Sustainable Recovery

World Energy Outlook Special Report
River running through a forest

Buildings

Close to 10% of the global workforce today is involved in construction, manufacturing related to buildings and other related activities. The Covid-19 pandemic is resulting in drastic declines in construction and investment in the buildings sector because of disruptions to on-site working conditions, labour availability and material supply chains. More than 25 million jobs across the sector have been lost or are at risk in 2020.

Investment in energy efficiency in buildings is expected to fall by nearly 15% in 2020 from around $150 billion in 2019. With buildings accounting for more than 30% of global energy use today and 30% of energy-related CO2 emissions, investment needs to accelerate significantly if the world is to meet its sustainable development goals. Lack of access to clean cooking is a major inequality issue for the 2.6 billion people who currently lack access to it, and the decline in investment in 2020 is likely to slow progress towards achieving this sustainable development goal.

In this section we explore options that could stimulate job creation and provide a boost to the economy while also improving sustainability and resilience. Measures to promote energy efficiency, renewables and clean cooking access within the buildings sector could mitigate the impacts of the crisis, provide jobs and kick-start economic recovery, as well as bringing long-term benefits well beyond the buildings sector as savings from lower energy bill are reinvested, and as energy system resilience and sustainability is improved.

Retrofit existing buildings and more efficient new constructions: We estimate that 9‑30 jobs would be created for every million dollars invested in energy efficiency measures in the buildings sector. Measures in this area often have short lead-times: existing efficiency programmes, for example, can be rapidly expanded and new projects can be shovel-ready within weeks or months. Targeting support to social housing and government buildings in the first instance could help kick-start efficiency improvement works, creating a pipeline of projects for the industry. Government investment in accelerating energy efficiency in buildings would bring long-lasting benefits: it would reduce energy bills for consumers, reduce energy poverty, improve health and comfort, and improve resilience in the face of climate events and price shocks.

More efficient and connected household appliances: Lower household incomes, disruption to global supply chains and the closure of retail outlets have resulted in the deferral or cancellation of many appliance purchases. This has slowed the rate of improvement in energy efficiency. Action to support the replacement of old appliances with new, highly efficient and connected appliances would create 7-16 jobs for every million dollars spent. Sales could be accelerated quickly, providing relief to the entire appliance supply chain, while increased use of smart connected appliances could reduce consumer bills and electricity system operation costs. Subsidies would also assist manufacturers in upgrading production lines to produce more efficient equipment, and support the effective disposal of old equipment. The safe recycling of old stock is particularly important for air conditioners and refrigerators, which contain powerful greenhouse gases.

Improve access to clean cooking: More than 2.6 billion people rely on the inefficient and polluting use of biomass, kerosene or coal as a primary cooking fuel. The resulting household air pollution causes around 2.5 million premature deaths every year, with Africa and Asia hardest hit. Recent progress to expand access to clean cooking has been slow and there are risks that the current crisis could further slow or reverse progress. Around 5 000-10 000 households would gain clean cooking access for every million dollars of spending. Beyond immediate health benefits, investing in access would create distribution and retail jobs. It would also reduce GHG emissions, with increases in CO2 emissions from the use of liquefied petroleum gas (LPG) offset by lower methane and nitrous oxide emissions from traditional uses of biomass. The use of clean cooking fuels would also avoid the average one-and-a-half hours that are spent every day collecting fuel wood and reduce the average four hours a day spent cooking, a burden that primarily falls on women.

Investment impacts on employment in the Sustainable Recovery Plan

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Investment impacts on abatement costs in the Sustainable Recovery Plan

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Investment impacts on households gaining access to clean cooking in the Sustainable Recovery Plan

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Retrofit existing buildings and more efficient new constructions

The Covid-19 pandemic is drastically reducing global construction and retrofit activity in the buildings sector. Investment in building construction may decline by 20% to 30% in major advanced economies in 2020, while also falling in China and India (IEA, 2020d). About 250 million people are employed in construction across the world: estimates suggest that over 10% of jobs have been or will be lost in 2020, and up to 80% of workers have been furloughed in some countries.

In some countries, existing buildings are expected to account for up to 80% of the stock in 2030; retrofits have an especially important part to play in improving energy efficiency. In countries where the building stock is expanding rapidly, it is particularly important to ensure that new buildings are constructed as efficiently as possible. Delays to construction and renovation activity will slow energy efficiency improvements, affecting energy use and related CO2 emissions in the buildings sector. This is especially the case for space heating and cooling, which account for almost 40% of energy use in buildings today and for 42% of CO2 emissions and over 60% of direct CO2 emissions in the sector. 

Retrofits for existing buildings and efficient new constructions are the primary means of reducing energy demand in the sector. Where retrofits are needed, they are most effective at reducing demand and emissions when improvements are made to the building envelope, for example, adding insulation and improving glazing, and when there is a shift to more efficient equipment, such as heat pumps or heat solutions based on renewable resources, and to digital energy management. Building efficiency measures are central to achieving near zero energy building status in both new and existing buildings.

Average annual energy retrofit rates in buildings are currently less than 1% in most major markets, which is well below the level required to achieve sustainability objectives. Most buildings in advanced economies – where heating demand is concentrated –were built before there were effective building codes. Even today, less than one-third of countries globally have mandatory energy-related codes for new construction.

Policy approaches to address the current Covid-19 crisis related circumstances include:

  • Increase incentives for building efficiency improvements, smart energy management solutions and on-site renewables, including by reducing administrative and processing times for approvals and addressing shortages of skilled providers.
  • Target efficiency improvement measures on those households and businesses most impacted by the crisis, such as low-income households, small businesses and hotels.
  • Use public procurement to catalyse activity, for example by commissioning efficiency retrofits of public assets such as social housing, schools, offices and healthcare facilities.
  • Provide guarantees to encourage energy service companies to invest in retrofits.
  • Accelerate or expand existing and planned efficiency programmes.

Around 9-30 jobs in manufacturing and construction would be created for every million dollars invested in retrofits or efficiency measures in new builds. Construction jobs would mostly be local, while manufacturing jobs in the wider industrial sector would be created by increased demand for building materials and equipment such as insulation, efficient glazing and heat pumps.

Improving the efficiency of buildings lowers energy bills for consumers, who can spend the savings on other goods and services, providing a further boost to the economy. Smart energy management systems can help customers further reduce bills and benefit from providing demand shifting services to electricity networks. The economic benefits of retrofits are likely to be highest when projects are focused on the least efficient buildings and include both building envelope improvements and heating equipment installation.

Household bill reduction potential to 2025 of investment in efficiency improvements in buildings

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Job creation potential to 2025 of investment in efficiency improvements in buildings

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CO2 emissions abatement costs for space heating and annual avoided emissions by measure of the Sustainable Recovery Plan per million dollars invested

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Deep energy retrofits of old buildings can reduce energy demand linked to space heating by two-thirds or more: they can also reduce or eliminate emissions where they involve switching to renewables or decarbonised electricity. Retrofitting 20% of buildings in advanced economies over the next five years would reduce CO2 emissions from space heating by around one-fifth. Major cost-effective gains can be achieved by improving insulation and installing heat pumps.

More efficient buildings help to improve the security and resilience of energy systems by reducing energy use. Retrofits and efficient construction that encourage electrification and the use of smart energy management systems strengthen the security and resilience of electricity systems, boosted by the use of smart devices and on-site renewables that facilitate load management and support increased integration of variable renewables into electricity networks. 

More efficient and connected household appliances

Appliances, such as refrigerators, washing machines, computers and mobile phones, account for nearly one-quarter of global electricity consumption today. Air conditioners account for a further 8% of total electricity demand and are one of the fastest sources of demand growth, having increased by nearly 25% between 2015 and 2019. Much of the recent growth has come from areas other than advanced economies, in particular from China and India.

The Covid-19 pandemic is leaving its mark on the appliance industry, with government restrictions on mobility and work practices significantly impacting appliance manufacturing, supply chains and consumer sales. Year-on-year sales of white goods in the European Union fell by 75% in March and April, with a 10-20% drop expected for 2020 as a whole. In the United States, electronics and appliance store sales fell by 65% in April 2020 relative to 2019 (US Census Bureau, 2020).

In contrast, ICT for remote working and home entertainment have seen an increase in sales during lockdown periods, with implications for electricity use in homes and beyond. Continued teleworking could lead to permanent changes in energy demand: it is estimated that teleworking could increase household energy demand by 7-23%, depending on the location, season and efficiency of appliances and equipment (IEA, 2020g).

Declines in revenue from the sale of appliances create a risk of job losses across manufacturing, distribution and sales. There is also a risk of reduced investment in the upgrading of production facilities to increase appliance efficiency. Lower electricity prices and lower household incomes could decrease consumer interest in higher efficiency products. Some governments may seek to weaken or delay mandatory energy performance standards and labelling for appliances in an effort to stimulate sales. Maintaining – or strengthening – standards would however increase the economic impact of investments in the sector, while also creating long-term benefits for consumers and the economy. 

Government actions to support sales of efficient appliances and assist local appliance manufacturers to improve production facilities and worker skills would yield long-term benefits by improving the productivity, efficiency and competitiveness of local manufacturing, increasing appliance efficiency and reducing energy demand and emissions. The increased use of smart appliances could also improve services and increase economic gains by rewarding customers for providing services to electricity systems.


Global internet traffic surged by almost 40% between February and mid-April 2020, driven by growth in teleworking, video streaming and conferencing, online gaming and social networking (Sandvine, 2020). The growth during Covid-19 comes on top of a 12‑fold growth in global internet traffic since 2010 (Sumits, 2015; Cisco, 2018; ITU, 2020).

Rapid improvements in energy efficiency have helped to limit electricity demand growth from ICT, which consume around 800 terawatt-hours (TWh) per year, around 3.4% of global electricity use (Malmodin and Lundén , 2018). Global energy use in data centres has remained flat since 2010 at around 200 TWh, about 1% of global electricity use, despite a sevenfold growth in workloads (Masanet, 2020).

Demand for data and digital services is expected to continue its exponential growth, and the Covid 19 crisis may further accelerate these trends. Strong government and industry efforts on energy efficiency, renewables procurement, and RD&D could limit growth in ICT energy demand and emissions over the next decade (IEA, 2020h).


The choice of policy approaches to stimulate employment and economic activity in the appliances area depends on the local context. Governments in economies with a significant appliance manufacturing industry may provide direct support to retain local employment, while others may intervene to stimulate sales and the economy. Policy options for both include:

  • Provide direct rebates or tax reductions to customers to trigger purchases. The largest subsidies could be offered to low-income households and for the purchase of the most efficient appliances.
  • Increase spending on appliances in the public sector, e.g. government buildings, schools, community centres, to replace low efficiency stock with best available technologies, including smart appliances where relevant.
  • Support appliance manufacturers to invest in retooling production lines and train workers to produce high efficiency appliances.
  • Support adopting efficiency standards in markets where demand for appliances is growing.
  • Introduce requirements for appliances to be smart and connected, allowing appliances to provide demand-side management services to the benefit of consumers and the grid.
  • Expand international co-operation on appliance efficiency standards.

The majority of jobs related to appliances are in supply chains and sales rather than in direct manufacturing. Of the nearly 1 million jobs in the white goods appliance sector in Europe, only around one-quarter are direct manufacturing jobs. China, Mexico, Korea and Turkey are the largest appliance manufacturing centres globally today.

We estimate that 7-16 jobs would be created for every million dollars of spending, of which the majority would be in distribution and sales. This job creation effect is strongest when appliances are manufactured locally.

Subsidy to price ratio to halve appliance payback periods

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Jobs created for investment in appliances in the Sustainable Recovery Plan

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Replacing old devices with new high efficiency appliances would cut consumer spending on electricity by around 30-50%. Depending on the type of appliance, and the additional features sold with more efficient appliances, payback periods range from under one year to more than ten years. A small subsidy could significantly reduce payback periods for consumers, accelerating the uptake of efficient appliances and reducing consumer bills. Bill savings are usually invested in more productive and labour-intensive sectors of the economy. 

Energy demand and emissions savings created by appliance-related recovery measures depend on programme design, and on the level of efficiency specified or triggered. Replacing one-quarter of the world’s least efficient appliances would, however, be likely to reduce emissions by over 300 Mt CO2. The average cost of emissions saved depends on the appliance type and the carbon intensity of electricity in the service region, but CO2 emissions abatement costs are negative for many basic efficiency improvements in washing machines, refrigerators, televisions and lighting.

Refrigerants in older air conditioners and refrigerators are often hydrofluorocarbons (HFCs), which can have ozone depleting properties and are potent greenhouse gases. The Kigali Amendment to the Montreal Protocol calls for the eliminating the production and use of HFCs; phasing out old refrigerators is central to accomplishing its objectives. Various support initiatives are underway. For example, the Kigali Cooling Efficiency Program is funding the upgrading of refrigerator production lines in Argentina, Bangladesh and other countries to retool manufacturing lines for the production of more efficient appliances using less damaging refrigerants.


Following the 2008 financial crisis, Mexico had a programme in 2009-18 to replace non-efficient appliances in low-income households. It provided rebates for purchasing new energy efficient appliances that complied with mandatory efficiency standards. The primary aim was to reduce household electricity use, which was subsidised in over 95% of households. It was also an opportunity to reduce GHG emissions and ensure appropriate disposal of refrigerant gases.

Nearly 2 million refrigerators and air conditioners were replaced, as well as light bulbs, resulting in estimated savings of almost 700 gigawatt-hours (GWh) annually. All of the replaced appliances were more than ten years old and in low-income households that received electricity subsidies. The programme delivered subsidy savings of $22 million annually through avoided energy consumption. The payback period to the government was under four years, and the scheme created more than 1 600 new permanent jobs and 10 500 new temporary jobs. Energy savings avoided 3 400 kilotonnes of carbon-dioxide equivalent (kt CO2-eq) per year, while the programme captured, stored or destroyed ozone depleting refrigerant gases, thus avoiding a further 500 kt CO2-eq of emissions annually.

Improve access to clean cooking

Progress on improving access to clean cooking solutions has been slow over the past decade. In 2018, more than 2.6 billion people relied on traditional uses of biomass, coal or kerosene as a primary cooking fuel. Although improvements have been registered in a number of countries, mostly in developing Asia, population growth in sub-Saharan Africa has outpaced efforts to provide access, and four-out-of- five people do not have access to clean cooking solutions (IEA, 2019a). On the basis of current policies and trends, the UN Sustainable Development Goal (7.1.2) to achieve universal access to clean cooking by 2030 looks to be out of reach. 

Access to clean cooking and premature deaths from household air pollution in sub-Saharan Africa and Asia, 2010-2018

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The Covid-19 crisis and its economic implications risk could significantly slow progress in expanding access to clean cooking, and in some cases could lead to previous gains being reversed. Households may switch back to traditional uses of biomass if they cannot afford cleaner fuels or if there is disruption in supply chains. At the same time, many nascent companies developing new consumption modes (e.g. LPG pay-as-you-go smart meter technology), or projects in low-access areas (e.g. bioethanol, upgraded biomass fuels), could be forced to cease operations as a result of a drop in revenue. There is an urgent need to develop comprehensive programmes to support such innovative clean cooking providers and seize opportunities to expand access to clean cooking (IEA, IRENA, UNSD, World Bank, WHO, 2020).

Recent oil market disruption has resulted in international LPG prices reaching historic lows: in April and May 2020, they were down by around 40% compared to the 2019 average. This could make LPG much more affordable for households, provided that low prices are sustained, and that logistical or regulatory factors do not prevent lower prices being passed on to consumers. Nonetheless, potential LPG price volatility could be damaging for low-income customers, and price caps or targeted subsidies may be needed to support long-term use and avoid fuel stacking practices. With lower LPG prices, payback periods for LPG stoves could drop from around 3.5 years to 1 year for urban households reliant on paid fuel wood in sub-Saharan Africa. In many countries with a well-developed LPG sector, such as Brazil, Indonesia, India, Kenya, Morocco and South Africa, governments have moved quickly to ensure continuity of supply during the crisis, and have recognised LPG provision as an essential service. In India, the government guaranteed free LPG refills to poor households from April to June 2020. 

Strong government involvement and a comprehensive set of measures are needed to support the expansion of clean cooking access. Many opportunities exist today for policy makers to make short and medium-term progress on clean cooking:

  • Support affordability of clean cooking options through direct incentives for equipment acquisition and fuel consumption for the poorest households. Options include subsidies, tax or duty exemptions and pre-financing of upfront costs (e.g. for biogas digesters, which have high upfront cost but almost no operational costs).
  • Establish price mechanisms to ensure energy affordability for low-income households so as to increase household confidence in clean cooking solutions and reduce fuel stacking.
  • Develop markets for stoves and fuels, encourage industry participation and private equity investment. This includes enforcement of laws and regulations, financial incentives and protocols to certify efficiency, emissions, and safety (e.g. safe cylinder recirculation model).
  • Support the development of modern fuel infrastructure. This includes investment in the production or import of modern fuels, distribution of cooking equipment and transport infrastructure.
  • Support companies and non-governmental organisations to develop renewables-based electric cooking solutions, and innovative business models such as pay-as-you-cook using LPG, and to support increased use of non-fossil cooking fuels such as bio-LPG, bioethanol and other upgraded biomass fuels.

Expanding the use of clean cooking requires a diverse set of equipment and fuels, and would create different types of jobs in rural and urban areas. In countries with adequate resources, a biogas, bioethanol or upgraded biomass fuel industries would create employment in rural areas for transforming feedstock into modern biomass. In countries with existing manufacturing, the assembly and maintenance of modern cookstoves could provide a major source of employment. Expansion of LPG services, which already employs around 2 million people worldwide, could create 16-75 direct local jobs per million dollars spent, depending on the specificities of the LPG market. A strong push for LPG with safe cylinder circulation models would provide new jobs for bottling, distribution and retail, as well as in cylinder manufacturing. Between 5 000 – 10 000 households would be provided with access to clean cooking solutions for each million dollars invested. 

Fuel distribution pathways are evolving, with innovative business models making use of digital technologies and mobile money services that create demand for new skills and jobs in customer-care teleservices. The development of modern fuel industries would have an impact on existing traditional biomass value chains which can be very labour intensive. However, many of these jobs are informal, though measures could be implemented to avoid negative impacts. If regulations ensure that jobs in new value chains are created in the formal rather than the informal economy, the jobs created would be less vulnerable, while also contributing taxes, benefiting public finances and the whole economy.

For households that currently pay for inefficient and unsafe cooking fuels, shifting to modern cooking solutions can often lead to reduced energy bills, freeing income that can be reinvested in the economy. In particular, pre-financing the high upfront capital cost of biogas digesters would unlock savings, leading to major long-term benefits for households (IEA, 2020i). 

Cooking activities account for 1 Gt CO2-eq globally. One-fifth of these emissions come from the inefficient combustion of wood or other fuels, which also produces methane (CH4), nitrous oxide and black carbon. Increasing access to clean cooking would reduce these GHG emissions as any increases in CO2 emissions from increased use of LPG or electricity would be more than offset by lower methane and nitrous oxide emissions: emissions from deforestation would also be reduced. While LPG is today one of the lowest CO2-eq emitting cooking fuels available at scale, the development of less-emitting fuels for cooking could further boost GHG emissions reductions in the long term. Biogas and bio-LPG look like promising solutions: they could draw on local agricultural resources, and could potentially be distributed in much the same way as LPG.

Impact on GHG emission of 1 million dollars spending on clean cooking

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Reduction in premature deaths of 1 million dollars spending on clean cooking

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Household air pollution resulting from polluting and inefficient cooking solutions is linked to around 2.5 million premature deaths every year. Achieving universal access to clean cooking solutions by 2030 could avoid around 1.9 million premature deaths per year.

Investing in clean cooking would also avoid the one-and-a-half hours that are currently spent on average every day collecting fuel wood, and reduce the four hours that are spent cooking on average. These are burdens that fall disproportionally on women.

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