Buildings

Optimize building energy consumption

Greening the energy supply can have a big impact on building emissions

A substantial share of building emissions is associated with the energy production needed to power those buildings. Building emissions have continued to increase since 1990, and as of 2022, about two-thirds of the sector’s emissions were caused by electricity generation and commercial heat. The remaining third of emissions comes from directly burning fossil fuels on-site for heating and cooking. Managing energy use is fundamental to reducing overall emissions from the sector, alongside decarbonizing the energy supply.

Building heating and cooling systems present the best opportunities for energy consumption reduction

Buildings require energy for space heating and cooling, water heating, lighting, cooking and appliances. Behavior change is a fundamental way of reducing energy demand, particularly from temperature control settings for heating and cooling in high-energy consuming countries, where the IEA’s Net Zero by 2050 scenario finds the potential to reduce electricity demand by 6% by 2030 as a result of changing behavior. Rolling out efficient and low-carbon technologies, such as heat pumps, and improving building design to reduce the need for active heating or cooling are important interventions to reduce energy use.

Furthermore, optimizing energy use will make it easier to decarbonize the remaining energy used, and electrification (a key strategy for decarbonizing) also contributes to improving energy efficiency since electric technologies tend to be more efficient than their fossil-fuel counterparts. In this shift, we analyze emissions from building operations, and not those associated with embodied materials or construction, which are discussed in the shift on the construction of zero-carbon buildings.

Reducing the energy consumption of buildings can help meet climate and equity goals, but requires concerted effort from the public and private sector

Reducing energy use aligns with many climate goals. In addition to mitigating climate change, reducing the energy intensity of buildings can lessen energy poverty and increase energy security and price stability. However, energy efficiency alone cannot eliminate energy poverty, which will require substantial regulatory and financial support to ensure access to energy and energy efficiency upgrades. Without adequate financial support for energy efficiency improvements, the burden on low-income households will increase, while those who can afford to make these improvements will benefit from reduced costs.

Improving building retrofit rates and increasing the global sales of energy-efficient building components and appliances will require concerted efforts by governments, investors, industry and local civil society and business leaders to minimize trade-offs and ensure improvements in well-being.

Global progress on improving energy efficiency of buildings is slow

Historically, progress has been slow, and the world needs to double down on improvements to optimize building energy use. Overall, emissions from operating buildings increased at an average rate of 1.7% to 2.1% per year between 2010 and 2018. The global energy intensity of building operations has decreased since 2000 but would need to be reduced by at least 30% to meet 2030 targets. Retrofitting existing buildings is also happening more slowly than needed and the rate should more than double by 2030. 

Data Insights

Is the world making enough progress toward the most important outcomes?

Systems Change Lab assesses progress made toward targets across 2 outcome indicators. Click a chart to explore the data.

What factors may enable or prevent change?

Systems Change Lab identifies 9 enablers and barriers that may help spur or impede change. Click a chart to explore the data.

Progress toward targets

Systems Change Lab tracks progress made toward targets across 2 outcome indicators. outcome indicator. Explore the data and learn about key actions supporting systems change.

Energy intensity of buildings

The energy intensity of building operations declined by 5% between 2015 and 2022. To achieve the 2030 target, recent progress must accelerate by a factor of three.

Globally, the energy intensity of building operations — measured as kilowatt-hours used per square meter (kWh/m2) of floor area — declined by 20% from 2000 to 2015, but this progress has recently slowed and remains well off track. The sector saw only an additional 2.5% decline in energy intensity from 154 kilowatt-hours used per square meter (kWh/m2) in 2015 to 150 kWh/m2 in 2019. Overall, the growth in energy demand has slowed over the last three years of available data (2020–22) despite increases in global floor area, which translates into an improved energy intensity of 145 kWh/m2 in 2022.

Multiple competing factors are driving these trends, including the recent COVID-19 pandemic (during which energy and emissions from buildings decreased) and energy crises, interannual variability in weather patterns changing heating and cooling needs, and changing behaviors, such as increased uptake of digital devices. To achieve the target of 85-115 kWh/m2 by 2030, gains made from 2018 to 2022 would need to accelerate by a factor of three. Ultimately, the energy intensity of buildings should fall to 55-80 kWh/m2 by 2050.

Retrofitting rate of building

Existing buildings need to undergo deep retrofits to be zero-carbon in operation by 2050. Currently, less than 1% of buildings are renovated each year, which needs to increase to between 2.5% and 3.5% per year by 2030.

Meeting the 1.5 degrees C (2.7 degrees F) temperature limit means that all of the global building stock will need to be net-zero carbon in operation by 2050 at the latest. In order to reduce existing buildings’ energy and emissions intensity, all existing buildings that are not net-zero and are eligible for retrofits need to undergo a deep retrofit to that standard.

Retrofitting includes energy efficiency improvements, such as the installation of double-glazed windows to improve heat retention or upgrading installation, and decarbonization measures, such as replacing fossil fuel-based heating systems with electric systems. It also means upgrading energy-consuming devices and appliances to more efficient versions. Supporting access to resources  necessary to undertake these retrofits — including materials, skills and financing — will be vital to ensuring accessibility and implementation.

Doing so requires a retrofitting rate of 2.5%–3.5% of existing buildings each year by 2030, with higher rates required and reached, in developed countries with substantial existing stock. Currently, according to the IEA, less than 1% of buildings are retrofitted every year, which is well below what is required to meet the targets for deep retrofitting.

Data on deep retrofitting rates does not exist for many countries, and where data is available, the information is usually for single years (see, for example, the EU Building Stock Observatory). Due to insufficient data, it is not possible to give a quantitative estimate of how much deep retrofitting needs to accelerate to meet the 2030 target, but it is clear that the pace needs to increase dramatically in the coming decade.

Enablers and barriers

We also monitor change by tracking a critical set of 9 enablers and barriers enabler or barrier that can help spur or impede change. Explore the data and learn about key actions supporting systems change.

Annual investment in building energy efficiency

From 2018 to 2023, global investment in building energy efficiency increased from around $140 billion to roughly $240 billion.

Although energy efficiency measures often lead to long-term cost savings, they commonly require substantial upfront investments that then pay for themselves in terms of reduced energy bills.

In addition to lowering energy consumption, investment in building energy efficiency can also provide work. In the United Kingdom, fully retrofitting existing buildings could support up to 580,000 jobs every year.

The willingness to invest in energy efficiency has been impacted in the last few years by various factors, including COVID-19, national policies such as the Inflation Reduction Act, and rising costs of construction due to raised interest rates. Investments in green buildings have seen a recent slowdown but need to accelerate.

Despite difficulty in tracking a wider range of energy efficiency investment, the latest data shows that from 2018 to 2023, global investment in building energy efficiency increased from around $140 billion to roughly $240 billion.

Global floor area

Global floor area of buildings grew from 192 billion square meters in 2010 to 253 billion square meters in 2022. This total area is expected to almost double by 2050, emphasizing the need to house a growing population while also eliminating emissions from buildings.

Floor area will need to increase to provide adequate housing to the estimated 1.6 billion people who will be affected by the global housing crisis by 2025. Meeting this global need is essential, as the right to access adequate housing is a basic human right.

At the same time, it will be easier to meet climate targets if the global growth in floor area is kept relatively low and that new floor area is safe, resilient and zero-carbon. Increased floor area requires more materials that are often carbon-intensive and more energy to heat and cool the space. Additionally, the current distribution of floor area is highly inequitable, with floor area per capita in some countries being much higher than in others.

Sufficiency (meaning reducing demand for floor space and energy and using existing space in different ways) can help rebalance this distribution of floor area and make more efficient use of space and energy. The IPCC states that sufficiency can deliver 17% of the total global mitigation potential from the buildings sector.

Globally, the floor area of buildings has steadily increased over the years, growing from 192 billion square meters in 2010 to 253 billion in 2022. Floor area is expected to double by 2050, making it all the more essential that new buildings are constructed to be at least zero-carbon-ready, if not already zero-carbon in operation.

The floor area data is not disaggregated into formal and informal construction. This distinction is important, because many of the mitigation measures detailed for this system apply mainly to the formal housing sector, while different considerations are central for informal construction.

Investments in smart technologies for buildings

Investments in smart meters and electric vehicle chargers grew from $12 billion in 2014 to $27 billion in 2019. Increased deployment of these technologies can help buildings use energy more efficiently, which also helps electric grid operators balance supply and demand.

Smart technology for buildings encompasses multiple elements that serve to optimize energy use, both in terms of minimizing energy use and in distributing power use across time and resources. Examples include the use of building energy management systems to ensure optimal heating, cooling and ventilation, and electric vehicle (EV) chargers incorporated into residential and commercial buildings.

Though they are at different stages, most of these technologies can be further developed and improved, especially those that improve grid integration and management. Global investments in smart meters and EV chargers grew from $12 billion in 2014 to $27 billion in 2019. Increased deployment of these technologies can help buildings use energy more efficiently, which also helps electric grid operators balance supply and demand.

Share of countries with building energy codes

Building energy codes are a fundamental and widely used policy instrument for improving the energy performance of buildings. As of 2022, more than 90 countries had such codes in place.

Building energy codes — also called “building energy standards” or building minimum energy performance standards (MEPS) in some countries — are used to regulate energy use and efficiency in new and existing buildings. These codes, which can be mandatory or voluntary, are a fundamental and widely implemented policy instrument for improving the energy performance of buildings. As of 2022, mandatory codes or those with some kind of performance standard were in place in more than 90 countries out of 198 (45%).

Building standards to improve the energy efficiency of existing buildings are particularly important in countries where the building stock is mature and most of the buildings that will exist in 2050 have already been built, and building standards for new construction are important in countries where most of the building stock for 2050 is still to be constructed. Additionally, while the existence of building standards is crucial, the ambition of these standards is also fundamental to their success.

Share of energy use for refrigerators covered by mandatory Minimum Energy Performance Standards (MEPS)

As household ownership of appliances continues to rise, implementing minimum energy performance standards (MEPS) is important to improve energy efficiency. The share of energy used by refrigerators covered by mandatory MEPS almost doubled from 57% in 2000 to 90% in 2022.

As household income increases in emerging and developing economies and energy-consuming devices become cheaper, household ownership of appliances has steadily risen over time. For example, by 2022, ownership of a refrigerator averaged 0.9 units per household globally.

Implementing mandatory standards and labeling through minimum energy performance standards (MEPS) is important to ensuring that appliances have the best possible energy efficiency, meaning they will consume less energy than less-efficient models. The share of energy used by refrigerators covered by mandatory MEPS almost doubled from 57% in 2000 to 90% in 2022.

Based on a sample of eight European countries, one study investigating the effectiveness of MEPS for cold appliances, including refrigerators, found that these standards led to a 15%-38% increase in cold appliances with an A+ rating being sold.

Share of energy use for space cooling devices covered by mandatory Minimum Energy Performance Standards (MEPS)

Because of the growing ownership of air conditioners and other cooling devices, mandatory minimum energy performance standards (MEPS) are becoming increasingly crucial to improve energy efficiency. As of 2022, MEPS were in place in over 90 countries, covering over 88% of energy consumption for space cooling in residential buildings.

Because of the growing home ownership of air conditioners and other cooling devices, such as fans, at the household level, mandatory minimum energy performance standards (MEPS) have become increasingly crucial to improve the efficiency of appliance energy use.

Globally, there are around 2 billion air conditioners currently in use, 70% of which are in homes. The growing need for space cooling and increased ownership of air conditioners will contribute to a rise in electricity demand from buildings. Fans and simple cooling devices provide space cooling services for people in many parts of the world, which also contributes to electricity consumption.

Mandatory MEPS are crucial to reduce the energy demand for space cooling while meeting people’s needs for thermal comfort. As of 2022, MEPS were in place in over 90 countries, covering over 88% of energy consumption for space cooling in residential buildings (almost doubling since 2000).

Number of companies committed to energy efficiency in buildings

As of July 2024, 143 companies were signatories to the World Green Building Council Net Zero Carbon Buildings Commitment, while Climate Group’s EP100 initiative for corporate energy efficiency has brought together over 125 businesses.

Through public commitments and aligning strategies with targets, companies can send a powerful signal to policymakers and other businesses about the enormous potential of energy efficiency in economic and environmental terms.

In 2018, the World Green Building Council (World GBC) established the Net Zero Carbon Buildings Commitment, which pledges to eliminate net carbon dioxide (CO2) emissions from new and existing buildings as fast as possible by 2030. As of July 2024, 143 companies had signed the commitment, alongside 29 cities and 6 states and regions. While not a suitable proxy to measure companies’ commitments to energy efficiency in buildings, alongside other initiatives it can provide an indication of progress.

Additionally, Climate Group’s EP100 initiative brings together over 125 businesses committed to improving their energy efficiency and taking steps to achieve net-zero-carbon buildings. To date, members of this initiative have been assessed to have achieved collective emissions reductions of 395 million tonnes of carbon dioxide equivalent (CO2e), simultaneously saving $1.6 billion.

Between 2015 and 2018, 11 companies from the buildings sector, supported by the World Business Council for Sustainable Development (WBCSD), developed a joint action plan to reduce projected energy use in buildings by 50% by 2030. This effort was part of the Low Carbon Technology Partnerships initiative (LCTPi), comprising over 160 companies and 70 partners committed to accelerating the transition to a low-carbon economy.

WBCSD also brought forward a Manifesto for Energy Efficiency in Buildings, calling on its members to take voluntary action. As of 2024, more than 140 organizations (out of 234 members) had signed it.

Number of countries providing financing to access energy efficiency programs

Energy efficiency upgrades can be expensive, which presents a barrier to achieving the target renovation rates that are necessary to transform the building stock. It is crucial that governments accelerate action to ensure that households and building owners are able to access funds to undertake these projects.

Energy efficiency upgrades can be expensive, which presents a barrier to achieving the target renovation rates that are necessary to transform the building stock. It is crucial that governments accelerate action to ensure that households and building owners are able to access funds to undertake these projects.

Countries are implementing programs to deliver energy savings through smart meters, high-quality appliances, building retrofits and the optimization of the private sector’s operations. There is no data at the global or regional level to track progress toward this indicator; however, it is clear that there is a vast need to scale and accelerate action. 

Number of jobs in the construction of energy efficient buildings

In 2019, in the buildings sector there were more than 2.5 million jobs related to energy efficiency in construction, 500,000 jobs in energy efficiency manufacturing and over 1 million jobs in other energy efficiency fields.

Job creation is an essential component of a just transition. Energy efficiency jobs are important to the global economy because they will provide the effort we need to retrofit buildings to use less energy. Public spending on energy efficiency creates jobs for workers directly by creating demand for energy efficiency professionals and indirectly by increasing demand for industries in the supply chains for these technologies.

By enacting new standards for energy efficiency in new and existing buildings, we could create new jobs in installation, component manufacturing and other industries in the supply chain.

In 2019, the most recent year for which global data is available, there were approximately 11 million people employed in improving energy efficiency in the buildings and industry sectors. For buildings specifically, over 2.5 million of these jobs were related to energy efficiency in construction, with an additional 500,000 jobs in energy efficiency of manufacturing and over one million in other energy efficiency fields.

It is essential that new employment opportunities provide fair compensation, safe working conditions, equal opportunities and social protections. These jobs must be free of forced and child labor and provide employees the right to organize or discuss work-related issues. Retraining programs may be necessary for workers transitioning out of high-carbon industries.

Photo credits

Photo by Tommy Kwak on Unsplash