On 1 July 2026, CRREM retired its Excel tool that had been with us for close to a decade.
The pathways and methodology have not disappeared though. In fact, CRREM has made the whole thing more transparent. On its revamped website, we can now see the Assessment Guide, Technical Blueprint, pathway data, emission factors and worked examples needed to complete a CRREM assessment. For practitioners who just want to run a quick independent analysis, however, there is now a little more assembly required. You can use a commercial platform, or you can build the calculation workflow yourself.
Fortunately CRREM didn’t just stop there and let you decide your own fate. CRREM provides step-by-step guidance on how you can create your own tool. So I decided to give it a try. Partly, I wanted a practical internal tool that I could use for individual assets and portfolios. I was also curious whether I could actually recreate the CRREM calculation by simply following the guidance. And in the end, it worked.
It takes building energy data, selects the relevant pathways and emission factors, calculates energy and carbon trajectories, and identifies the CRREM “Misalignment Year”. Since this is a DIY, I also added some supporting layers for data coverage, boundary review, refrigerants, renewable energy and retrofit scenarios.
Before relying on it, I checked it two ways. First against CRREM’s published worked examples, which exist precisely so anyone building their own implementation can prove their maths matches CRREM’s. Then I re-ran client portfolios that had previously been assessed with the old Excel tool, comparing outputs datapoint by datapoint on matched data vintages rather than eyeballing the headline “Misalignment Years”. The results lined up.
But the more useful outcome was not really the tool itself. Building it forced me to look much more closely at what sits behind the final “Misalignment Year”.
One number can hide quite a few decisions
The basic CRREM calculation is not especially mysterious. You calculate the energy and carbon intensity of a building, project its performance, and compare it with the relevant CRREM pathway.
But moving from that basic logic to a usable assessment raised a surprising number of questions. What happens when only landlord energy data are available? How should estimated consumption be distinguished from reported data? How should on site renewable energy be treated? What exactly happens to the pathway when a building switches from gas heating to a heat pump?
The retrofit module was a good example. The old CRREM Excel tool used a very simple structure for retrofit actions: the name of the action, the year it would happen and the expected energy saving.
That is perfectly usable for a broad sensitivity test. But it quickly becomes limiting when you want to understand what an intervention is actually doing.
Saving 70,000 kWh of gas is not the same as saving 70,000 kWh of electricity. Both produce the same reduction in total energy use, but their effect on carbon emissions will be different. Electrification is more complicated again. Replacing a gas boiler with a heat pump may reduce total energy consumption and carbon emissions while increasing electricity demand. A single energy saving percentage cannot show that clearly.
On-site solar exposed a different issue. At one point during my own build, the model I built treated new solar generation as additional building consumption. I corrected it so that self-consumed solar displaces the same amount of grid electricity. Spotting and correcting it was a useful reminder that even apparently simple accounting choices can distort the final pathway if they are not tested carefully.
These examples all sound obvious once they are written down. But it is exactly the sort of assumption that disappears behind a final “Misalignment Year” unless the calculation is transparent.
I ended up keeping the core CRREM assessment controlled, while placing these additional decisions around it. The baseline result remains visible, and retrofit or renewable energy scenarios are shown separately rather than overwriting it.
For me, that is the right balance. The purpose is not to adjust the CRREM methodology until it produces a more convenient answer. It is to make the inputs, assumptions and scenarios around the assessment visible enough to be reviewed and challenged.
What CRREM does well
CRREM remains a very useful framework. It gives the real estate industry a common, science-based reference point for comparing the energy and carbon performance of buildings with a pathway aligned with 1.5°C. That is valuable for portfolio screening. If one asset misaligns in 2028 and another in 2038, the first asset probably deserves attention sooner.
It also creates a common language. Investors, asset managers, sustainability teams, engineers and valuers may approach transition risk from different directions, but CRREM gives them a shared reference point for discussing where an asset currently sits and how its position may change.
The important question is what happens next. A “Misalignment Year” can identify that there is a gap, but it cannot, on its own, explain why, let alone what should be done about it. A building may be misaligned because it is genuinely inefficient. Or its operation may simply be atypical, with longer operating hours, unusually intensive occupancy or specialist tenant activities. In some cases, the reported energy boundary may not match the whole building basis CRREM expects — either because tenant consumption is missing, or because the meter includes process loads that are not really building energy at all and cannot be separated out. Even the selection of floor area and property type can materially affect the result.
Those are not reasons to dismiss CRREM. They are reasons to investigate the result properly.
The methodology is still evolving
CRREM has been increasingly open about the limitations of its current Energy Use Intensity (EUI) methodology.
At present, the energy pathways are closely connected to the carbon pathways. This can produce some counterintuitive outcomes. In locations with carbon intensive electricity grids, buildings can face very demanding energy reduction pathways because each unit of electricity produces more carbon. In locations where the grid is already relatively clean or decarbonising quickly, an inefficient building can appear better aligned from a carbon perspective even if its underlying energy performance has not improved very much.
CRREM’s own methodology material acknowledges this issue. Its Technical Council is now reviewing how the EUI pathways should evolve, including whether energy and carbon pathways should be separated more clearly and how technical feasibility and property specific energy uses should be considered.
It is an acknowledgement that the current approach has limitations and can be improved.
I see that as a positive sign. A framework like CRREM becomes less useful if people treat it as unquestionable. Being open about its limitations makes it easier to use the results responsibly.
Misalignment is becoming financially relevant
CRREM replaced “Stranding Year” with “Misalignment Year” in July 2025. One year later, it was still asking the market to retire the old term for good.
The old term certainly had more impact. “Your asset is stranded. Not good.” It is also a less ambiguous message for investment decisions than “misaligned”. Yet the distinction really matters. “Stranding Year” sounds like a prediction that an asset will lose value or become financially unviable in a particular year. That is not what CRREM calculates, nor the message CRREM ultimately wanted to deliver. It identifies when an asset’s projected energy or carbon performance moves outside its relevant pathway.
But this does not mean the result has no financial relevance. INREV identifies alignment with a decarbonisation pathway such as CRREM as one of six environmental factors relevant to investment underwriting. Its guidance connects transition risk with capital expenditure, operating costs, income, discount rates and exit yields.
The direction is also becoming clearer in valuation practice. RICS’s latest global professional standard, ESG and Sustainability in Commercial Property Valuation, which took effect on 30 April 2026, identifies emissions pathway analysis, with CRREM given as an example in Europe, as a factor that may be relevant to commercial property valuation. For the first time, it also includes specific guidance for the UK, EU and Australia, reflecting the more developed regulatory and disclosure requirements in those markets.
Just as importantly, RICS draws a clear line between valuation and strategic ESG advice. It recognises that ESG-related capital and operational expenditure may be relevant to value, but also that assessing transition risk, testing scenarios and advising on a response may require separate specialist input. INREV also acknowledges the difficulty. Data gaps, assumptions about future costs and savings, and wider market dynamics can make the financial effect of an environmental intervention difficult to isolate.
In that sense, a CRREM assessment can inform valuation and investment decisions, but the Misalignment Year is not itself a valuation conclusion. Understanding why an asset is misaligned and what can realistically be done about it requires another layer of investigation.
As CRREM moves further into underwriting and valuation, the quality of that investigation becomes more important, not less. A “Misalignment Year” based on incomplete energy coverage, the wrong property classification or an unrealistic scenario should not carry the same weight as one supported by a transparent and well-documented assessment.
A signal, not a verdict
My main conclusion from building the workflow is that CRREM is mathematically deterministic, but it is not professionally determinative.
If two people use exactly the same inputs, pathways and assumptions, they should get the same result. But the result does not determine whether the asset is good or bad, whether it should be sold, or how much it is worth.
It should prompt further questions:
- Why is the asset misaligned?
- Is the result driven by genuine inefficiency, intensive use or incomplete data?
- Which parts of the energy demand can realistically be influenced by the owner?
- What interventions could improve its position?
- Are those interventions technically and financially credible?
Those questions are ultimately more valuable than the “Misalignment Year” on its own.
Building the workflow has given me a practical internal tool for running CRREM assessments. More importantly, it has given me a clearer view of where the calculation ends and professional judgement begins.
If you’re wrestling with this on an asset or portfolio, drop me a note.
AI Usage Disclosure Note: The original idea and research are my own. AI supported the drafting and editing.