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Why C-PACE and the Commercial Real Estate Industry Should Take Action on Embodied Carbon Now 

Valerie Crum
Sand and worksite to manufacture of cement in a quarry

In August, the State of California became the first state to pass legislation limiting embodied carbon emissions from new construction of commercial buildings1, which will begin in 2024. As the built environment continues to generate 40% of annual global carbon emissions, similar policies are expected to follow across the country. The good news is that commercial real estate leaders can reduce embodied carbon to capitalize on emerging tenant preferences without a significant cost premium. 

For smart CRE leaders, acting on embodied carbon now is both a sustainability strategy and a financial imperative. 

What is embodied carbon? 

Embodied carbon is the carbon dioxide (CO₂) emissions associated with materials production and the construction processes of a building or infrastructure. It includes any CO₂ created during the manufacturing of building materials and the transport of those materials, as well as construction practices used.2  Think of each material as an “ingredient” with its own “nutrition label,” called an environmental product declaration (EPD). Today, standard materials such as concrete, steel, and aluminum consistently have weak performance on environmental, health, and carbon impacts.3

While commercial real estate owners and regulators have historically focused on energy and water consumption from building operations, embodied carbon is the other half of a new building’s total impact. Over the next 30 years, new construction projects are projected to produce just as much carbon from embodied sources as from operations.4 Going forward, a comprehensive sustainability strategy will be needed to target whole-building decarbonization through both operational and embodied improvements. 

Here’s the good news: Taking action on embodied carbon is simple. Today, new construction can reduce embodied carbon by 19-46% with less than a 1% cost premium.5 In a study from RMI and SKANSKA6, the greatest embodied carbon reductions were achieved through no-cost measures, such as substituting different concrete mixes that maintain material specifications. 

Why take action now? 

Premiums for “green” certified buildings have reached an incredible 6% (JLL)7, and modern tenants are demanding sustainable, “net zero” spaces that produce no additional carbon emissions. A truly “net zero” space must reduce its embodied carbon footprint in order to make this distinction possible.8 Furthermore, because materials with lower emissions have no, or low-cost premiums, they are a smart strategy to earn credits toward green building certifications, such as LEED, that now incentivize action on embodied carbon.9 Embodied carbon is quickly becoming an essential step to achieve attractive green premiums and maintain sustainability-minded clients. 
Acting on embodied carbon now is also a smart financial choice. Emerging tax incentives will reduce the cost of high-performance materials10, and there are early indications that high-performance, low-carbon materials can achieve lower price points.11  

Finally, the commercial real estate industry has an opportunity to collaborate with policymakers on appropriate embodied carbon goals. The SEC’s climate-related disclosures rule12 may require some companies to report on embodied carbon levels, and more local policymakers are following California’s example to pursue embodied carbon legislation.13 These new policies are driven by local sustainability goals, as well as the opportunity to reduce energy consumption14, spark new economic development15, and improve air quality.16 

Embodied carbon in commercial buildings is an emerging industry and less understood than operational energy use, so we expect some initial “growing pains” for compliance with new regulations. These may include:

Firms that act on embodied carbon now can get ahead of regulations while developing industry-defining expertise and growing the market for high-performance materials. 

How can my company get started? 

Looking forward, Nuveen Green Capital believes C-PACE financing can support the acceleration of decarbonization by providing more affordable capital to new construction projects that are leading the way on embodied carbon, and we will be supporting our public-sector partners on this opportunity. 

Reach out to Jessa Coleman, Director, Programs and Policy at:,  to learn more about opportunities in your state. 

Commercial real estate leaders can start planning for lowering embodied carbon today. Next steps and industry-backed resources include:

Valerie Crum is an MBA/MS candidate at the Ross School of Business and the School for Environment and Sustainability at the University of Michigan. She focuses on emerging finance and technology to build the next generation of resilient cities. Prior to graduate school, Valerie led grant investments at a Miami foundation to guide the future of one of the fastest-growing US cities. Her background also spans green building and municipal energy policy. She is a LEED Green Associate. 

Valerie was the Environmental Defense Fund Climate Corps Fellow at Nuveen Green Capital during the summer of 2023.

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1 The California Building Standards Commission (CBSC) voted for two building code changes to limit embodied carbon emissions in the construction, remodel, or adaptive reuse of commercial buildings larger than 100,000 sq feet and school projects over 50,000 sq ft. These changes go into effect on July 1, 2024, statewide. More details at  
13 See Carbon Leadership Forum’s Current Embodied Carbon Policy tracker and map available at 
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