Cities account for more than 70% of global greenhouse gas (GHG) emissions, with the real estate sector—including buildings and construction activity—accounting for nearly 40%. That’s why, according to the World Economic Forum and Boston Consulting Group, decarbonization efforts targeted towards the real estate sector will have the greatest impact on reducing cities’ carbon footprint.

B Capital portfolio company Accacia, an AI real estate and infrastructure decarbonization platform, is one climate tech innovator tackling real estate and infrastructures’ carbon emissions head-on.

We spoke with Accacia Founder and CEO Annu Talreja to learn more about these efforts, the technologies helping to scale the decarbonization impact, and the innovations Talreja is watching closely that can help the real estate industry achieve net zero.

B Capital: Why is real estate such an important part of the broader decarbonization effort?

Annu Talreja: When we say real estate, we’re referring to the built environment, which includes real estate and infrastructure, as well as construction activity. This is one of the single-greatest emitting sectors, hence the urgency to tackle emissions in this space.

Real estate also accounts for about 40% of total energy consumption and 25% of total water consumption. So generally, buildings are the hotspot of all energy and fuel consumption. There’s an opportunity to not only optimize that consumption, but also make a shift to more renewable and sustainable sources of energy.

B Capital: Accacia’s technology isn’t just helping buildings reduce carbon emissions. It’s also improving transparency and visibility into GHG emissions data in real time. Is that visibility something the real estate sector is showing greater demand for, or is there a need to educate the sector on why this data transparency is important?

AT: I divide the real estate industry into four segments.

At the top are your industry-leading players who take a leadership role in solving for the climate crisis in real estate. Second would be the companies who do some form of ESG reporting, but want to “double-click” on the “E” of ESG. They want to get serious about climate risk in real estate. Third are those just starting out on their ESG reporting journey, and fourth are smaller players who are not invested in carbon metrics.

Broadly speaking, Accacia is focused on the first and second groups as customers, because they’re actively looking for solutions to help them track and monitor this data and increase transparency in their systems. This transparency helps them budget decarbonization projects more appropriately.

And it’s not just that they want to decarbonize for the greater social good. It also makes commercial sense. Most Fortune 500 companies have net zero goals, and thus want to be located in buildings which are also net zero. Net zero commercial buildings are now able to command a 10%, even 30% rental premium versus buildings that are not net zero. That’s a huge revenue driver. Plus, switching to more renewable energy has a positive impact on your bottom line.

So, there’s a huge market push, and market leaders are gravitating towards understanding their climate risk more appropriately. I think the next three-to-five years will see the industry accelerate , and the third and fourth category of customers will also gravitate towards evaluating their climate risks.

B Capital: Accacia uses AI in its platform. Is AI an important part of the decarbonization effort in climate tech overall?

AT: Absolutely. That’s true not only for the real estate sector. AI and machine learning play a critical role in scaling decarbonization efforts and making intelligent decarbonization choices.

With AI, it’s easy to analyze large volumes of data and look at multiple scenarios, which, from a human perspective, would be a very daunting task. With AI, we’re able to scale up the entire effort.

B Capital: Are there any other emerging climate technologies you’re watching closely in the real estate sector?

AT: There is a lot of innovation happening on the side of building materials and hardware. A majority of emissions in real estate comes from materials and construction activity. Cement itself contributes 7-8% of total GHG emissions globally—a very big contributor. There’s a lot of research around green cement and innovative cement replacement materials. I find that really interesting. I’m looking out for more sustainable forms of cement and steel, because these two materials are very heavy on emissions.

There are also a lot of IoT devices on the market that are evolving to help understand building performance more intelligently. Elsewhere, I’ve come across glass panel technology developed for large commercial buildings, like skyscrapers. Each of those panels works as a sort of solar panel. A lot of work is happening on innovative fuel and energy sources, and what I find especially interesting is the integration of those technologies within building systems.

Finally, one technology to look out for in real estate is carbon removal. It’s an area where a lot of exciting developments are happening, and a lot still needs to happen. Carbon removal is an important part of the climate risk mitigation effort going on across the world.