Recent EU-US collaboration has identified many solutions for decarbonizing buildings, addressing affordability, financing, and job creation. It’s time to scale up and roll out these solutions — energy security and climate action begin at home.
In every crisis lies the seeds of great opportunity. The oil crises of the 1970s led to several positive, although unintentional, consequences, including the foundation of the International Energy Agency, greater interest in renewable energy and energy efficiency, a conservation movement and higher fuel standards for vehicles.
If we prioritize energy efficiency and building decarbonization, we can use known technologies to deliver a long-term solution with multiple benefits
The current prospect of disruptions to Europe’s gas supply, coupled with globally volatile gas prices, is another great potential opportunity to ramp up the decarbonization of buildings. This is fast becoming an imperative for both security of supply and climate action.
The opportunity is recognized by the U.S.-EU Energy Council, the lead transatlantic coordination forum on strategic energy issues. The Council’s most recent joint statement notes that ‘accelerating the just energy transition to a net-zero future will support the mitigation of energy market fluctuations and facilitate access to affordable and reliable energy’.
Among the mitigating actions discussed by the Council are: building capacity in global liquefied natural gas markets; reducing methane emissions from hydrocarbons, and advancing work on developing clean and renewable hydrogen. No doubt that these are worthwhile endeavors.
The challenge to curtail the energy demand of buildings is enormous. Up to 97 percent of our buildings are inefficient.
However, if we prioritize energy efficiency and building decarbonization, we can use known technologies to deliver a long-term solution with multiple benefits : for energy security, for climate action, for jobs and green growth, for individual households and for society at large. The energy that is used for heating, cooling, lighting and maintaining our buildings is still mostly generated from burning fossil fuels, and accounts for 27 percent of global greenhouse gas emissions.
Many potential pathways for decarbonizing the built environment were identified in the 2021 transatlantic U.S.-EU exchange on the economic recovery through building renovation and clean energy solutions, which brought together over 700 stakeholders and top-level decision-makers from the EU and the U.S., and is referenced in the Council’s joint statement.
The challenge to curtail the energy demand of buildings is enormous. Up to 97 percent of our buildings are inefficient, and current rates of renovation are well below what is needed. The EU has an annual energy-renovation rate of 1 percent, while deep renovations (which reduce energy consumption by at least 60 percent) are carried out in just 0.2 percent of the building stock annually.
To achieve climate-neutrality by 2050, Europe needs to increase its annual renovation rate to at least 3 percent, with deep renovations accounting for 70 percent of the total. The U.S., meanwhile, must tackle its rate of per-capita buildings-related emissions, which is highest by far among G20 nations.
Investing in energy-efficient buildings could create more than 160,000 jobs in the EU by 2030
Mass-scale renovation of our buildings is a huge investment. Some public funds are available; President Biden’s Bipartisan Infrastructure Deal includes more than $62 billion for programs targeting energy-efficiency projects. The European Investment Bank doubled energy-efficiency lending for buildings between 2018 and 2020, from €2 billion to €4 billion.
However, much more is needed. For example, BPIE estimates that to be in line with the Paris Agreement obligations, in Europe alone, around €243 billion need to be invested annually. The traditional grants and subsidies are not enough, we need flexible financial instruments that can be deployed at scale.
Prioritizing energy-efficient renovation is also the holistic approach required to tackle energy poverty and support communities in the transition to a low-carbon society. Energy poverty — the inability to afford basic household energy needs — affects up to one-third of U.S. and European households. Financial instruments like the exemplar U.S. Low Income Housing Tax Credit are necessary to ensure sustainable and affordable housing, and simultaneously improve energy efficiency, health, living conditions and wellbeing for the most vulnerable in our societies.
Another key benefit of mass-scale renovation will be the creation of new, well-paying jobs. Investing in energy-efficient buildings could create more than 160,000 jobs in the EU by 2030[JC1] ; in the U.S., nearly 60 percent of home-renovation expenditure is attributed to involved labor. Upskilling and training for this new ‘green workforce’ is essential.
The U.S. and EU could jointly lead an initiative to monitor sectoral improvements of the efficiency and carbon performance, and launch a collaboration on data collection and benchmarking.
The sheer range of solutions to common challenges identified shows just how useful it is to share knowledge on how to best accelerate the clean energy transition. The U.S.-EU exchange also made it clear that, despite progress, the carbon performance of our built environment remains difficult to measure. We must look at how industry standards and leadership can demonstrate progress in emissions reduction. Since 2015, the Paris Agreement process initiated a global stock take of progress — a clear signal to the buildings and construction sector to be more transparent and ambitious in collecting, analyzing and sharing data about climate performance.
The U.S. and EU could jointly lead an initiative to monitor sectoral improvements of the efficiency and carbon performance, and launch a collaboration on data collection and benchmarking. A global initiative to improve real-estate carbon performance transparency would be timely and accelerate the development and implementation of reporting standards and processes.
We must continue to advance international cooperation and prepare a roadmap of joint actions to accelerate progress toward climate and energy goals. International fora such as the G7 and G20 processes should prioritize decarbonized buildings and low-carbon construction. Globally, the sector continues to grow rapidly, and lock in high demand for carbon-intensive energy. Transatlantic leadership to support nations around the world in developing a buildings and construction sector which provides climate-proof and affordable buildings is the call of the hour.
Ensuring a resilient built environment is a long-lasting solution and profoundly important climate action. Investing in zero-carbon new buildings and renovations brings higher standards of living, skilled job opportunities and green growth. It is the opportunity to create a shared, transatlantic commitment to a just and socially inclusive energy transition that leaves no one behind.