Tracking Buildings 2020

Not on track
Tracking buildings
In this report

Energy-related CO2 emissions from buildings have risen in recent years after flattening between 2013 and 2016. Direct and indirect emissions from electricity and commercial heat used in buildings rose to 10 GtCO2 in 2019, the highest level ever recorded. Several factors have contributed to this rise, including growing energy demand for heating and cooling with rising air-conditioner ownership and extreme weather events. Enormous emissions reduction potential remains untapped due to the continued use of fossil fuel-based assets, a lack of effective energy-efficiency policies and insufficient investment in sustainable buildings.

Buildings sector energy-related CO2 emissions in the Sustainable Development Scenario, 2000-2030

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Tracking progress

Final energy use in buildings grew from 118 EJ in 2010 to around 128 EJ in 2019.

The fastest-growing building end uses – space cooling, appliances and electric plug-loads – are driving buildings sector electrification. While electricity accounted for one-third of building energy use in 2019, fossil fuel use also increased at a marginal annual average growth rate of 0.7% since 2010.

As a result, direct emissions from buildings rose to just over 3 GtCO2 in 2019, a 5% increase since 2010.

When indirect emissions from upstream power generation are considered, buildings were responsible for 28% of global energy-related CO2 emissions in 2019. In absolute terms, buildings-related CO2 emissions rose, reaching an all-time high of 10 GtCO2 in 2019.

This new trend contrasts with the plateauing of emissions from 2013 to 2016 and results from a combination of factors. Emissions levelled off after 2013 largely because of progress in reducing the carbon intensity of the power sector. But since 2016, increased demand for building energy services – particularly electricity for cooling, appliances and connected devices – outpaced energy efficiency and decarbonisation efforts, resulting in a net resurgence in energy-related emissions in buildings.

Extreme heat in many parts of the world was partially responsible for electricity demand growth in 2019, the second-hottest year on record after 2016 (when a strong El-Nino phenomenon and climate change raised temperatures across the globe).

Very high temperatures and prolonged heatwaves set records in many countries, driving up demand for air conditioning. Australia shattered its hottest-summer record, as 2019 was around 3°C warmer than the 1961-90 average. Hundreds of cities had their hottest day ever recorded in July, particularly in Western Europe (e.g. France, Germany, and the United Kingdom). Overall, 29 countries in the Northern Hemisphere broke all-time records during the summer months. 

Buildings sector energy intensity (final energy use per m2) has been decreasing continuously by 0.5% to 1% per year since 2010. However, this rate is significantly below average annual floor area growth, which has remained around 2.5% since 2010.

This indicates untapped energy efficiency potential, as global building energy code evolution is not keeping pace with rapid floor area expansion in emerging economies, while renovation rates in developed countries remain low. Similarly, the marginal increase in direct emissions suggests that renewables, heat pumps, efficient electric technologies and district heating are not replacing fossil fuel-based assets (including boilers, furnaces and cook stoves) on an average global level.

To get on track with the Sustainable Development Scenario (SDS), annual drops in energy intensity per m2 globally need to be at least 2.5%. This could be achieved by 2030 with more stringent building energy codes, deep energy renovations, a tripling of heat pumping technology uptake and a 50% improvement in the average seasonal performance of air conditioners, along with other energy efficiency measures.

In some emerging markets, particularly in Africa, Latin America and Asia, changes in buildings sector energy intensity have been spurred by a shift away from traditional solid biomass use. 

Buildings sector energy intensity in selected regions in the Sustainable Development Scenario, 2000-2030

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Energy efficiency policy coverage for buildings continued to advance in 2018. About 35% of energy use in buildings was covered by policies in 2018, only a slight improvement from the 34% coverage in 2017.

This moderate policy coverage growth rate is due in part to market changes, as growth in energy demand is shifting from China – where policy coverage improved substantially in the last two decades – to other emerging economies, where policies cover a smaller share of buildings sector energy use.

Lighting coverage, which benefitted the most from energy policy improvements in the past decade, appears saturated at about three-quarters of energy use covered by policies in 2018.

While the major push to phase out incandescent lamps since 2008 has helped raise coverage, annual improvements in 2017 and 2018 were less impressive, especially as policies in most countries do not reflect recent progress on LED lighting.

This reflects a worrying overall trend in buildings energy policy coverage, as annual rates of improvement have diminished from 5-8% in the 2000s to 2-3% in recent years.

Policy coverage also does not necessarily indicate policy stringency, and indeed many policies have not been updated to raise their requirements. For example, lighting policies in many countries have not been revised to phase out halogen lamps, which are only about 5% more efficient than incandescent bulbs.

Policy coverage of total final energy consumption in buildings, 2000-2018

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Total investments in the global buildings sector were an estimated USD 5.7 trillion in 2019. More than 60% of these investments were for building construction, while the rest were energy-related.

Good indicators of energy efficiency trends are the incremental rises in spending on energy efficiency investments, which correspond with spending on products that consume less energy than would have been used had the purchaser opted for a less efficient model or, in the case of building refurbishments, not undertaken the efficiency improvements.

In 2019, incremental spending on energy efficiency investments amounted to over USD 150 billion. After sluggish progress in the last three years, 2019 incremental spending increased around 2% from the previous year.

Improvements in the energy efficiency of building envelopes – the material components of a building’s structure such as insulation, windows and air sealing – is the largest component of energy-related investment in buildings, representing almost half of buildings spending. However, additional efforts are required to follow the pace of growth in building construction.

Effective policies need to address market barriers impeding the spread of multiple cost-effective technologies, from high-efficiency lighting to low-cost building envelope measures that can unleash major energy savings while also improving comfort and energy services in buildings. Building efficiency and demand-side response also reduce the impact of rising electricity demand on the power sector.

Comprehensive policy packages are needed to group solutions under one umbrella. Pairing traditional policy tools such as mandatory MEPS with more ambitious regulatory and financial incentives to engage the private sector could help unite several technical and market-based solutions for buildings in arrangements such as one-stop shops and energy service companies. This would create a comprehensive framework to deliver cost-effective action tailored to specific building needs, using the most effective technology opportunities.

Governments need to make clear, ambitious commitments to ensure long-term market signals.

Such commitments should identify specific policy measures, such as regular building energy code updates in all countries and mandatory MEPS for equipment to enable and encourage the uptake of key energy technology solutions, hasten the transition to clean energy and reduce the costs involved.

Product standards and technical engineering specifications need to be based on quantitative rules with scientific proofs to comply with codes and exceed the MEPS. Commitments should also include improved demand-supply integration and demand-side measures to support more ambitious targets in the building sector, such as net-zero-carbon buildings.

Policies need to endorse energy efficiency measures to make them affordable.

Government support for low-carbon and energy-efficient products can increase market uptake by early adopters, with the resulting economies of scale stimulating private R&D investments and enabling technological advancement and enhanced innovation. Paired with market signals, including energy performance requirements, efficiency gains can be achieved with little increase to manufacturing costs or consumer prices.

Financing and market mechanisms, as well as innovative business models, are required to accelerate the clean energy transition.

Governments can stimulate action through policy interventions that shape market rules to improve access to financing, de-risk clean energy investment and broaden the availability of market-based instruments that reduce barriers to the transition and enhance the attractiveness of buildings sector investments. 

Governments need to collaborate to make sustainable buildings a reality. Institutional capacities, along with regional and global co-operation, need to be expanded to enable the clean energy transition.

Governments can co‑operate to share knowledge, best practices and solutions through multiple initiatives such as the IEA Technology Collaboration Programmes and the IEA Global Exchange for Energy Efficiency.

Resources
Acknowledgements

John Dulac, European Commission

Yan Da, Shan Hu, Zhang Yang, Siyue Guo, Tsinghua University

Meredydd Evans, Malcolm Orme, Takao Sawachi, Sha Yu, EBC TCP

Jessica Glicker, Johnathan Volt, BPIE

P. Marc Lafrance, DOE