Energy mixes & CO₂ emissions

Energy mixes refer to the distribution of the total amount of energy consumed by a given entity by energy source. This can be for an asset, a company, or a country. Although the percentages differ notably across countries, fossil fuels overwhelmingly constitute the global energy mix, accounting for over 80% of the total worldwide.

A 2021 report by the International Energy Agency (IEA) introduced changes in power composition from 1971 to 2019. Below is the situation of the transition in the energy mix composition: 

World electricity generation mix by fuel, 1971-2019. Source: International Energy Agency.

The energy mix at the building level depends on the national mix but can also include specific energy sources (such as rooftop solar panels). A building’s CO₂ emissions are directly influenced by the energy sources used for its power supply. Each asset has a different energy mix depending on its metering plan and the uses within the building. Similarly, each country has a different energy mix depending on the structure of its energy system and the consumption of all national entities. 

Why consider the energy mix? 

In the EU, buildings are the largest energy-consuming sector, responsible for about 40% of energy consumption and 36% of carbon emissions. About 35% of the EU’s buildings are over 50 years old, and almost 75% are energy inefficient. Given this, the European real estate sector must significantly reduce its carbon footprint.

To achieve this, it is crucial to understand which energy sources are used to assess a building’s carbon performance. A building powered by high-carbon-intensity energy sources will have poor carbon performance, even if it is energy-efficient. An effective ESG (Environmental, Social, and Governance) strategy requires prioritizing actions that will have the greatest impact on reducing CO₂ emissions. By understanding the energy mix, property owners and managers can prioritize investments in renewable energy, improve energy efficiency or else choose green energy suppliers.

Considering the energy mix allows for identifying the main sources of CO₂ emissions, implementing effective measures to reduce the carbon footprint, and improving the environmental performance of real estate assets. This, in turn, contributes to sustainable development goals and combats climate change.

Key definitions: Final Energy, Primary Energy, and CO₂ equivalent

Final Energy

Final energy consumption refers to the total energy consumed after considering the energy loss during the generation, transmission, and distribution phases. It is usually the type of energy users consume, such as heating, cooling, or lighting. It’s often considered the energy consumption seen on a bill.

World electricity generation mix by fuel, 1971-2019. Source: International Energy Agency.

In the context of real estate assets and energy management, final energy consumption can be a valuable metric to evaluate buildings’ energy performance and identify improvement opportunities. To use final energy consumption for energy management, you can start by manually collecting energy data from your buildings or through automated metering systems. You can then analyze the data to identify energy use patterns, peak demand periods, and ways to manage energy consumption better. Based on this analysis, you can prioritize energy efficiency measures that are most effective in reducing final energy consumption, such as improving insulation, upgrading HVAC systems, and installing energy-efficient lighting.

For more on energy management: how to reduce your consumption of building lighting. 

In addition, you can use final energy consumption to compare the energy performance of your buildings to industry standards or similar buildings in your portfolio. By tracking your progress over time and comparing your performance to peers, you can set energy reduction targets, monitor your performance, and continuously improve your energy management strategies.

Primary Energy

Primary energy refers to the total energy extracted from a natural resource (such as fossil fuels, nuclear fuels, or renewable energy sources) to generate a type of energy consumed (such as heat or electricity). It accounts for the energy needed to create the energy used in the final stages before accounting for the energy loss during the generation, transmission, and distribution phases.

To use primary energy consumption for energy management, you can start by collecting data on the energy sources used by your buildings, such as electricity or gas. You can then convert the energy consumption data into primary energy units using conversion factors that reflect each energy source’s energy content and efficiency by country. Based on this analysis, you can identify areas where energy efficiency measures can reduce primary energy consumption. This can help you protect the value of your real estate assets. You can also ensure to align with the market expectation and the European taxonomy (or other regulations/certifications).

CO₂ equivalent (CO2eq)

CO₂ equivalent (CO2eq) refers to the total amount of greenhouse gases emitted into the atmosphere from combustion, both directly and indirectly, due to energy used by buildings. This includes not only carbon dioxide (CO₂) emissions but also other greenhouse gases, such as methane (CH4) and nitrous oxide (N2O), which are converted into CO₂ equivalents based on their global warming potential. The assessment of CO2eq emissions is closely related to the carbon footprint of buildings. These emissions can be determined using an official emission factor database, which accounts for the different greenhouse gases emitted and their respective CO₂ equivalent values.

In the context of real estate assets and energy management, CO₂ emissions help evaluate a building’s carbon footprint and identify opportunities for reducing greenhouse gas emissions. By analyzing the CO₂ emissions of a building or portfolio, one can evaluate the amount released into the atmosphere due to the building’s operations and determine the potential for reducing the carbon footprint. To use CO₂ emissions for energy management, you can start by collecting data on the energy sources used by your buildings and calculating the amount of CO₂ emissions associated with each energy source.

How can you optimize your ESG strategy?

Deepki’s ESG Index methodology allows for analyzing the whole real estate market’s energy performance on a European market level.  As the first publicly available benchmark measuring real estate’s environmental performance using real data, the Index provides energy consumption and CO₂ emissions values for the average, top 30%, and top 15% performers across different real estate typologies, in the UK, France, Germany, Benelux, Italy, Spain, and Europe overall, helping define sustainable investments according to the EU Taxonomy. 

Final energy consumption result in 2023 in Europe. Source: ESG Index website.

By automatically collecting actual- rather than declarative- data from more than 400,000 assets in 41 countries, Deepki can share in-depth insights into the real estate sector’s energy performance by asset type (offices, retail, residential, logistics, healthcare, etc.) and location. Published and updated annually, this benchmark reflects the European market and its systemic evolutions.

The top 15% and top 30% primary energy indicators are best utilized for comparing against top-performing assets and considering alignment with the European Taxonomy. Currently, the European Commission has designated primary energy as the measure used to quantify an asset’s performance. Additionally, the final energy and CO2eq emissions indicators can assess the overall environmental performance of an asset. These other two benchmarks can help real estate actors better understand where they stand in the sector’s effort to reach net zero. 

Furthermore, Deepki allows for more detailed benchmarking at the asset level directly through Deepki Ready, our SaaS platform. To learn more about this topic, check out our “Behind the scenes of the ESG Index” blog. The 2024 edition will be released at the end of the year.

Using the ESG Index for performance comparison

To adequately use the ESG index to compare your assets in terms of primary energy, you must first:

1. Know your building typology and floor area,
2. Ensure you have a comprehensive metering plan in place to identify the presence of different energy sources in your building. This will provide you with an initial indication of the energy mix, allowing you to approximate the percentage of each energy source, such as gas, electricity, or renewable energy, used for heating, cooling, and other purposes.
3. Have enough consumption coverage data or a reliable estimation methodology, 
4. Gain a thorough understanding of the building’s energy mix by ensuring precision in the consumption data, specifically identifying the energy sources associated with it.
5. Finally, convert your number with your country’s coefficient to calculate your primary energy consumption. 

Once you, Asset Manager, have converted the final energy of a specific asset into primary energy consumption, it is possible to use Deepki’s ESG Index to compare your asset’s performance in relation to the top-performing assets of the industry. You can compare the assets in relation to the country’s average and build typology. This way you can provide insight into whether your asset is underperforming or surpassing EU taxonomy standards. You will also be able to evaluate your final energy consumption and carbon footprint linked to building energy usage compared to the market’s top-performing assets to assess areas to improve your ESG strategy and reduce your overall energy consumption.