One and the same action, capturing the carbon dioxide from the building’s air, sets off a chain reaction. But how far the chain runs, and how much value it produces, is decided in the receiver, meaning the owner.

When I offer you our product, your first question is probably: does it increase the value of my property?

To answer this question, it’s worth understanding what our product actually does. It captures carbon dioxide from the air inside your building. Because of that, you need less fresh air, your ventilation uses less energy, and the building is lower in emissions.

But that value does not appear in the same place for everyone. For one owner it’s in the yearly rent, for another only at the sale, for a third in the construction cost. 

So the more useful question is not if the technology works, but what do you want from your building.

Why your investment strategy matters here

The value of a building is basically its net operating income divided by the yield that investors require. Our product works on both of these numbers. It can raise the income, through a higher rent and lower running costs, and it can lower the yield, because a greener building that fits better to the tightening regulation is usually seen as less risky.

However, this makes sense mostly if you value the building as an income asset. What about a developer who looks at the cost to build it? Or a company in its own building looks at its emissions, or and a heavily indebted owner looks at its financing? There are cases to be made for all.

The point is: Your strategy decides not just how much of this value you capture, but whether income and yield are even the right measure to begin with.

Let’s go through five common building investment strategies, and how the value of our technology looks for each one. Consider which one you might be closest to.

If you hold a building for the long term

If you own a building as a stable, long-term income asset, like a pension fund or an insurance company does, the value comes from things that accumulate during your holding period.

The cases for carbon capture

The first one is a higher rent, when tenants pay a premium for a low-emission building that they can also use in their own emission reporting. 

The second one is lower running costs, because the carbon is captured directly from the ventilation air, which lets you bring in less fresh air, and so the ventilation needs less energy. 

And the third one is the protection against tightening regulation, that could otherwise lower the value of the building later. 

The case against carbon capture

This benefit stays thin, if the building is already in a prime location, full and with top rent, or if your tenant pays the running costs, so that the saving never comes to you.

When it might be the best fit

However, in the more usual case, a building that is not yet at the top of its market, these effects work strongly for you, because you hold it long enough to collect both the higher income every year and the higher value at the exit. In one case we modelled, the value of the building was around eleven million euros higher over ten years than without it.

If you buy, improve and sell

If you instead buy buildings to raise their net income with active management, and then sell them re-priced, like a real estate fund does, capture is one tool among many. It raises the net income through the rent premium and the energy saving in the ventilation.

The case for carbon capture

For you the important part is the re-pricing: when the income is higher and the building is greener, the next buyer may accept a lower yield, and this is where most of your return comes from. 

The case against carbon capture

The difficulty is that you have to put this premium already into your purchase price, and the buyer at the exit has to accept it as well. So the value depends on if your market begins to price a green premium that you can put into your calculation. Without that, your lender and your buyer do not credit it, and so you cannot price it into the deal. 

When it might be the best fit

Still, if the premium does appear in your market, this is actually the strategy that turns it into money the fastest, because you raise the income yourself and sell into the re-pricing inside your own holding period.

If you are building something new

If you are building a new property, like a developer or a construction company, the value is not in the rent but in the investment itself.

The case for carbon capture

Because the capture removes carbon dioxide directly from the air, you do not need to bring in as much fresh air to keep the indoor air quality on a good level. This means you can design a smaller ventilation system, smaller ducts and smaller air handling units, and this lowers the construction cost already from the start. 

In one calculation that we made together with technology company, the saving in the initial investment was about 280 000 euros. 

The case against carbon capture

This benefit exists only in a new building. In an existing building the ducts and the shafts are already in place, they are a sunk cost, and so this particular saving disappears. 

When it might be the best fit

In a new building, though, the case is unusually clean. The savings in the construction cost comes immediately and does not depend on the tenant or on the market. At the same time you get a building that already supports where the regulation is going in 2030, which protects its value and its sale later.

If you own and use the building yourself

In this case you might represent a manufacturer or a corporation that owns its own head office. For you the value is in your own emissions and in reporting.

The cases for carbon capture

When the ventilation needs less energy, your purchased energy goes down, and with it the emissions from that energy, which are counted as your Scope 2. 

The carbon dioxide that is taken out of the air can also support your own carbon targets, and because you use the space yourself, the same low-emission building serves your reporting and your brand. 

This becomes valuable when you have a real climate target or a reporting duty, for example under CSRD, or when your customers expect it. 

The case against carbon capture

The effects of our technology matter little to you if most of your emissions come from somewhere else than the building, for example from an industrial process.

When it might be the best fit

For a company that does have real targets and reporting under CSRD, this is a reduction that you make yourself, in your own building and under your own control, instead of buying offsets of an uncertain quality. The clean carbon dioxide that it produces is something you can show, which has its own value for your brand.

If you carry a lot of debt

If you are, for example, a listed property company under refinancing pressure, the most interesting effect can be in your financing. The value reaches you through a chain of steps.

The cases for carbon capture

When the net income is higher, the building is valued higher, your loan-to-value gets better and you have more room in your loan covenants. And when you also have verified green credentials, the rating agencies and the banks may see you as less risky. 

Together these can improve your credit rating, and a better rating lowers the interest you pay, or it can open access to green financing that is often a bit cheaper. 

For an owner with a lot of debt this matters much more than for the others, because the cost of borrowing is a big part of your economics, and a downgrade is expensive.

The case against carbon capture

The connection is indirect and slow. A credit rating is decided by your whole portfolio and your level of debt, not by one building, so if your problems are structural, for example too much debt or a weakening property type, one greener building does not move the rating. And the benefit comes only if your lenders really price these green credentials.

When it might be the best fit

Still, the same leverage that makes a downgrade expensive works also in the other direction. For an owner whose situation is not purely structural, and who can still invest, even a small improvement in the financing terms becomes a large number in euros over a big loan. And raising the income together with the green credentials is one of the few moves that help the valuation, the covenants and the refinancing at the same time.

So, which owner are you?

There is no single answer to how carbon capture raises the value of your building. The technology is the same in every case. What changes is what it’s worth to you, and that depends on your strategy. 

If you own, invest in, or build properties, please don’t hesitate to reach out which of these five is closest to your situation, and where you would weigh the value differently. That is the conversation I am really after.