Buildings hold significant, untapped opportunity for a green restart

The world as we know it has changed these past months, and we will and should not go back to where we were. Instead we need to build back better, with a way forward that combines economic stimulus with policies that take serious action on climate change. In doing so, there’s no avoiding buildings. They are integral to achieving the sustainable future we want, accounting for nearly 40% of global energy and 1/3 of global greenhouse gas (GHG) emissions. So, tackling the building stock is essential to getting on track for decarbonization. At the same time, improving energy efficiency in buildings is also one of the most cost-effective ways to reduce CO2 emissions and help meet the Paris Agreement.

Buildings are central to recover better

An estimated 9 – 30 jobs would be created for every million dollars invested in energy efficiency measures in the building sector and the measures have short time leads.

The benefits of focusing on buildings extend beyond reaching climate objectives and cost efficiency. It also retains and creates jobs, helping to accelerate economic recovery. In 2019, 220 million jobs depended on investments within the building sector, accounting for 7% of total global employment. In 2020, due to the covid-crisis more than 25 million jobs have already been lost or are at risk, and investments in energy efficiency in buildings are expected to fall by nearly 15 % from around USD 150 billion in 2019.

We have seen this work before; following the global financial crisis of 2008, a United States stimulus program focused on building renovation created over 200,000 jobs. This shows that political decisions can have supporting effect and activate local value chains, driving both economic recovery and environmental sustainability.

Every ton of CO2 saved, not only saves the climate, it saves the energy bill and frees up money to boost the economy.

So where do we start? With efficient heating and cooling which accounts for up to 80 % of a building’s energy consumption. The technical solutions are already on the market, so it’s a question of ramping up implementation. Optimizing heating, ventilation and air conditioning systems can lead to an average energy saving of 30 %, with a payback time of 2 – 4 years on the upfront investment needed.
The main challenge – and opportunity – is the existing building stock. In the EU, we estimate that 9 out of 10 buildings will still stand in 2050. That means we need to substantially accelerate the current renovation rate by utilizing the plethora of energy efficient solutions on the market today. Many of these solutions will have an immediate effect on energy consumption and therefore energy bills, freeing up resources for further, more substantial interventions – a so-called stage, deep renovation.

Beyond what we can do to maximize the energy efficiency of the individual building, buildings are also anchoring points for the overall energy system. Efficient and smart buildings enable smart, integrated energy systems running on high shares of renewable energy. Intelligent solutions allow for flexible demand management and increased efficiency makes it possible to tap into new, sustainable energy sources which are needed to decarbonize heating and cooling supply.

We can recycle excess heat from supermarkets and data centers and use it to heat up buildings through district energy networks, as an example, using large heat pumps for storage.

Getting it done

So, the potential to recover better for both people and planet is right in front of us. What we need now is an ‘all actors on deck’ approach and to set out and take concrete, and ambitious action and targets.

Key points of such a framework include setting an ambitious minimum of energy performance standards for new and existing buildings, including implementing a concerted effort on the renovation of buildings. Currently, the global renovation rate stands at less than 1%. This must be upped to 3%, ensuring that the full energy efficiency potential of those renovations is also captured, for instance by introducing requirements for the optimization of technical building systems, and rolling out ‘smart’ solutions. We also need to look beyond the individual products at the system: this goes both for the building, and for the energy system as a whole. For the latter, taking a district approach, means we can create systems that are truly interconnected and smart, leveraging the benefits of true sector integration.

Finally, in order to accelerate all these opportunities, it is key to address financing, by e.g. supporting the development of financing models for retrofit where business innovation is required. In this way we can stimulate economies and act on climate changes with a quick effect.

The opportunity is here, and so is the political impetus at EU level where the Green Deal already outlines actions on not just the Renovation Wave and the Energy Systems Integration but also foresees a ‘fit for purpose’ review of the Energy Efficiency Directive, the Renewables Directive and the Energy Performance of Buildings Directive. This means an unparalleled opportunity for not just an ambitious, but also a holistic approach where all ‘cogs’ of the energy wheel are reviewed, assessed and put together within the same timeframe. Add to that the corona recovery measures which both at EU and national level are highly tinted in green tones and it becomes clear why now is the moment for ambitious policies and standards for buildings to be developed in parallel, to ensure a lasting transformation of the building sector while recovering better for climate and economies. Let’s make this a green restart.