiatives emphasize the recognition of urgent need for increased investment in climate action and the development of more systematic financial approaches to address climate issues.

What do the climate finance initiatives from COP28 mean for the real estate sector?

As a result of these decisions and the initiatives related to them, real estate stakeholders and investors would expect a growing pool of funds for climate-related projects, including sustainable buildings, remodelling and carbon neutral construction. The emphasis on sustainable and resilient infrastructure will continue to rise and result in more funding for innovation and execution of such projects.

2. Agriculture and food systems

Over 130 countries signed a declaration to incorporate emissions from agriculture and farming into their national climate action plans. This move signifies the recognition of agriculture's role in climate change and the need for sustainable practices. Furthermore, a coalition of food and agriculture organizations committed to scaling regenerative agriculture, aiming to transition over 160 million hectares of land towards practices that protect soil and reduce carbon emissions.

What do the agriculture and food systems initiatives from COP28 mean for the real estate sector?

In terms of real estate, these regulations would affect predominantly the land use policies, affecting existing and new real estate developments. On community, municipal and state level, more sustainable agricultural practices would drive the need for responsible farming and supply chains. With rising awareness, the potential for innovation and collaboration between real estate technology leaders and farming stakeholders would strengthen in order to meet ESG requirements and develop sustainable agricultural communities, powered by technology.

3. Renewable energy targets

One of the greatest commitments during COP28 was the renewable energy discussion.  A group of 118 countries agreed to triple renewable power generation capacity to 11,000 GW and double energy efficiency within this decade. This ambitious goal underscores the critical role of renewable energy in mitigating climate change and the need for substantial government support and financing to achieve these targets.

What do the new renewable energy targets from COP28 mean for the real estate sector?

The announcement of significant renewable energy funds, particularly for emerging and mid-income countries, would result in accelerated project approvals. Real estate stakeholders will see not just an increased investment interest in existing zero emissions developments, but also be challenged to innovate and step up to meet new requirements. This includes incorporating more renewable energy sources in community and building planning, as well as the use of new technologies.

4. Methane reduction commitments

Fifty oil and gas companies pledged to achieve near-zero methane emissions by 2030, with plans to be submitted by 2025. A fund for methane abatement projects in emerging markets and developing economies was also announced. This commitment is crucial, as reducing methane emissions is an effective way to quickly halt temperature rises, with 70% of energy-related methane emissions being addressable through existing technologies.

What do the methane reduction commitments and pledges from COP28 mean for the real estate sector?

The investment interest in decarbonization of real estate practices and technologies is rising. Real estate companies can leverage this shift by innovating, procuring and implementing low-carbon technologies as well as practices to reduce the environmental footprint of existing developments. These technologies already exist. Their integration and alignment with ESG goals will be crucial for the success of new real estate developments.

5. Fossil fuel phase-out

A central aspect discussed was the need to reach a consensus on phasing out fossil fuels. The draft climate deal at the COP28 summit suggested several options for countries to reduce greenhouse gas emissions, notably omitting the explicit call to "phase out" fossil fuels. This development indicates a shift from the initially more aggressive stance on fossil fuel reduction. The draft presents various strategies, including "reducing both consumption and production of fossil fuels," aiming for net zero emissions by 2050. This change reflects deep international divisions over the future role of oil, gas, and coal in addressing climate change, setting the stage for further negotiations.

What do the fossil fuel phase-out pledges from COP28 mean for the real estate sector?

While this could lead to initial increase in costs due to implementation of alternative energy sources, the increased renewable energy production will make it more accessible and available in more regions of the world. The push to phase out fossil fuels aligns with broader ESG goals. Real estate stakeholders will need to integrate sustainable practices and technologies more proactively to meet the investor and consumer expectations. Last, but not least, this would open new opportunities for innovation and drive more sustainable communities.

This year’s climate summit COP28 was one of the most complex so far. With so many issues to discuss and high stakes, delivering these outcomes is a significant stride ahead toward innovative sustainable solutions for climate change. Real estate stakeholders could certainly take notes and start 2024 with more targeted efforts toward decarbonizing the real estate sector. RealCube, a leading Proptech solution is a great first step toward net-zero buildings and communities. Our software enables meeting ESG goals in real estate in a smooth and systemized manner, while enhancing business processes and simplifying workflows across all departments. Request a demo to see our solution in action and have a personalized consultation to see what you can achieve with RealCube.