Net-zero warehousing

The UK’s warehousing stock accounts for over 566  million sq ft of property, with over 1,944 individual units, according to the United Kingdom Warehousing Associations’ (UKWA) latest report on the size and make-up of the sector, released this year. It’s grown by 138 million sq ft and 444 units since the UKWA’s last report in 2015, owing to the boom in warehousing development that’s core to the UK’s economy.

Now, climate commitments are creating a new need to deliver net-zero clusters that can support economic growth in sustainable ways.

One result of the logistics sector’s rising Environment Social and Governance (ESG) activity and alignment with international policy is that the sector is paying more attention to sustainability.

The World Economic Forum (WEF) has forecast that emissions will rise by more than 30% in 10 years to 25 million tonnes per year, reflecting the growth in urban dwellers and online shopping. There’s an increasing demand from industrial occupiers in the logistics sector to address this.

Coupled with this, there’s strong ESG requirements from institutional investors backing these schemes and increasingly sophisticated designs from developers. As a result, industrial sites and new warehouses are becoming increasingly green, with a number of developments achieving Net Zero status using the UK Green Building Council Net Zero Framework. This includes developer PLP’s net-zero ready scheme, PLP Crewe. The speculative development, a 30-acre scheme, achieved this by assessing construction carbon, carbon in materials selection and mitigating remaining emissions via offsetting. In addition, the operational performance of the scheme in the long-term has been optimised through the building fabric, low carbon heating and solar PV.

The Government itself has an ambition to create a net-zero carbon industrial cluster by 2040, with a vision of attracting innovators, investors and problem solvers to create this first low-carbon prototype that others in the UK can replicate. These schemes are on the horizon and it won’t be long before new industrial units come forward with increasingly good environmental credentials.

One key factor in the success of a net-zero cluster is the proximity of businesses within the cluster itself and how they share energy resources on site and use on-site generation or conversion of waste in a closed loop. For the logistic sector, a further key factor is the proliferation of Electric Vehicles (EV) in their fleet, and how these warehouses can support that by providing charging stations that don’t put significant strain on the grid.

The size and aggregation of energy demand across industries creates challenge and opportunities. The current UK electricity network in some cases faces difficulties in providing power to sites, with significant connection costs and delays to development. However, the scale of potential clusters offers opportunities for huge efficiencies in renewable energy generation and demand optimisation, and Carbon Capture. This also helps drive innovation, for example innovation in areas such as Carbon Capture, Utilisation and Storage (CCUS). A concerted shift towards net-zero warehousing, and clusters of this kind would also accelerate the creation of an internal market for hydrogen – the most promising technology for decarbonising carbon intensive sectors of the economy.

Humber, in the North of England, is home to one of many ongoing projects to decarbonise clusters across Europe. The Zero Carbon Humber project aims to create efficiencies and ramp up efforts on CCUS and hydrogen while electrifying processes where possible.

Projects like this help demonstrate that the decarbonisation of logistics doesn’t just contribute to a greener logistics sector. The net-zero ambitions of the sector could lead to long-term gains in other areas – like the development of hydrogen and clean energy and a carbon-neutral built environment.

The logistics sector, as one of industrial property’s largest clients, should consider how best to work with property developers to meet sustainability objectives. As carbon neutrality becomes an important mission for businesses, net-zero warehousing could help further enhance green credentials and support the country as it aims to stabilise grid capacity, ultimately putting logistics at the heart of the UK’s green economic recovery.

Paul White, Director, Sustainability at Turley, discusses the momentum towards net-zero warehousing and how the logistics and property sectors need to be prepared for a boom in net-zero development.

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