A gas-heated office run against an illustrative decarbonisation pathway, and why its gas use decides the date.
Convert the building's energy use into carbon intensity each year, kWh per square metre times an emission factor that falls as the grid decarbonises, and find the first year it exceeds the decarbonisation pathway for offices. For an illustrative gas-heated office at 29.2 kgCO2e/m² today against an illustrative pathway of 40.0, the lines cross in late 2033, so the stranding year is 2034. Replacing the gas boilers with heat pumps keeps it below the pathway to 2050.
Worked in full in Office Real Estate by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
CRREM, the Carbon Risk Real Estate Monitor, publishes decarbonisation pathways by country and property type: the carbon intensity, in kgCO2e per square metre a year, that a building must stay under for the stock to be consistent with a temperature target. A building whose intensity rises above its pathway is "stranded" from that year, in the sense that it would need capital spending to be aligned again, and buyers and lenders increasingly price that date. The calculation is simple, but three inputs decide it: the building's energy mix, the emission factor path for each fuel, and the pathway itself.
Every figure below is illustrative, including the pathway, which is a smooth curve chosen for the example rather than CRREM's published values. For a real asset, use the current CRREM pathway for the country and use type, and the emission factors it is built on.
| Input | Value |
|---|---|
| Gross internal area | 12,000 m² |
| Electricity, whole building incl. tenants | 100 kWh/m² |
| Natural gas for heating | 50 kWh/m² |
| Grid emission factor, 2026 | 0.200 kg/kWh |
| Grid decarbonisation | 5% a year |
| Gas emission factor, constant | 0.184 kg/kWh |
| Pathway, 2026 | 40.0 kg/m² |
| Pathway decline | 7% a year |
Grid factor(t) = 0.200 × (1 − 5%)t
Asset intensity(t) = electricity kWh/m² × grid factor(t) + gas kWh/m² × 0.184
2026: 100 × 0.200 + 50 × 0.184 = 20.0 + 9.2 = 29.2 kgCO2e/m², against an illustrative pathway of 40.0
Stranding year = first year in which asset intensity > pathway
Excel, with years in A, the asset in B and the pathway in C: =INDEX(A2:A26,MATCH(TRUE,INDEX(B2:B26>C2:C26,0),0))
| Year | Grid factor | Asset | Pathway |
|---|---|---|---|
| 2026 | 0.200 | 29.2 | 40.0 |
| 2030 | 0.163 | 25.5 | 29.9 |
| 2032 | 0.147 | 23.9 | 25.9 |
| 2033 | 0.140 | 23.2 | 24.1 |
| 2034 | 0.133 | 22.5 | 22.4 |
| 2036 | 0.120 | 21.2 | 19.4 |
| 2040 | 0.098 | 19.0 | 14.5 |
| 2050 | 0.058 | 15.0 | 7.0 |
The office starts 27.0 per cent inside its pathway and still strands in 2034, 7.9 years from now on an interpolated basis. The reason is the gas. The electricity component falls with the grid, from 20.0 to under 12 within a decade, but the gas component stays at 9.2 kgCO2e/m² for ever, and the illustrative pathway reaches 7.0 by 2050. A building that burns gas at this rate cannot stay aligned to 2050 however clean the grid becomes: its floor sits above the pathway's end point. From 2034 to 2050 the building emits about 1,010 tonnes more than its pathway allows, which at an illustrative shadow carbon price of €100 a tonne is €101.0 thousand, a small sum next to the value effect of being labelled stranded.
Replace the boilers with heat pumps at a coefficient of performance of 3.0 and the 50 kWh of gas becomes 16.7 kWh of electricity. Intensity drops to 23.3 today and, being all electric, falls at the grid's 5 per cent a year. The illustrative pathway falls at 7 per cent, so the lines would still meet eventually, in about 2051.3, but not within the 2050 horizon. Whether that pays is a separate calculation, covered in does an energy upgrade pay for itself on an office.
| Case | Crossing | Stranding year |
|---|---|---|
| Grid decarbonises at 3% a year | 2032.0 | 2033 |
| Gas use 70 kWh/m² (intensity 32.9) | 2030.6 | 2031 |
| Base case | 2033.9 | 2034 |
| Electricity cut by a fifth, to 80 kWh/m² | 2036.7 | 2037 |
| Grid decarbonises at 7% a year | 2036.7 | 2037 |
| Gas use 30 kWh/m² (intensity 25.5) | 2038.7 | 2039 |
| Heat pumps, grid at 3% a year | 2038.8 | 2039 |
| Heat pumps, grid at 5% a year | none | after 2050 |
The heat pump case is the most sensitive to an assumption the owner does not control. If the grid decarbonises at 3 per cent a year rather than 5, the all-electric building strands in 2039. Cutting electricity use by a fifth with lighting and controls, while keeping the gas, buys only three years.
The stranding year is where the building's falling carbon intensity crosses a pathway that falls faster. For this illustrative gas-heated office it is 2034, and the fixed gas floor of 9.2 kgCO2e/m² means no grid scenario saves it by 2050; electrifying the heat does. How a dated energy capital call feeds into the ten-year cash flow and the value of an office is in the free workbooks for Office Real Estate.
A building is stranded from the first year its carbon intensity exceeds the CRREM decarbonisation pathway for its country and use type, meaning it would need investment to be aligned again. In the illustrative case an office at 29.2 kgCO2e/m² today crosses an illustrative pathway that starts at 40.0 and falls 7 per cent a year in 2034.
Because gas emissions do not fall with the grid. In the worked case 50 kWh/m² of gas gives a fixed 9.2 kgCO2e/m², while the illustrative pathway reaches 7.0 by 2050, so the building cannot stay aligned whatever happens to the electricity factor. Replacing the boilers with heat pumps removes that floor.
Use the floor area basis the pathway is defined on, typically gross internal area. In the illustrative office, dividing the same emissions by 10,000 m² of lettable area instead of 12,000 m² gross raises intensity from 29.2 to 35.0 and moves the stranding year from 2034 to 2030.
This article is one calculation from Office Real Estate. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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