Reduce, Offset, Repeat: The Path to Carbon Neutrality

00:00:05:09 - 00:00:33:02
Sara Gutterman: Hello everyone. Welcome to today's webinar. We're going to just wait about 30s for more people to join. So hang tight and we'll be with you momentarily. If you're just joining, we're just going to wait. All right. Let's go ahead and get started. Thank you all so much for joining our webinar. Today. I we get to talk about one of my favorite topics, the decarbonization of the built environment, particularly through carbon offsets.

00:00:33:02 - 00:00:54:24
Sara Gutterman: And I am joined today by one of my favorite business partners, Marc Chen, CEO and founder of Knut, who is the company that Green Builder Media is partnering with to streamline access to high quality carbon offsets. But lots more about that in a minute. If any of you do not know me, I'm Sarah Government. I am the CEO and co-founder of Green Builder Media.

00:00:54:27 - 00:01:24:25
Sara Gutterman: Always thrilled to have the opportunity to talk with our audience and present to you today again about one of my very favorite topics. I first just want to thank Mary Kestner, our production manager, who's a wizard behind the curtain making it all happen, as well as Victoria Mirsky, who helped to arrange this webinar today, and Whirlpool Corporation for their generous partnership and sponsorship of our Next Generation Influencer Group and our Today's Homeowner program.

00:01:25:02 - 00:01:50:06
Sara Gutterman: Whirlpool is committed to being the best global kitchen and laundry company in constant pursuit of improving life at home and in an increasingly digital world. Whirlpool is driving purposeful innovation to meet the evolving needs of customers through its diverse brand portfolio. So thank you very much to whirlpool for your partnership and support. With that, I'm going to go ahead and dive in.

00:01:50:06 - 00:02:21:05
Sara Gutterman: And today today's webinar is titled reduce, offset and Repeat the Path to Carbon Neutrality. I'm going to go ahead and just provide some context about what is happening with respect to the decarbonization of the built environment and why carbon offsets are so important. And then I'm going to pass the mic over to Mark so that he can talk more specifically about carbon offsets, carbon offset projects, and how we are working together.

00:02:21:06 - 00:02:34:24
Sara Gutterman: We build our media and cNOT to, as I mentioned a little earlier, streamline access to the highest integrity carbon offset projects possible. So.

00:02:34:26 - 00:02:59:27
Sara Gutterman: I've been in Green Builder Media's turning 20 next year. And so I've been in the sustainability world for at least that long. And before co-founding Greenville Media, I was in venture capital, and we had a niche where we invested in organic foods and natural products. So I've been doing this for a while, and I can honestly tell you that I have never been so excited about the rate and pace of change.

00:02:59:29 - 00:03:50:02
Sara Gutterman: And that is true even with the results of the recent election. I think that green building and decarbonization sustainability is very protected. We might have to pivot our messaging a little bit to align green building with ongoing cost savings and enhance profitability, because clearly the economy is top of mind for everyone. And I'll talk a little bit more about that in a minute, but I'm just very excited about the robust conversations that we Green Builder media are having with building professionals of all kinds, from the top ten, 30, 50 builders in the country to other types of developers and architects and designers and code officials and municipalities and realtors and other lenders and other stakeholders,

00:03:50:08 - 00:04:20:23
Sara Gutterman: as well as consumers, homeowners and home buyers about how we get to a net zero carbon built environment. And we really believe that there are three main pillars that are fundamental as we decarbonize the built environment, and that's getting to net zero carbon emissions from from homes and buildings. So the first pillar really is focused on utilizing sustainable design and construction practices and techniques.

00:04:20:23 - 00:04:52:27
Sara Gutterman: And so that starts with climate responsive design. It also includes building science and green building and construction best practices. The second pillar is the meticulous specification of low carbon products from low carbon companies. So it's specifying products that have, say, environmental product declarations or other similar sustainability certifications from companies that have solid ESG, environmental, social and governance or corporate sustainability practices.

00:04:52:27 - 00:05:28:03
Sara Gutterman: To be quite honest with you, it doesn't really matter if a company calls it ESG or if they just call it corporate sustainability. The fundamentals are the fundamentals. It's really the same thing. But the third pivotal pillar to getting to a net zero carbon built environment today includes carbon offsets. And so, again, you'll hear a lot more about those in terms of what a carbon offset is, why it's particularly important and and how to choose high versus low quality and integrity carbon offsets.

00:05:28:05 - 00:06:06:16
Sara Gutterman: Let me provide a little bit of context about why decarbonizing the built environment, and really our entire is important. It's because of this trifecta of the environmental, social and financial reality. So from an environmental standpoint, we've hit 1.5 degrees warming in the last 12 months. We're going to two degrees in the next 12 months. And it's not so much that climate scientists believe that all of our ecosystems are going to collapse if we go over two degrees warming, but it's just simply that over that threshold, their climate models don't work because of what's called a threat multiplier of climate change.

00:06:06:16 - 00:06:35:21
Sara Gutterman: Meaning we're just flying blind over two degrees. We don't know what's going to happen. We do know that as the planet continues to warm, cycles become more frequent and intense, whether that's extreme temperatures or climate events like super storms, hurricanes, wildfires, drought, we're seeing that in our day to day lives. This is just something that's happening, and playing out doesn't really matter how or why it happened at this point, but it's happening in terms of the social reality.

00:06:35:24 - 00:07:02:16
Sara Gutterman: There are clearly higher levels than ever of climate anxiety. 77% of millennials and Gen Zs consider the future to be frightening because of climate change, 56% think that humanity is doomed. That's not 6% or 16%. That's a very high. It's over half. And so, you know, we need to start providing very real climate solutions to address this rising and surging climate anxiety.

00:07:02:16 - 00:07:48:12
Sara Gutterman: And then the third piece of why this is so important is the financial reality whereby investors, lenders, supply chain partners, municipalities and other stakeholders now believe that companies, whether those are building professionals or manufacturers that have strong corporate, social and environmental and governance policies or just corporate sustainability policies, actually are less risky as partners, as as people who access financing because they are able to mitigate the risks of climate change better, whether that's looking at resiliency, whether that's looking at supply chain disruption.

00:07:48:14 - 00:08:13:03
Sara Gutterman: But these companies with strong corporate sustainability strategies are now considered to be lower risk from a financial standpoint. And all of this is particularly important in the built environment because of how conspicuously consumptive homes and buildings are. So here in the US, homes and buildings account for about 40% of our nation's total energy use, 70% of electricity use, 40% of total emissions.

00:08:13:03 - 00:08:38:13
Sara Gutterman: And while we need to reduce emissions from the built environment by about half by 2030 and about by 100% by 2050. Not if we're going to stay under that two degrees warming threshold. Not even 1% of our buildings today are considered to be net zero carbon. So as you can see, there's a huge opportunity, but there's also a lot of work to be done.

00:08:38:15 - 00:09:06:19
Sara Gutterman: So let's look at some of the market dynamics that are shifting us towards the decarbonization of the built environment. The first is consumer pull through consumer demand. We're seeing mushrooming consumer demand for decarbonization even in today's economic environment. And that's really because homeowners and I don't have this data in this presentation, because I literally am just analyzing that right now.

00:09:06:20 - 00:09:32:17
Sara Gutterman: But I'm going to share a piece of data from our annual state of the industry survey, which it's interesting because this year it's very clear that the economy is top of mind for our consumer audience. We reach millions of early adopter and first movers who are committed to sustainability. And historically, sustainability was really the number one issue with the economy kind of secondary this year that has flipped.

00:09:32:17 - 00:10:06:08
Sara Gutterman: And it's very clear that the economy is top of mind if you're interested in that. I think December 4th or fifth, I'm giving webinar on this state of the industry data. So look for that. It's very interesting. But point is that what is very clear is that consumers still want green homes. But one of the main drivers is that they believe that energy efficient, all electric, healthy, resilient homes will actually save them money in the long term on monthly utility bills and ongoing operating costs.

00:10:06:08 - 00:10:38:14
Sara Gutterman: And if they have the one home that stands in the neighborhood after a superstorm or a wildfire and they don't have to rebuild, think about the cost savings there. So there's now a connection between having green homes and sustainable living with cost savings. And that's really where, as I said earlier, we as an industry have an opportunity to pivot our messaging around decarbonization from something that's nice or essential in order to hit our climate goals to something that's nice and essential for hitting your financial goals.

00:10:38:16 - 00:11:16:12
Sara Gutterman: The good news is that we know that homeowners and consumers in general believe that decarbonization is helpful to business, that it enhance and result. It results in enhanced innovation. It generates positive brand equity, it yields greater financial returns and mitigates risk. We also know that living in a net zero carbon home is becoming more and more important, especially to millennials and Gen Z, but across all four generations that are impacting the housing market, don't have traditionalists or Gen Alpha just because they don't have a big influence at this point on housing market.

00:11:16:14 - 00:11:38:13
Sara Gutterman: Millennials are over half of home purchase applications in the 52 to 54% year over year. Right now, Gen Z are just starting on their home buying journey, but they're definitely, you know, their growth curve is going to grow like a hockey stick over the next several years with more and more impact on housing markets. So this is a value.

00:11:38:15 - 00:12:08:22
Sara Gutterman: Living in a net zero carbon home is a value that these younger generations are bringing to the home buying process. And we can also see that younger generations, millennials and Gen Zs, have a very high willingness in to invest in sustainability upgrades if those upgrades will lower their cost of homeownership over time. Again, that goes towards what I was talking about in terms of connecting sustainability features and benefits with long term cost savings.

00:12:08:24 - 00:12:37:20
Sara Gutterman: You can see Millennials and Gen Z are the dark purple line, whereas the middle blue line is a measure of consumers. When we when we add in Boomers and Xers. So that willingness goes down a little bit, meaning older generations are a little less willing to invest in those sustainability upgrades than younger generations. And then builders consistently underestimate at least what the younger generations say that they will invest in.

00:12:37:20 - 00:13:02:14
Sara Gutterman: And the way that I interpret that is that builders might have a more accurate perspective on what they will actually pay versus what they say they will pay. But even so, we're still tweaking at the margins here, right? We're over 50% across all of these categories. And so clearly, you know, there's a willingness to pay. And then the reality there as well, you know we're also seeing increased demand.

00:13:02:17 - 00:13:31:05
Sara Gutterman: This is a question that we've asked to our builders. They are seeing increased demand from their home buyers for things like energy efficient insulation, windows and doors, lighting, smart home systems and controls, heat pump technologies, solar plus storage, etc. and our builders are more willing to adopt enabling technologies like demand side energy management systems, cool roof systems, high performance building envelope systems today, more so than ever before.

00:13:31:08 - 00:14:07:24
Sara Gutterman: So that was, you know, kind of describing the market dynamics of consumer pull and builder push. Now I want to focus for just a minute on the changing and shifting regulatory landscape. And this is really important. And this is the main reason why I believe green building is incredibly protected. Again, regardless of what happens at a federal level, there may be rollbacks to energy code or the HUD ruling, or for affordable housing and energy efficiency, or perhaps environmental protections.

00:14:07:24 - 00:14:52:22
Sara Gutterman: But green building, largely regulations and codes, largely happen on a local municipal and a state level, not on a federal level. And so when we look at the regulatory landscape for green building and the decarbonization of the built environment, I actually predict that the next five years between 2025 and 2030 is it's going to be a very, very active time frame in a good way, meaning there are cities like Aspen and Burlington, Vermont and San Francisco that have set net zero carbon targets by 2030, meaning they want to reduce emissions from their cities entirely by 2030.

00:14:52:23 - 00:15:19:21
Sara Gutterman: There are other cities like New York City, Seattle, Los Angeles, that have set 40 to 50% reduction targets by 2030. Most of these cities are relying on energy efficiency measures, electrification of the built environment and transportation, and the adoption of renewable energy to hit those goals. And a lot of them are kind of waking up and they're like, oh my gosh, it's 2025.

00:15:19:22 - 00:15:43:13
Sara Gutterman: We have five years to hit our goals. That's not a lot. And so I think that the next five years are going to be very active with respect to implementing codes and policies and legislation. And again, a local, municipal and state level, so that these various different entities can hit their 2030 goals. We're also seeing climate risk disclosure requirements.

00:15:43:18 - 00:16:18:12
Sara Gutterman: We saw that last year, California passed two climate laws that are going to require scope one, two and three emissions reporting for companies that have $1 billion in revenue or more. But those climate risk disclosure requirements aren't only going to impact those large companies. Many of the tech behemoths, by the way, like Apple and Google and Microsoft that are located in California, are totally behind these climate risk disclosure requirements because they're largely already doing them.

00:16:18:15 - 00:16:46:29
Sara Gutterman: They're already reporting scope one, two and three. But because of the scope three reporting, which means that all of these big companies have to get reports from everyone in their supply chain, everyone they do business with its bankers, its lenders, its attorneys. It's anyone that's working on offices, whether you're a product manufacturer or a builder or a remodeling or contractor, everyone's going to have to provide some kind of reporting to these large companies.

00:16:46:29 - 00:17:11:18
Sara Gutterman: So if you touch any, any large company that's based in California, you're going to have to provide reporting. So Game on is here. Of course we saw the SEC pass their risk disclosure requirements for just scope one and two not three. But that's shifting the landscape in terms of what is going to have to be calculated measured and then reported on as well.

00:17:11:20 - 00:17:41:29
Sara Gutterman: Earlier this year we saw the Department of Energy release a zero energy, excuse me, a zero emissions building definition, which is always a harbinger for what's going to happen with respect to codes and requirements across the country. The EPA put out a low Embodied Carbon Construction materials labeling program, again, to kind of set some guardrails to understand what low carbon products and materials look like.

00:17:42:01 - 00:18:17:12
Sara Gutterman: This is a bullet point on the slide, but ResNet and various different entities are working on an Ansi standard 1550 that will streamline the measurement of embodied carbon for residential projects. That's going to go a long way towards really streamlining and creating a formula for measuring embodied carbon. And then the Biden administration came out with voluntary carbon offset guidelines to really differentiate what a high integrity carbon offset project is versus low integrity carbon offset project is.

00:18:17:13 - 00:18:43:17
Sara Gutterman: And then again, we're starting to see changes in codes and mandates. So in July, California passed a code for commercial buildings over 100,000ft² that have to now start reporting on scope one, two and three emissions in Boston. Same thing for large commercial buildings. Builders and developers effectively are now required to create net zero carbon plans when they go in to get a permit.

00:18:43:20 - 00:19:13:16
Sara Gutterman: While those are for commercial buildings right now, they will trickle into the residential sector. We've also seen a changing valuation metric, and this really started happening when millennials started getting into the market even before the pandemic, where they started looking at that full value of homeownership as opposed to just upfront cost or lowest price per square foot. And that ethic has been pulled through again in our state of the industry data that was just hot off the press.

00:19:13:19 - 00:19:34:09
Sara Gutterman: You're really the first group that's even hearing about it, because I've just been analyzing in the last couple of days across all four generations boomers, Xers, millennials and Zs. All of them now say that they look more at ongoing operating costs and full value of homeownership, as opposed to just upfront costs. And that's for the first time ever.

00:19:34:13 - 00:20:08:22
Sara Gutterman: And then, of course, from a financial standpoint, rebates and incentives, largely from the Inflation Reduction Act in red and blue states are really benefiting builders through 45 zero and then also home owners to enhance the energy efficiency and electrify their homes. Now, the next element that the next pillar that I want to talk about is, is just kind of understanding how we decarbonize the built environment beyond the market dynamics.

00:20:08:22 - 00:20:33:27
Sara Gutterman: So there's two kinds of carbon that needs to be measured as we look at emissions from homes and buildings. And this is true also for products and manufacturing and other aspects of our economy. But for right now I'm just going to talk about homes and buildings. There's embodied carbon, which basically means it's a measure of everything that goes into a home.

00:20:33:28 - 00:21:00:29
Sara Gutterman: I'll just talk about a home for now, up until the day that home is sold or occupied. So from when the very first material for any product that goes into a home is extracted to transportation, to manufacturing, to packaging, to more transportation, to installation for every product that goes into that home. And there's about 20,000 product inputs that go into a typical American home.

00:21:00:29 - 00:21:35:03
Sara Gutterman: So as you can imagine, measuring embodied carbon is complex. We are we've been able to streamline it. We have a calculator that actually Marc and his team created that helps builders measure embodied carbon. As I said, there's the Ansi standard coming out which will streamline it even further. There's some other really good tools like the beam calculator. And then there are other groups, like construction Instruction, that's working with builders to create lifecycle assessments or LCAs for their homes to look at embodied carbon.

00:21:35:03 - 00:22:01:11
Sara Gutterman: So there's various different ways that you can measure embodied carbon, either on your own or in conjunction with partners. And then the operational carbon basically takes over once a home is occupied. And it's just the ongoing emissions from the operations of that home. So if a home is net zero energy, it's got solar and storage. It's producing all of the power that that home needs.

00:22:01:11 - 00:22:33:15
Sara Gutterman: As you can imagine, the operational carbon is either significantly reduced or eliminated. If it's a grid tied home. The way that we measure operational carbon is by actually looking at the energy mix for the utility. And if it's a relatively clean utility, I'll use NV energy as an example. Or there's a lot of utilities that have really cleaned up their energy mix and are trying to provide energy using large solar arrays and wind power, in some cases hydro or even geothermal.

00:22:33:15 - 00:23:20:13
Sara Gutterman: And the cleaner the utility for a grid tied home, the lower the operational carbon calculation. So when we look at how we get to net zero carbon, it really involves deploying these sustainable design, building science and green building and construction best practices ranging from implementing passive heating cooling ventilation strategies to enhancing energy efficiency. Electrifying homes. We cannot ignore health and wellness that, you know, even though maybe, you know, indoor air quality systems doesn't directly pertain to decarbonization, can't sacrifice health and wellness.

00:23:20:15 - 00:23:50:19
Sara Gutterman: Interestingly, solar increases embodied carbon, but it reduces operational carbon. So net net solar is always a good idea. Advanced technologies for demand side energy management, of course, and then always understanding, you know, your inspections, your testing, your measurements for performance, you know, and ongoing operations. After we dress, address, performance, then we move into the specification of low carbon products from low carbon companies.

00:23:50:25 - 00:24:26:17
Sara Gutterman: And this one's hurt because as I mentioned, there's about 20,000 product inputs into the average American home, about 450 SKUs. And there aren't that many low carbon products with environmental product declarations that basically those measure the full cycle lifecycle, environmental performance or impact of a product. So there's just not that many that we could. I'd love to build one of our vision house projects with all products that have, but we just can't because there's not that many out there.

00:24:26:19 - 00:24:54:28
Sara Gutterman: And then beyond the certifications or other sustainability certifications, we have to also look at the sustainability practices of those companies themselves. Do they have ESG strategies in place and reporting? Are they reporting on their scope one, two and or three emissions and other climate risk disclosures? And I've been talking about scope one, two and three emissions. So just in case you don't know what those are, I made an assumption that you did.

00:24:55:03 - 00:25:27:03
Sara Gutterman: So one is basically direct emissions that a company burns internal scope. Two is indirect emissions that a company buys. Right. So say from a utility. So both of those have to do with energy use. But then scope three is everything else associated with operating buildings, employee travel commutes, how products are actually used by the products, the end users and then end of life or disposal issues.

00:25:27:03 - 00:25:54:07
Sara Gutterman: It's packaging. It's, you know, again, manufacturing. It's kind of all other emissions. And so scope three can be 80 to 90, even 95% of the emissions of a company. So as you can imagine, that's why I think the SEC did not include scope three for now in their climate risk disclosure requirements. Just because it's hard to get your arms around and it's going to take time for companies to do that.

00:25:54:09 - 00:26:26:29
Sara Gutterman: Now, the third and essential step of decarbonizing the built environment is carbon offsets. So in case you're not familiar with carbon offsets, one carbon offset is the equivalent of taking one ton of carbon out of. And there are a lot of different types of carbon offset projects right now. There are nature based projects that, for example, include things like forest management and conservation, tree planting, biodiversity protection.

00:26:26:29 - 00:27:04:14
Sara Gutterman: And then there are technology based projects that say include landfill gas capture or capping, abandoned and gas wells that would otherwise be emitting carbon and perhaps methane into the air. Or we have a really cool project that I love that's in the Front Range in Colorado, near Denver, in Fort Lupton, that is taking agricultural waste. And instead of allowing that agricultural waste to emit, to decompose and emit carbon and methane into the air, it's turning it into biochar and storing it into the ground.

00:27:04:16 - 00:27:32:04
Sara Gutterman: And then, of course, there are direct air capture projects which are using those big fans. There's there's I know a couple of these in Scandinavia where they're pulling carbon out of the air and then storing it into the ground, into limestone, or into other types of soil and rock types. So there are, as I mentioned earlier, there's a big difference between high quality and low quality carbon offsets.

00:27:32:06 - 00:27:59:16
Sara Gutterman: High quality offsets do things like address additionality, meaning they're not issuing offsets for a project that would have been done anyway. So I give a lot of questions, say, from builders who are saying, hey, I am building an energy efficient community and it's going to have solar, and can I issue carbon offsets for that? And the real answer is, well, no, because you're doing that project anyway, so you don't address that additionality.

00:27:59:19 - 00:28:33:00
Sara Gutterman: High quality projects also provide robust, transparent and accurate reporting and analytics. They eliminate double accounting, meaning they don't plant a tree and then sell that tree planting through an offset 10 or 100 or 1000 times. The voluntary carbon offset market was getting a little bit of a bad rap because of double accounting by some bad actors. Fortunately, a lot of that's been cleaned up because of now this increased demand for transparent and accountable reporting.

00:28:33:02 - 00:29:00:16
Sara Gutterman: High quality projects also have third party certification and validation, and well-defined pricing and benefits and results. They also have permanence to their offsets. So for us, what we do is if you buy an offset from us, we actually retire those offsets so they cannot be exchanged or bought and sold after the fact. So this webinar is not intended to be a sales pitch, but just informational.

00:29:00:18 - 00:29:17:18
Sara Gutterman: So and I'll tell this story very briefly, I had an moment and not a good one about a year ago, a year and a half ago now, where I jumped up out of bed at 3 a.m. and I was pacing around my house and I was like, oh my God, we're not going to make it. Not going to make it.

00:29:17:19 - 00:29:39:24
Sara Gutterman: We've hit 1.5 degrees. We're going to two degrees. What are we going to do? And then I settled myself down because, you know, I talked to myself into the fact that we do know how to decarbonize the built environment. We know how to electrify buildings and transportation. We know how to get to regenerative agriculture and how to reimagine manufacturing industry and all these things we need to do to decarbonize.

00:29:39:24 - 00:30:01:05
Sara Gutterman: But so I kind of calm myself down. But then I was like, well, these things take time and we need to act now, quick, fast. Now we're, you know, climate is changing without act. Now what can we do? What can we do is we build our media. What can I do is just a human being. And it became very clear that carbon offsets were the answer to get us to that last month.

00:30:01:08 - 00:30:26:21
Sara Gutterman: Right. We have to address performance. We have to specify those low carbon products. But then the next piece is we have to buy carbon losses. And so we did a bunch of due diligence. The long story short, we met Mark and his team actually through Gene Myers at Thrive Homebuilders Thrive Homes. Excuse me through a project, one of our vision House projects that we did with thrive, where we bought offsets from cNOT.

00:30:26:24 - 00:30:57:15
Sara Gutterman: And it became very clear that cNOT was the right partner for us. So as we have partnered with cNOT, court has a fleet of vets carbon offset projects and creates portfolios. So now, as I said, we're working with building professionals, namely mostly builders and developers and manufacturers as well, to purchase high the highest quality, highest integrity carbon offsets in addition to those offsets, again, which get retired.

00:30:57:15 - 00:31:24:23
Sara Gutterman: And we have ongoing reporting for and I'll let Mark talk more about that. We're also providing training and education and assistance and collateral materials that talk, that help our partners who purchase carbon offsets, communicate about carbon offsets. What are they? Why are they important? Why are they particularly in the built environment? Why should your business executives care? Why should your home buyers or your customers care?

00:31:24:26 - 00:31:46:17
Sara Gutterman: And this goes now beyond, as we've seen since the economy is so important in top of mind, this goes beyond this is a nice thing to do for the planet, or we have to do this to hit our climate goals. This now goes to value that's being created for your business ultimate, you know, cost savings in terms of mitigating risk.

00:31:46:19 - 00:32:22:20
Sara Gutterman: So there's a lot of talking points. There's a lot of training and education that we are now providing again to really create that layered message beyond the fact that just carbon offsets are cool, which I really think they are. And then we are creating this front lines of climate action, so to speak. So a growing network of builders, developers, other building professionals, manufacturers, homeowners and other stakeholders who are really leading the building industry into a new era of net zero and will really be spotlighting and highlighting those entities next year.

00:32:22:23 - 00:32:44:16
Sara Gutterman: So if you are a builder or a building professional, what we can do for you and with you is we'll help you calculate your embodied carbon using the specs for your projects. We have a couple of different portfolios that you can choose from in terms of that. Each of them have a different mix of projects and therefore different pricing.

00:32:44:17 - 00:33:13:12
Sara Gutterman: Nature based projects tend to be less expensive. The technology based projects tend to be a little bit more expensive, and then we can figure out how many offsets you need to purchase in order to deliver a net zero embodied carbon home, and that ranges for a high performance home. It's really not that expensive, right? Somewhere, let's say in the 750 or $800, maybe up to $1,500, maybe up to 2000, depending on the size and how much concrete.

00:33:13:12 - 00:33:43:12
Sara Gutterman: And if you're using steel or, you know, insulation that has high embodied factor, then on the operational side, we're actually working with builders and developers. And now some lenders who are we're packaging five, ten and 30 year operational carbon offset packages to sell to home buyers. And we're bringing the lenders in to incorporate these packages into closing costs.

00:33:43:12 - 00:34:07:17
Sara Gutterman: And, you know, it depends on, again, the performance of the home, the energy mix of the utility, if it's a grid tied home. But again, these are not very expensive packages. You know, maybe they range from say $140 to 4 or $500. The last thing that I have to say before I kick it over to Mark, because, as usual, I took more time than I plan to and had intended to.

00:34:07:18 - 00:34:32:14
Sara Gutterman: But something is better than nothing, right? So if you are a building professional, if you're a builder or manufacturer or other professional, you know, if I think that again, as we've seen, the cost to offset a project, a home, a community, a building, it's not that high relative to, you know, total value and sales pricing for your business.

00:34:32:17 - 00:35:07:27
Sara Gutterman: You can see here that, you know, when we look at, say, average emissions from employee commutes or office emissions, these are just these are don't it's not huge numbers. You know you can really offset and employees commute and office emissions from them being in offices for less than 100 bucks a year. You know, if you want to look at offsetting your house or give a gift to a friend or colleagues.

00:35:08:00 - 00:35:32:11
Sara Gutterman: According to the EPA, the average American household omits, you know, a the equivalent of about $140 worth of offsets, you know, per year. So we're not talking about break the bank numbers. I'm going to stop there. I'm going to pass things over to Mark. You'll get a little bit more into, again, portfolios of carbon offsets and projects themselves.

00:35:32:16 - 00:35:51:02
Sara Gutterman: But I really encourage you to look at our carbon offsets marketplace. Go to media. Click on the nav bar where it says carbon Offsets. That microsite has pretty much all the information that you need. And with that mark, please take it away.

00:35:51:05 - 00:36:01:26
Mark Chen: Thank you. Thank you. Sarah, let me share my screen here. Let's see.

00:36:01:28 - 00:36:14:00
Mark Chen: All right. Let's see. So sorry about this.

00:36:14:03 - 00:36:23:23
Mark Chen: You can see that I apologize. I need to move things around here.

00:36:23:25 - 00:36:47:00
Mark Chen: All right. Thank you everybody. Thank you, Sarah, for taking the time and inviting me to share a little bit about a little more about carbon credits or carbon offsets. And I'll get into the distinction. And you provided a great set of background already about some of the differences of embodied versus operational carbon, but just wanted to take just a few minutes to double click on a few of the items that you brought up.

00:36:47:02 - 00:37:19:07
Mark Chen: The first one is this distinction between embodied carbon and operational carbon, particularly in the built environment space. I think we it's very easy to think about operational carbon. It's what everybody thinks about in terms of net zero, full electric, full electrification. But you know, as you mentioned, we really need to be thinking about embodied as as well. I mean, for your typical home, embodied carbon can be more than half of the overall lifecycle emissions of a, of a property.

00:37:19:07 - 00:37:44:15
Mark Chen: And so for not, you know, as we move towards net zero homes and fully electrify and have renewable energy powering those homes, that ratio is going to get even even bigger. And in some areas, as you mentioned before, if you add solar to the roof, that actually has a huge impact benefit for the overall life cycle and certainly on the operational carbon, but it actually adds to the embodied carbon side of the the equation.

00:37:44:16 - 00:38:04:21
Mark Chen: So it's something that we really focus on. And it's an area where really there are very few tools out there. All the good work that that Sara, you and your team at Green Builder Media are doing to try to work with manufacturers to get so that buyers can make better decisions or more informed decisions on the amount of embodied carbon.

00:38:04:21 - 00:38:28:17
Mark Chen: But at the end of the day, we're building things that require materials, and that's going to to have a have a carbon footprint. And so when we look at the typical home, most of the embodied carbon is coming from basically two places concrete and, and insulation. Right? I mean, the ratio between them can can change depending on how thick your concrete core is, how thick your slab is.

00:38:28:18 - 00:38:54:10
Mark Chen: Do you have a basement? Insulation can be highly variable. Are you using expanded polystyrene as insulation in some places? What's the propellant if you're using it for for blowing in insulation, those can can change the numbers pretty dramatically. But we see your typical family home being anywhere between 40 to 60 tons of carbon carbon dioxide equivalent on on, on average.

00:38:54:10 - 00:39:16:27
Mark Chen: But when you get down to it, it's mostly concrete insulation, a little bit of roofing. The other piece is, you know, some flooring of the choice of appliances really doesn't have a huge driver at this level. And so, you know, as you think about how do you actually put this into place, you know, you're out there building homes or you're buying homes.

00:39:16:27 - 00:39:40:10
Mark Chen: How do you figure out, like, what your actual embodied carpet is? There are a number of tools out there. Sarah mentioned some of them already. One click. Elsie, I think on this list is probably the only one that is costs money and it is highly detailed and you will get audit sort of ready LCA reports, but it can be a little bit of a learning curve to try to figure out how to, to to use.

00:39:40:10 - 00:40:08:11
Mark Chen: You do needs to to import most of the into the tool, other tools that are readily available. EC3 is a great great one. RMI has a as a free tool out there called beam HD created epic. Epic is a little bit more towards the the design side of things. So early on in the process, before you even know what materials it can help you with identifying what's the what's the art of the possible.

00:40:08:14 - 00:40:34:22
Mark Chen: And so, you know, I talked about all that to say, you know, we no matter what we do, as much as we try to, you know, design and construct for a low carbon footprint and use low carbon materials and, and products, we will have a footprint at the end of the day. And really carbon credits are the best way, the easiest way, the most flexible way of addressing that, that footprint today.

00:40:34:22 - 00:41:09:20
Mark Chen: And as as we mentioned earlier, there has been have been some some challenges with with the space. But at the end of the day, you know, we've resolved a lot of the challenges and carbon credits are being trusted and utilized by many leading folks in the field. In fact, there are a lot of certification bodies, whether it's zero carbon certification in Canada, which I'll talk about in a little bit, but climate neutral Local Law 97 is a new, new New York City law mandating carbon disclosure and reporting, as well as management.

00:41:09:25 - 00:41:42:26
Mark Chen: These certification programs all permit as well as encourage, the use of carbon credits to get below a certain threshold to to meet the certification standards. And then really quickly, when I talk about credits versus offsets, because you'll hear these terms use somewhat interchangeably. Carbon credits are really sort of the umbrella term for these financial instruments. To that, you can purchase and drive investment in projects that reduce the amount of carbon in the atmosphere.

00:41:42:26 - 00:42:12:12
Mark Chen: And carbon offsets are essentially when you're using those those credits and you're retiring them, and you're doing so in a way that addresses emissions that you're creating elsewhere. Right. And so in the case of home building, certainly, it's we can talk about them as carbon offsets. But oftentimes I will talk about them interchangeably as either offsets or credits and credits as the umbrella term.

00:42:12:15 - 00:42:39:20
Mark Chen: There are multiple types of carbon credits out there. Sarah Ray started talking a little bit about the distinction between sort of nature based versus engineer. Just want to run through sort of what we consider the four categories for major categories of, of carbon credits. And really they fall along two dimensions, right? The first one is are you reducing the amount of carbon dioxide that would otherwise be in the atmosphere, or are you removing carbon dioxide that is already in the atmosphere?

00:42:39:20 - 00:43:00:01
Mark Chen: And then are you doing so via, you know, technology and machines and engineering work, or are you doing so with nature based solutions? And so the most common way of getting of, of fulfilling carbon credits today is by reduction. It's just a lot easier and simpler as well as cheaper to not emit carbon dioxide in the first place.

00:43:00:02 - 00:43:24:16
Mark Chen: Right? Why stop digging the hole before you start trying to fill the hole the whole back in? And so reduction projects are much more scalable. They are readily available across the board, across both technology as as Sarah mentioned, with landfill gas capture, refrigerant destruction, and a lot of gases that are even more powerful than carbon dioxide fall into this bucket, right?

00:43:24:17 - 00:43:50:00
Mark Chen: Methane is anywhere between 25 and 100 times more powerful than carbon dioxide, depending on how you measure it. Certain refrigerants can be 2000 times more powerful than carbon dioxide. And so even just saving, you know, a a 10 pound container of refrigerant and destroying it in a, in a in a proper manner can be highly effective. And you can compare it to tons of carbon dioxide and then conservation.

00:43:50:00 - 00:44:27:26
Mark Chen: Right. Nature based conservation saving trees, keeping carbon locked out where it should belong, which is in in vegetation. And then on the flip side, we can also start doing net removal. Right. So on the nature side, start planting net new trees, reforest areas that were previously cut down and then technology based removal. You know, the the fans in in Iceland that are, that are running on geothermal energy or electricity, pulling air and running it over substrates to literally pull carbon dioxide, absorb it out of the atmosphere and then carted away and store it underground.

00:44:27:26 - 00:44:51:06
Mark Chen: And so these are all four different categories. You can think of the cost sort of going in this direction as well, going from lease cost in a clockwise manner to most expensive. Some of the credits for technology based removal can be upwards of $1,000 per per ton. And then you also certainly need to consider the key components of integrity.

00:44:51:09 - 00:45:21:26
Mark Chen: As mentioned earlier, you know there are some challenges with purchasing credits. When we have seen look out at the the market of available credits with our our fleet of PhDs and our third party ratings advisor advisors. You know, unfortunately, 95% of the credits that we see out in the market don't meet our bar for for integrity. Right. And that's when we look at additionality or over crediting in particular, durability and double counting for sure are issues to consider.

00:45:22:03 - 00:45:50:09
Mark Chen: But the biggest hurdle, the tallest hurdle to jump over is essentially additionality and over crediting. Like, if we did not purchase these credits, what would happen otherwise? Would this project happen? And are you counting calculating the amount of carbon savings or reduction appropriately? And that's something that that we have our team internal team looking at. And then what I wanted to sort of wrap with is how are folks using these today.

00:45:50:11 - 00:46:18:13
Mark Chen: Right. How are carbon credits, carbon offsets being used to help bring down the carbon footprint of a building? Or what does that mean for for the owner, the builder, the developer? So I just wanted to dive through Scotia Plaza, which is a skyscraper in in Toronto, Canada, owned and operated by by King Capital. And they were seeking certification under Canada Zero Carbon Building Performance Standard.

00:46:18:13 - 00:46:51:11
Mark Chen: And this is a performance standard that takes into account full life cycle emissions of a building for both embodied as well as operations of a building. This is an existing property existing structure. So of course the only way to address the embodied carbon was through the use of carbon credits. And so, you know, what Kit wrote or provided at the end of the day was we've heard from tenants who have said that they're signing in the building because it's on a path of decarbonization versus others in, in the market.

00:46:51:17 - 00:47:14:25
Mark Chen: You know, it's a real driver, that certification of having corporate tenants that have their own reporting and carbon footprint needs, right. They're trying to reduce their their scope three emissions, right, to move into properties and buildings that have zero carbon emissions or zero emissions, so they can report out to their investors, to their consumers, to their regulators as well.

00:47:14:25 - 00:47:44:22
Mark Chen: So they're seeing a pickup in demand as a result. So let me just, you know, leave you with sort of what, what what next. Right. Like what should you take away from all all this, this content one is step number one, optimize for the operational and embodied carbon. Right. It's it's the three steps that Sarah mentioned earlier, design and construct with carbon in mind across both of those dimensions embodied as well as operational.

00:47:44:23 - 00:48:06:20
Mark Chen: You know, you choose those products and processes to minimize the amount of carbon that goes into the structure itself. And then you can use carbon credits, carbon offsets to address whatever you can't eliminate. And then when you do so, make sure that you're buying in a high integrity manner that you're not just buying the project that's down the street, because you can go drive, drive by it.

00:48:06:24 - 00:48:31:07
Mark Chen: Don't buy the projects that just look good, because we call those charismatic projects that maybe sound great, but you peek under the hood and you realize you can realize that they're not actually delivering on the carbon benefits that you were hoping for, right? And when that happens, you're you're basically just greenwashing, right? Because you're buying what essentially it looks good, but does it actually have any real impact on on the environment.

00:48:31:12 - 00:48:53:00
Mark Chen: And then lastly, even when you do purchase those credits, make sure you buy in a diversified portfolio that you're not just buying, you know, from from one project, we very much as seen on view purchasing carbon offsets like you're investing your for one portfolio, right. You wouldn't put it all in in in one stock even if it is Tesla.

00:48:53:00 - 00:49:19:00
Mark Chen: But you would want to diversify across a number of different categories, a number of different projects, a number of different locations. And if you don't have the capability to do that internally, we have seen our certainly Green Builder can can help you with any of the steps in that process. So I'll stop there and I think we'll take questions.

00:49:19:02 - 00:49:46:12
Sara Gutterman: Wonderful. Thank you so much, Mark. So I have a few questions that have come in before I do though, I have a question for you. I know the answer to this, but can you talk a little bit about some of the specific projects in our portfolios and our three portfolios, and then just talk about those portfolios in general, and how you and your team have crafted those and the difference in pricing.

00:49:46:14 - 00:50:18:23
Mark Chen: Yeah. Great question. So great question. So, you know, when we think about the portfolio as we are designing portfolios that really try to cover those four different categories, right. So the avoided emissions, the conservation projects, reforestation and afforestation and then engineered removal. Most of our time frankly, we spend on the first three categories because that's where we have there's just a lot more challenges in identifying projects, and that's where we have a head of science.

00:50:18:29 - 00:50:44:13
Mark Chen: We do our own due diligence on each of the projects that go into the different categories of the portfolio, and then for each of the projects that we take a look at, and I'll mention some some in a second, we will also work with third party ratings agencies. And so these are ratings agencies that are kind of like the S&P and Fitch's and Moody's of the financial world, but specifically for carbon credits.

00:50:44:17 - 00:51:08:24
Mark Chen: They're not taking money from, from from from sellers. They're not being biased in their own ratings. And essentially what we do is we make sure that at least one other one third party ratings agency has rated the project well before it can be included in one of our portfolios, the projects themselves. You know, just give you a few examples that come to mind.

00:51:08:25 - 00:51:33:28
Mark Chen: You know, you mentioned landfill gas. Landfill gas projects are a really effective way of capturing methane. Methane is 80 times more powerful than, than than than carbon dioxide. And in most countries or many countries outside the United States, especially in developing countries such as Brazil, it is not mandated to cap your your landfill. And so people are just dumping organic waste into an open pit.

00:51:33:29 - 00:51:58:10
Mark Chen: They're not covering it up. It turns into methane and it just leaks out. And it's relatively inexpensive to go in and essentially throw over a polypropylene tarp and then make sure that you also cover it with, with dirt. And then you install piping infrastructure to actually pull out that methane and you burn it and generate electricity. Really effective way of keeping a really potent greenhouse gas out of the atmosphere.

00:51:58:13 - 00:52:32:17
Mark Chen: And then lastly, I'll end with, you know, one other project I'll bring up is in Alaska is actually a native tribe in Alaska on Prince of Wales Island. I think it's about 100,000 acres of forest land that had been previously cut down by forest forestry interest, paper and pulp producers. And now there's an afforestation project or, sorry, a reforestation project going, going on there being developed by the native tribe.

00:52:32:17 - 00:52:47:17
Mark Chen: And so, you know, it's projects like that where you go out there and they're just amazing to see what, you know, carbon credit, what funding through the sale of carbon credits could do, not just for the climate but for the actual local population as well.

00:52:47:20 - 00:53:07:06
Sara Gutterman: So that leads me to the next question, which is there's something called co-benefits associated with carbon offset projects that go beyond the environmental benefits to more of a social and community scale benefit. Talk about what a co benefit is and what what you look for when you're picking projects.

00:53:07:09 - 00:53:31:20
Mark Chen: Yeah, for sure. Co-benefits are incredibly powerful partly because. So I just say we take a look at projects from a carbon perspective. The first bar that that that projects need to, to, to to get over is do they have a positive impact on the climate. The very next question we ask is what are the co-benefits and why Covid benefits sort of way into that?

00:53:31:20 - 00:54:11:28
Mark Chen: Calculus is a they're great. I mean, to be able to to benefit biodiversity or benefit the local local population or clean up the local local water right above and beyond the climate benefits. But also we see co-benefits as being correlated with the long term success of a project. If you don't have benefits for in the case of new, if you're not helping the local the native tribe that is responsible for for that land, then if you fast forward 2020 years, then the tribe has no interest in continuing to maintain that that that project and keep that carbon locked up.

00:54:11:29 - 00:54:37:12
Mark Chen: Right. They might lease the land back out to, you know, somebody who wants to to clear cut that, that property. So co-benefits are incredibly powerful. They can run the run the gamut from, you know, literally economic benefits for the tribe. It can also lead to job creation. We see that a lot in Indonesia, Southeast Asia where you're creating jobs to maintain these these these forests.

00:54:37:14 - 00:54:44:10
Mark Chen: You're providing funding for education, health initiatives in the local area as well.

00:54:44:13 - 00:55:19:06
Sara Gutterman: Wonderful. Thank you. Mark, just a couple more quick questions that have come in. Two quick ones for me and then one for you. Mark one, will there be rebates for new apartment construction projects? The answer is yes. There are multifamily rebates and I would check with your local municipality or your state to see what kind of say, IRA related funding there is through 45 L or for homeowners for those energy efficiency and electrification upgrades.

00:55:19:06 - 00:55:42:20
Sara Gutterman: There might be some utility incentives and rebates as well again, but those very much happen on a local or municipal level. So I just call, you know, your local utility, call someone, you know, your county administrator, and then you can also call your state energy office to learn more about this. The next question that came in for me was about the.

00:55:42:26 - 00:56:07:22
Sara Gutterman: I mentioned that there are about 20,000 product inputs and about 450 SKUs. So the questions question is what's the difference between a product and SKU? SKU is basically a type of product. So you may have, you know, 20 different or 20 of the same products that are ordered but are ones they represent one skew. So that's why you have 20,000 product inputs but only 450 SKUs.

00:56:07:24 - 00:56:16:24
Sara Gutterman: Mark, for you. You mentioned in calculator and the question was what is the name of that tool?

00:56:16:27 - 00:56:18:01
Mark Chen: That tool is called epic.

00:56:18:03 - 00:56:42:01
Sara Gutterman: Epic okay. Super great. Well, Mark, I think you answered all the questions that came up, including my own. Thank you so much. As always, nice to stage or a screen in this case with you. And really happy to have the opportunity to work with you in the court team. Any last comments that you'd like to relay before we hop off?

00:56:42:07 - 00:57:11:01
Mark Chen: Yeah, I would just say I'm really excited to be chatting about carbon and getting into the weeds about sort of like the sources of, like the drivers of, of carbon in the built environment. You know, when we started seeing it felt it felt like, you know, we were educating a lot of the market. And now, you know, through, through your, your efforts and many other sort of like minded folks, there seems to be growing in popularity and a lot more sort of evangelists and advocates.

00:57:11:01 - 00:57:15:07
Mark Chen: And so just happy to see that the growth in in interest.

00:57:15:09 - 00:57:42:01
Sara Gutterman: Yes I agree. So strap your seatbelt on because this is going to be a wild ride. Yeah. So thank you, Mark, for your time today. Thanks everybody who attended. And we look forward to talking a lot more about decarbonizing the built environment and carbon offsets. Again, for anyone who wants more information, please go to Builder Media and check out the Cognition Carbon Offset marketplace.

00:57:42:04 - 00:57:53:03
Sara Gutterman: I think my contact information is on there. Got questions you want to reach out? Thanks again to Mary Kestner and Victoria Mirsky and other generous support. Thank you and have a wonderful day.