Executive summary

Energy used in buildings accounts for around 30% of total final consumption, half of global electricity consumption, and 2.8 Gt of direct CO2 emissions. Higher incomes, urbanisation, and increased cooling needs are driving up energy demand, while rising energy bills, growing pressure on power systems, and limited access to clean cooking remain key challenges. Improving buildings efficiency is therefore essential to keeping energy services affordable and reducing emissions.

This report was developed at the request of Türkiye and Australia in the framework of the strategic partnership between the President of COP31 and the IEA. It explores a pathway to reducing energy consumption intensity in the building sector by at least 25% by 2035, in line with the target proposed by the COP31 Presidency.

Meeting the proposed target would require annual improvements in buildings energy intensity to more than double, compared to the rate of 1% achieved so far this decade. This acceleration is significant but achievable with technologies and policy measures already available. The analysed pathway to meet the proposed target is aligned with the goal of doubling the global average annual rate of energy efficiency improvements agreed by nearly 200 governments at COP28, and with the COP31 Presidency’s goal of increasing the share of electricity in total final energy consumption to 35% by 2035. Faster progress in buildings is essential for achieving both.

By 2035, global buildings energy intensity declines by only 7% compared to 2025 levels, and 11% compared to 2020, in a scenario based on today’s policy settings, falling well short of the proposed target. This highlights the need for further efficiency improvements across the sector.

The report explores a pathway that reaches an energy intensity improvement of 26% from 2025 levels, and 28% from 2020 levels, by 2035, combining four main levers: strengthening equipment efficiency, improving building envelopes, electrifying end uses, and expanding access to clean cooking. Achieving this global target will require different approaches across countries, reflecting their respective starting points and the relative importance of each lever based on national contexts.

Equipment efficiency plays a key role, accounting for 40% of the intensity reductions. Today, about 140 countries have regulations targeting the efficiency of different home appliances and equipment, but their stringency varies significantly. For instance, 118 countries have minimum energy performance standards (MEPS) for air conditioners, covering over 90% of today’s global energy demand for cooling, but some markets allow equipment that is less than half as efficient as models accepted in other markets. The pathway relies on all equipment efficiency improving at a faster rate, and sales of space cooling equipment and appliances progressing towards today’s best- in-class standards. Stronger MEPS, regularly updated energy labels, and incentives to accelerate the adoption of more efficient models are central to achieve this.

Improving envelopes in new and existing buildings contributes to 20% of intensity reductions, yet policy coverage and compliance remain key challenges: 102 countries, where the majority of new construction takes place, have mandatory building energy codes. However, the lack of widespread enforcement, combined with this coverage gap, results in only around 60% of all new buildings being built in compliance with a code today. Key measures for achieving the target include expanding compliance to all new buildings, increasing stringency of building energy codes, and accelerating retrofits to Zero Carbon Ready Buildings.

Electrification provides another 15%, particularly through the use of heat pumps for space and water heating. Heat pumps are typically three to five times more efficient than fossil fuel boilers, but the costs of equipment, installation, and electricity, alongside non-economic barriers, hinder adoption. IEA analysis indicates that heat pumps are already competitive in countries accounting for more than half of global space heating demand. In this pathway, heat pumps’ installed capacity triples by 2035, contributing to a nearly 35% reduction in space heating intensity.

Expanding access to clean cooking delivers 25% of the intensity reduction, replacing the inefficient use of traditional biomass with modern cooking solutions. Nearly 2 billion people still lack access to clean cooking, and progress remains insufficient. Policy momentum has accelerated, with more than 120 new policies and programmes implemented or announced across sub-Saharan Africa between 2024 and 2026. However, implementation lags behind ambition: although 32 countries have launched or announced national clean cooking strategies since 2024, only around 20 regulatory measures have been fully implemented. Universal access to clean cooking is achievable with today’s technologies, and at modest cost. In this pathway, clean cooking access expands to more than 1 750 million people by 2035, delivering additional health and climate benefits.

Reaching the proposed target would require annual investment to rise to nearly USD 1.2 trillion by 2035. Global investment in buildings efficiency, electrification, and other end-use improvements exceeded USD 370 billion in 2025, meaning it will need to more than triple. The challenge is not simply to mobilise more capital, but also to direct it towards effective renovations and high-efficiency technologies that deliver lasting energy savings.

Public funding will remain important in overcoming upfront costs to support vulnerable households and reduce investment risks, but it cannot meet the financing requirement alone. Green lending, energy performance contracting, energy service companies, and blended finance can help mobilise private investment. Clean cooking also requires more financial support, as reaching universal access globally would require just above USD 4 billion per year. This represents only a small fraction of the overall efficiency investment needed.

Accelerating buildings efficiency is both achievable and essential, but no single policy instrument alone can deliver the required improvements. Integrated policy packages can support progress by combining regulation, information, and incentives across the four key levers. The IEA provides policy makers with concrete tools to accelerate progress through its Energy Efficiency Policy Toolkit. All countries have opportunities to strengthen policy action from different starting points. Those already applying leading global standards can build on these efforts, updating them continuously and complementing them with other measures. Those with less ambitious policies have scope to strengthen requirements and expand their scope. Where policies are not yet in place, establishing the necessary frameworks and closing existing gaps will be critical to advancing progress, and these countries can build on others’ experiences and adapt them to their local contexts.