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NREP levies internal carbon tax to bolster net zero race

9th November 2022

Nordic real estate group NREP is boosting its decarbonisation schedule with a new internal carbon tax.

The urban investor, which has €18 billion ($18 billion) of assets under management, has committed to reducing embodied and operational CO2 emissions by 30% and 50% respectively before the end of next year. It is committed to becoming entirely carbon neutral by 2028.

The company says its new internal CO2 tax will “help drive innovation by putting a monetary figure on the cost of carbon”, ensuring the impact of emissions becomes a central factor within its decision-making process.

NREP will be adopting the EU Trading System as its primary carbon benchmark, setting the tax at its current level of €90 per tonne. The tax for embodied emissions during construction will be paid as a one-off at completion while operational emissions bills will be paid annually.

The tax receipts will be re-invested in the respective projects to improve sustainability performance and reduce emissions via a number of measures, including a carbon capture programme.

A recent carbon pricing report from McKinsey claims only 4% of real estate companies have an internal carbon charge, compared with 23% all 2,600 companies it surveyed. 

Claus Mathisen, CEO of NREP, said: “Sustainability actions are most powerful when they are taken early on and are at the core of a business. Putting a price on carbon is a great motivator. To reduce the CO2 fee as much as possible, teams are now doing a deep carbon analysis on every building within NREP’s portfolio.

“Our internal carbon tax is a means to an end. It puts us one step ahead in adjusting our business for a greener future, with regulations tightening every year. As such, it reduces risks and drives business value. We see a surge in demand for sustainable real estate, from customers, banks, and investors alike. I firmly believe that decarbonising now will equate to a future advantage.” 

Plans for fully net zero logistics facility unveiled

Also this week, NREP announced it will build the world’s first net zero logistics facility, which will achieve net zero across operational and embodied carbon without external off-setting.

The project, pictured above, is in Bålsta, 50 km outside Stockholm, Sweden. Embodied carbon will be reduced through low-carbon materials, such as timber and lower-carbon concrete. Carbon neutrality will be achieved during the building’s lifecycle, NREP said.

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