One sector that must be at the forefront of decarbonizing the economy is real estate, given its outsized impact on carbon emissions, one expert said.

Roughly $50 trillion is needed through 2050 to wean the U.S. economy off carbon emissions.

“When you look at an economic level, it is a staggering opportunity,” Brendan Wallace, founder of Fifth Wall, a venture capital firm specializing in climate change, told Yahoo Finance (video above). “So I think it's a macro trend for the whole economy, but it's particularly relevant for the real estate industry, given its impact on climate change.”

Residential and commercial buildings account for 40% of energy consumption in the U.S., though they contribute just 17.6% to GDP. Globally, buildings are culpable for 38% of carbon emissions.

“So correspondingly, the real estate industry needs to invest an enormous amount in decarbonizing itself,” Wallace said.

Wallace's venture capital firm, Fifth Wall, raised $140 million of $500 million as of September 24 to invest in technologies that would reduce emissions in real estate. The fund's backers include Equity Residential (EQR), Hudson Pacific Properties (HPP), Invitation Homes (INVH), Ivanhoé Cambridge, and Kimco Realty Corporation (KIM).

How buildings pollute — and ways to make them greener

Real estate contributes to climate change in two major ways, which present the biggest opportunities to cut emissions, Wallace explained.

The first is the operational carbon footprint, or the energy required to keep buildings running and maintained. This includes keeping the lights on, cooling and heating, and air ventilation, as well as supplying energy for other uses, like powering medical equipment in hospitals.

Making buildings more energy-efficient and employing renewable energy can make real estate greener over time.

"There's solutions that are...building systems technology and alternative energy on site and on-site battery that are particularly important to reducing the energy consumption of the existing assets we have today,” Wallace said.

The second area is the embodied carbon footprint, or carbon emissions from materials, transport of materials, and construction of buildings. Swapping more sustainable materials for carbon-intensive ones — like concrete, steel, plastics, and foam insulation — is one way to draw down emissions in a building's life cycle.

“And so today, what we're seeing is a lot of innovation in and around just smart and kind of carbon sequestering and decarbonizing materials, so just materials that can reduce the embodied carbon of real estate assets,” Wallace said.