The critical role of buildings in the green energy transition

April 24th, 2019, Published in Articles: EE Publishers, Articles: Energize, Featured: Energize

The International Energy Agency (IEA) has released a report which explores the critical role buildings can play in meeting climate change ambitions, using a portfolio of clean energy solutions that exist today. This is the executive summary of that report.

The global energy sector is not on track for a low-carbon transition. The world’s energy supply is almost as carbon intensive as it was two decades ago. Energy-related carbon dioxide (CO2) emissions rose by 1,7% in 2018, following an increase of 1,6% in 2017. This comes after three years of emissions staying flat and is due to a variety of factors, including economic growth, extreme weather and a slowdown in efficiency improvements.

This is the executive summary of the report

Click here to download the full report

The buildings sector accounted for about 28% of total energy-related CO2 emissions, two-thirds of which is attributable to emissions from electricity generation for use in buildings. The sector’s energy intensity per square metre improved, but its emissions increased more than 25% since 2000. This reflects a 65% increase in floor area since then, growing demand for energy services and rising electricity consumption. Electricity use in buildings grew five-times faster than improvements in the carbon intensity of power generation since 2000, and rising demand for equipment such as air conditioners is putting pressure on electricity systems.

A clean energy world will look significantly different than today

In contrast to current trends, the Faster Transition Scenario sets out a vision for an extremely ambitious transformation of the energy sector. Energy-related emissions peak around 2020 and drop 75% to around 10-gigatonnes of CO2 (GtCO2) per year by 2050. The carbon intensity of the power sector falls by more than 90% and the end-use sectors see a 65% drop, thanks to energy efficiency, uptake of renewable energy technologies and shifts to low-carbon electricity.

Electrification plays a major role in the transition, combined with clean power generation. Electricity’s share in final energy reaches about 35% by 2050, compared to less than 20% today. That growth is mainly due to adoption of heat pumps in buildings and industry, as well as a swift evolution in transport. Efficiency improvements keep electricity demand for other end uses, such as lighting and cooling, relatively stable, while access to electricity improves worldwide.

Buildings will play a central role in the clean energy transition

Among the sectors, buildings undergo the most abrupt CO2 emissions reductions in the Faster Transition Scenario. Emissions from fuel combusted directly in buildings fall nearly 75% by 2050. This dramatic drop is achieved by almost total elimination of coal from use in buildings, 85% reduction in oil consumption and 50% drop in overall natural gas demand relative to today.

The significance of buildings is further highlighted when direct emissions are combined with indirect CO2 emissions from electricity use. The share of electricity in energy use in buildings jumps from 33% in 2017 to nearly 55% in 2050. Yet, major efficiency improvements mean electricity demand is around 300-million tonnes of oil equivalent (Mtoe) lower in 2050 than it would have been otherwise. Paired with clean electricity, this means buildings-related emissions fall by around 6% per year to reach 1,2 GtCO2 by 2050 – one-eighth of current levels.

Technology and design are at the heart of a sustainable buildings sector

Multiple cost-effective technologies unleash average energy savings of 500 Mtoe per year in the buildings sector worldwide between 2020 and 2050. High-performance buildings construction and energy renovations reduce the sector’s energy use by nearly 30% to 2050, even as floor area doubles globally. A doubling in air conditioner performance reduces energy demand further, as 1,5-billion households gain access to cooling comfort. Heat pumps cut typical energy use for heating by four, and solar thermal delivers carbon-free heat to nearly 3-billion people by 2050.

Efficiency gains in lighting and appliances deliver around 110 Mtoe of energy savings over the period to 2050, while allowing access to and improved quality of energy services everywhere. Digitalisation and smart demand-side management further reduce energy use in buildings by as much as 10%. Demand-side response for 1-billion households and 11-billion smart appliances allows shifts of peak electricity demand to off-peak hours, supporting clean power generation in a synergistic combination with increasing electricity consumption in the buildings sector.

Enabling the clean energy future requires ramping up investment

Reaching the goals of the Faster Transition Scenario requires a rapid reallocation of capital. Fossil fuel supply investments decline sharply, but that is almost entirely offset by a doubling of investment in low-carbon power generation. Overall energy investment, driven by the end-use sectors, increases by about 65% from today’s level, but this leads to considerable energy reductions that translate into major cost savings for households and businesses.

Realising sustainable buildings requires capital flow to increase by an average of US$ 270-billion a year over the next decade. This is a small addition to the US$ 4,9-trillion already invested each year in the sector, and ultimately leads to US$ 4,8-trillion in global savings to 2050. As a result, the share of household income spent on energy in the Faster Transition Scenario is cut in half by 2050. Delaying action ten years on high-performance construction and renovation would result in 3500 Mtoe of unnecessary energy use to 2050, increasing cumulative spending on energy in buildings by US$ 2,5-trillion.

Comprehensive policy packages foster market-based solutions

Immediate action is needed to put in place mandatory energy policy that addresses rapid buildings growth in emerging economies with limited or no policy coverage. As much as 2,5-times the current floor area of the People’s Republic of China (“China”) will be built in those countries over the next 30 years. Governments can co-operate to expand and strengthen building energy codes as well as performance standards for end-use equipment, building upon decades of successful experience.

Buildings are not homogenous and require solutions tailored to their specific conditions. Clear policy signals on energy and CO2 emissions performance levels are necessary to push and pull markets to identify appropriate solutions. Government support for technology innovation and new business models will enable economies of scale as well as improved learning rates to deliver solutions with little increase in manufacturing cost or consumer prices.

The buildings energy transition will deliver long-term returns on investment, but upfront financing remains a challenge. Governments can affect this through policy intervention to improve access to finance, de-risk clean energy investment and broaden availability of market-based instruments that lower the barriers for a clean energy transition.

Governments can reap benefits of international co-operation. Countries can share knowledge, enable best practices and deliver better solutions through multiple initiatives such as the IEA Technology Collaboration Programmes (TCPs), the IEA Global Exchange for Energy Efficiency and the Global Alliance for Buildings and Construction.

This is the executive summary of the report

Click here to download the full report

Contact IEA,



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