Climate Change - Buildings and - Summary for Decision-Makers

Climate Change - Buildings and - Summary for Decision-Makers
Sustainable Buildings
                      & Climate Initiative




                                      Buildings and
                                      Climate Change
                                      Summary for Decision-Makers
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Climate Change - Buildings and - Summary for Decision-Makers
Also in this Series
Design and layout by Thad Mermer, the Graphic Environment • http://www.tge.ca
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                              between 2008 and 2050 which would result in the total building stock doubling by 2050.
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                              around 30% to 40% in the residential sector.



                              Greenhouse Gas Emission Baselines and Reduction Potentials from
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                              This report is the first comprehensive description of the factors that determine the
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Climate Change - Buildings and - Summary for Decision-Makers
Buildings and
Climate Change
Summary for Decision-Makers




                               Sustainable Buildings
                               & Climate Initiative


UNEP DTIE
Sustainable Consumption &
Production Branch
15 Rue de Milan
75441 Paris CEDEX 09, France
Tel: +33 1 4437 1450
Fax: +33 1 4437 1474
E-mail: unep.tie@unep.org
www.unep.fr/scp/sun




                                                       1
Climate Change - Buildings and - Summary for Decision-Makers
Preface




          Preface

          Today, it is widely accepted that human activities       They need to make the mitigation of greenhouse gas
          are contributing to climate change. The Fourth           emissions from buildings the cornerstone of every
          Assessment Report of the Intergovernmental               national climate change strategy.
          Panel on Climate Change (IPCC) estimated that
          between 1970 and 2004, global greenhouse gas             This Summary for Decision-Makers presents the
          emissions due to human activities rose by 70             current state of thinking on how the potential for
          percent (IPCC, 2007). While the full implications of     greenhouse gas emission reductions in buildings
          climate change are not fully understood, scientific      can be realized. It has been compiled by the
          evidence suggests that it is a causal factor in rising   Sustainable Building and Climate Initiative (SBCI),
          sea levels, increased occurrence of severe weather       a UNEP-hosted partnership between the UN and
          events, food shortages, changing patterns of             public and private stakeholders in the Building
          disease, severe water shortages and the loss of          Sector, which promotes sustainable building
          tropical forests. Most experts agree that over the       practices globally. One of UNEP-SBCI’s key
          next few decades, the world will undergo potentially     objectives is to ensure that Parties to the United
          dangerous changes in climate, which will have a          Nations Framework Convention on Climate Change
          significant impact on almost every aspect of our         (UNFCCC) have the information needed to support
          environment, economies and societies.                    the mitigation of building-related greenhouse
                                                                   gas emissions. This report is based on research
          It is estimated that at present, buildings contribute    conducted by the UNEP-SBCI under the guidance
          as much as one third of total global greenhouse          of its Climate Change Think Tank and in cooperation
          gas emissions, primarily through the use of fossil       with the Finnish research institute VTT, the Central
          fuels during their operational phase. Past efforts to    European University in Hungary, the Marrakech Task
          address these emissions have had a mixed record          Force of Sustainable Buildings and Construction,
          of success, although there are many examples             and the UNEP Risø Centre on Energy, Climate
          which show that carefully considered and properly        and Sustainable Development. The results of this
          funded policies can achieve significant reductions.      research have been published in three reports:
          The new international agreement which will be            Buildings and Climate Change – Status, Challenges
          negotiated at Copenhagen in December 2009                and Opportunities (UNEP, 2007a), Assessment
          provides decision-makers with an unprecedented           of Policy Instruments for Reducing Greenhouse
          opportunity to incorporate emissions from buildings      Gas Emissions from Buildings (UNEP, 2007),
          into a global strategy on climate change. However,       and The Kyoto Protocol, the Clean Development
          if the desired targets for greenhouse gas emissions      Mechanism and the Building Sector (UNEP, 2008).
          reduction are to be met, Decision-Makers have to         UNEP-SBCI will continue to facilitate and support
          tackle emissions from the Building Sector with much      the implementation of these recommendations,
          greater seriousness and vigor than they have to date.    and welcomes other stakeholders and interested
                                                                   partners to join it in this endeavor.




2
Climate Change - Buildings and - Summary for Decision-Makers
Foreword




Foreword

      Building Opportunities for
      Tackling Climate Change

In forty years we need to have reduced our              emissions. Doing so can create jobs, save money
greenhouse gas emissions by at least 50% to             – and most importantly, shape a built environment
avoid the worst-case scenarios of climate change.       that is a net positive environmental influence – not
In eleven years we need to have achieved at least       simply a ‘less-bad’ version of what we currently
a 25% reduction in emissions. In three years the        have. Indeed, cost effective emission reductions
current global framework that sets legally binding      and energy savings of more than 30% are possible in
targets for national emissions, and provides the        many countries. Investing in achieving such results
architecture for global carbon trading – the Kyoto      in the building sector also has the potential to boost
Protocol - will expire. In December 2009 the            the local economy and improve living conditions,
world’s nations are gathered in Copenhagen to           particularly for low-income communities.
negotiate an agreement on a new global protocol
that will enable humanity to achieve the necessary      This report – Buildings & Climate Change: A
global targets. The challenge is great, but so are      Summary for Decision-makers draws together
the opportunities.                                      the findings of three years of research by UNEP’s
                                                        Sustainable Buildings & Climate Initiative (SBCI) and
The building sector contributes up to 30% of global     it’s partners. It sets out priority actions that can be
annual green house gas emissions and consumes           taken by policy makers and industry stakeholders
up to 40% of all energy. Given the massive growth       locally, regionally and globally to deliver economically
in new construction in economies in transition,         beneficial and significant reductions in building-re-
and the inefficiencies of existing building stock       lated greenhouse gas emissions.
worldwide, if nothing is done, greenhouse gas
emissions from buildings will more than double in the   One of UNEP-SBCI’s key objectives is to ensure
next 20 years. Therefore, if targets for greenhouse     that Parties to the United Nations Framework
gas emissions reduction are to be met, it is clear      Convention on Climate Change (UNFCCC) have
that decision-makers must tackle emissions from         the information needed to support the mitigation
the building sector. Mitigation of greenhouse gas       of building-related greenhouse gas emissions.
emissions from buildings must be a cornerstone of       SBCI’s Industry stakeholders are already showing
every national climate change strategy.                 leadership and producing results. Buildings &
                                                        Climate Change: A Summary for Decision-makers
The world’s governments can successfully tackle         presents a strategic approach to harnessing this
climate change by harnessing the capacity of            capacity. The challenge now is for all nations to
the building sector to significantly reduce GHG         support their building industries by mainstreaming
                                                        energy efficient and low-GHG emissions building.




                                                        Sylvie Lemmet
                                                        Director
                                                        Division of Technology, Industry and Economics
                                                        UNEP




                                                                                                                         3
Climate Change - Buildings and - Summary for Decision-Makers
Key Messages and Priorities for COP 15




                        6 Key Messages for COP 15


         1                                                   2
                   The building sector has the most              Countries will not meet emission
                   potential for delivering significant          reduction targets without supporting
                   and cost-effective GHG emission               energy efficiency gains in the building
                   reductions.                                   sector.




         3                                                   4
                   Proven policies, technologies and             The building industry is committed to
                   knowledge already exist to deliver            action and in many countries is already
                   deep cuts in building related GHG             playing a leading role.
                   emissions.




         5                                                   6
                                                                 Failure to encourage energy-efficiency
                   Significant co-benefits including
                                                                 and low-carbon when building new
                   employment will be created by policies
                                                                 or retrofitting will lock countries into
                   that encourage energy efficient and
                                                                 the disadvantages of poor performing
                   low-emission building activity.
                                                                 buildings for decades.




                     4 priorities to be addressed


         1                                                   2
                                                                 Supporting energy efficiency and GHG
                   Prioritise the building sector as key
                                                                 emission reduction programmes in the
                   to meeting national GHG emission
                                                                 building sector must be recognised as
                   reduction targets.
                                                                 a NAMA.




         3                                                   4
                                                                 Develop baselines for building-related
                   CDM must be reformed to support
                                                                 GHG emissions using a consistent
                   investment in energy efficient building
                                                                 international approach to performance
                   programmes in developing countries.
                                                                 monitoring and reporting.




4
Climate Change - Buildings and - Summary for Decision-Makers
Contents




Table of Contents
Eight Key Messages for Decision-makers                                                                 6
1   The Contribution of Buildings to Climate Change                                                    8
2   “Building Blocks” for Developing Greenhouse Gas Mitigation Strategies for the Building Sector     16
3 Policy Options for Reducing Emissions from Buildings                                                22
  Target 1: Improve the Energy Efficiency of Buildings                                                23
  Target 2: Improve the Energy Efficiency of Household and Business Appliances                        27
  Target 3: Encourage Energy Generation and Distribution Companies to Support
		          Emission Reductions in the Building Sector                                                29
  Target 4: Changes in Attitudes and Behavior                                                         32
  Target 5: Substituting Fossil Fuels with Renewable Energies in Buildings                            34
4   International Cooperation for Emission Reductions from Buildings                                  38
    Six Actions to Urgently Consider for the Post-Kyoto Agreement                                     42
5   Conclusions and Priority Actions for Creating a Carbon Neutral Buildings Sector                   44
    National and International Policy Makers                                                          46
    Municipalities                                                                                    47
    NGOs and Civil Society                                                                            47
    Private Sector                                                                                    48
    Research and Education Institutions                                                               48
    A Final Word                                                                                      49
6   Bibliography		                                                                                    50
Acknowledgements                                                                                      56

List of Tables
Table 1. Major Barriers to Energy Efficiency in the Building Sector.                                  12
Table 2. Summary Table of Policies to Reduce Greenhouse Gas Emissions in the Building Sector          24
Table 3. Selected measures eligible for savings under the Energy Efficiency Obligations Schemes
         in Four Countries                                                                            30
Table 4. Countries/States/Provinces Enacting Feed-in Policies                                         35

List of Figures
Figure 1.   CO2 Emissions from buildings - IPCC High Growth Scenario                                   9
Figure 2.   Estimated Economic Mitigation Potential by Sector and Region Using Technologies
            and Practices Expected to be Available In 2030                                            10
Figure 3.   Life Cycle Phases of Buildings                                                            11
Figure 4.   Small Savings from Large Numbers of End-Use Units Constitute the Long-Tail Distribution
            of Building Sector Projects                                                               14
Figure 5.   Different Types of Residential Housing in South Africa                                    18
Figure 6.   Outcome of the French Grenelle de l’Environnement                                         20
Figure 7.   Energy Certification of New/existing Buildings                                            25
Figure 8.   A Passive Apartment Building in Finland                                                   36
Figure 9.   Commonly Identified Energy Efficiency Technology Needs in the Building and
            Residential Subsectors                                                                    39

List of Boxes
Box 1. Tax Incentives under the U.S. Energy Policy Act of 2005                                        26
Box 2. Leading by Example: Government Initiatives to Promote Energy Efficiency in Public Buildings    28
Box 3. Cap-and-Trade Scheme for Non-residential Buildings                                             31




                                                                                                                 5
Climate Change - Buildings and - Summary for Decision-Makers
8 Key Messages for Decision-makers




            1
              8 key messages for decision-makers
                        Buildings are responsible for more              the majority of buildings which will be standing in
                        than 40 percent of global energy use            2050 have already been built, so policies should
                        and one third of global greenhouse              encourage building owners to retrofit their buildings
                        gas emissions, both in developed and            in such a way as to optimize emission reductions.
                        developing countries.                           In developing countries, particularly those
             The main source of greenhouse gas emissions from           undergoing rapid urbanization, policies should
             buildings is energy consumption, but buildings are         encourage property developers and construction
             also major emitters of other non-CO2 greenhouse            companies to incorporate energy and greenhouse
             emissions such as halocarbons. While historically          gas emission considerations into the feasibility and




                                                                        4
             the majority of emissions emanated from developed          design stages of buildings.
             countries, it is expected that in the near future the
             level of emissions from buildings in rapidly industri-                Most developed countries and many
             alizing countries will surpass emission levels from




            2
                                                                                   developing countries have already
             buildings in developed countries.                                     taken    steps      towards     reducing
                                                                                   greenhouse gas emissions from the
                        The Building Sector has the largest                        Building Sector, but these steps
                        potential for delivering long-term,                        have had a limited impact on actual
                        significant    and        cost-effective                   emission levels.
                        greenhouse gas emissions.                       This is due to a number of barriers which reflect
                        Furthermore, this potential is relatively       the nature of the sector, such as the fact that there
             independent of the cost per ton of CO2 eqv.                are many small reduction opportunities spread
             achieved. With proven and commercially available           across millions of buildings; different stakeholders
             technologies, the energy consumption in both new           are involved at the various stages in a building’s
             and existing buildings can be cut by an estimated          life; these stakeholders have different economic
             30 to 80 percent with potential net profit during the      interests in terms of valuing investments in energy
             building life-span. This potential for greenhouse          efficiency measures; energy efficiency investments
             gas emission reductions from buildings is common           are perceived to be costly and risky; and there is
             to developed and developing countries, as well as          still a lack of practical knowledge about how to




            3                                                           5
             countries with economies in transition.                    implement energy efficiency measures.

                        Buildings have a relatively long                          To      overcome       these     barriers,
                        lifespan, and therefore actions taken                     governments must take the lead by
                        now will continue to affect their                         prioritizing the building sector in their
                        greenhouse gas emissions over the                         national climate change strategies and
                        medium-term.                                              putting in place a number of “building
             The full extent of the life-time emissions of a building             blocks”.
             can best be understood by using the life-cycle (LCA)       These are the essential tools for designing effective
             approach. The LCA approach reveals that over 80            policies, and include: credible and comparable
             percent of greenhouse gas emissions take place             energy performance standards; accurate and
             during the operational phase of buildings, when            comprehensive data and information about the
             energy is used for heating, cooling, ventilation,          Building Sector; the appropriate skills-base and
             lighting, appliances, and other applications. A            capacity to assess energy performance and
             smaller percentage, normally 10 to 20 percent, of          implement energy efficiency policies; and systems
             the energy consumed is for materials manufacturing         and frameworks for consultations with all major
             and transportation, construction, maintenance              stakeholders. Governments must work together
             renovation and demolition. In developed countries,         with the building and construction industry, NGO




6
Climate Change - Buildings and - Summary for Decision-Makers
and civil society organizations, research and          Convention on Climate Change provides the best
educational institutes, and most importantly, the      framework for facilitating this cooperation, but there
public, to achieve the common goal of reducing




6
                                                       is an urgent need to make the flexible financing
greenhouse gas emissions from buildings.               mechanisms of the Kyoto Protocol more effective
                                                       in addressing greenhouse gas emissions from the
           With these “building blocks” in place,      Building Sector. In this regard, the current structure
           governments are well placed to select       of the Clean Development Mechanism (CDM) must
           and design appropriate policies to          be reformed or additional mechanisms created
           reduce emissions from new and               to support developing countries’ efforts to reduce
           existing buildings.                         emissions from the Building Sector. Furthermore,
There are five main policy targets: increase           energy efficiency and greenhouse gas emission
the energy efficiency of buildings; increase the       reduction programs in the Building Sector should
energy efficiency of appliances which use energy;      be recognized as a Nationally Appropriate Mitigation
encourage energy generation and distribution           Action (NAMA). At the same time, sufficient
companies to support emission reductions in the        incentives to attract private sector financing must be




                                                       8
Building Sector; change attitudes and behaviour        put in place.
towards energy consumption; and promote the
substitution of fossil fuels with renewable sources              Reducing emissions from buildings
of energy. Governments have a variety of policy                  will bring multiple benefits to both the
instruments, including regulatory, fiscal, economic,             economy and to society.
informational and capacity building measures,                    The construction, renovation, and
to choose from. An assessment by UNEP’s                          maintenance of buildings contribute 10 to
Sustainable Building and Climate Initiative found      40 percent of countries’ Gross Domestic Product
that there are many policy instruments which are       (GDP), and represent on a global average 10 percent
not only effective in achieving emission reductions,   of country-level employment. If carefully planned,
but can also result in net savings when the energy




7
                                                       greenhouse gas mitigation strategies for buildings
saved is factored into the assessment.                 can stimulate the growth of new businesses and
                                                       jobs, as well as contribute to other, equally pressing,
          At no other time has the case for            social development goals, such as better housing
          international cooperation to address         and access to clean energy and water. Decision-
          climate change been more pressing            makers should seize the opportunity offered by the
          than now.                                    climate change crisis to build the foundation for
          The    United    Nations   Framework         sustainable development today and for the future.




                                                                                                                 7
Climate Change - Buildings and - Summary for Decision-Makers
Chapter 1
The Contribution of
Buildings to Climate Change
The Contribution of Buildings                                 Under the IPCC’s high growth scenario, this figure
                                                              could almost double by 2030 to reach 15.6 billion
to Climate Change
                                                              metric tons CO2 eqv. (Figure 1) (Levine et al, 2007).
                                                              As Figure 1 shows, historically the majority of
Today, buildings are responsible for more than 40
                                                              emissions were generated from North America,
percent of global energy used, and as much as one             Western Europe, and the Eastern Europe, Caucasus
third of global greenhouse gas emissions, both in             and Central Asia (EECCA) regions, but based on
developed and developing countries. In absolute               the high growth scenario given in Figure 1, the total
terms, the Fourth Assessment Report of the IPCC               emissions from developing countries will surpass
estimated building-related GHG emissions to be                these regions by 2030.
around 8.6 billion metric tons CO2 eqv in 2004
(Levine et al, 2007). What is particularly worrying           The good news is that the Building Sector has
is the rate of growth of emissions: between 1971              the largest potential for significantly reducing
and 2004, carbon dioxide emissions, including                 greenhouse gas emissions compared to other
through the use of electricity in buildings, is               major emitting sectors. This potential is relatively
estimated to have grown at a rate of 2.5% per                 independent of the cost per ton of CO2 equ.
                                                              achieved (IPCC, 2007). Figure 2, from the IPCC’s
year for commercial buildings and at 1.7% per
                                                              Fourth Assessment Report, shows that the potential
year for residential buildings (Levine et al, 2007).
                                                              for greenhouse gas reductions from buildings
Furthermore, the Buildings and Construction
                                                              is common to both developed and developing
Sector is also responsible for significant non-CO2
                                                              countries, as well as countries with economies in
GHG emissions such as halocarbons, CFCs, and                  transition. What this means is that with proven and
HCFCs (covered under the Montreal Protocol),                  commercially available technologies, the energy
and hydrofluorocarbons (HFCs), due to their                   consumption in both new and existing buildings
applications for cooling, refrigeration, and in the           can be cut by an estimated 30 to 80 percent with
case of halocarbons, insulation materials.                    potential net profit during the building life-span.

Figure 1. CO2 emissions from buildings (including through the use of electricity) – IPCC High Growth Scenario.
Note: Dark red: historic emissions. Light red: projections 2001 – 2030. 2000 – 2010 data adjusted to actual 2000 carbon
dioxide emissions. EECCA= Countries of Eastern Europe, the Caucasus and Central Asia. Source: Levine et al, 2007.




                                                                                                                          9
The Contribution of Buildings to Climate Change




                    Assessing Emissions                                    By far, the greatest proportion of energy is used
                    through a Life Cycle                                   during a building’s operational phase. Though
                    Approach                                               figures vary from building to building, studies
                                                                           suggest that over 80 percent of greenhouse gas
             Greenhouse gas emissions from buildings primarily             emissions take place during this phase to meet
             arise from their consumption of fossil-fuel based             various energy needs such as heating, ventilation,
             energy, both through the direct use of fossil fuels           and air conditioning (HVAC), water heating, lighting,
             and through the use of electricity which has been             entertainment and telecommunications (Junnila,
             generated from fossil fuels. Significant greenhouse           2004; Suzuki and Oka, 1998; Adalberth et al, 2001).
             gas emissions are also generated through                      A smaller percentage, generally 10 to 20 percent,
             construction materials, in particular insulation              of energy is consumed in materials manufacturing
             materials, and refrigeration and cooling systems.             and transport, construction, maintenance and
             Broadly speaking, energy is consumed during the               demolition. Governments can therefore achieve the
             following activities:                                         greatest reductions in greenhouse gas emissions
             • manufacturing of building materials (‘embedded’             by targeting the operational phase of buildings.
                 or ‘embodied’ energy)
             • transport of these materials from production                       Energy Consumption and
                 plants to building sites (‘grey’ energy);                        Economic Development
             • construction of the building (‘induced’ energy);
             • operation of the building (‘operational’ energy);           The energy consumption during the operational
                 and                                                       phase of a building depends on a wide range of
             • demolition of the building (and recycling of their          interrelated factors, such as climate and location;
                 parts, where this occurs).                                level of demand, supply, and source of energy;
                                                                           function and use of building; building design and
             Graham (2003) uses a Life Cycle Approach to link              construction materials; and the level of income and
             emissions to the different stages of a building’s life        behavior of its occupants. Climatic conditions, and
             (Figure 3).                                                   the type of environment in which a building is found,


             Figure 2. Estimated economic mitigation potential by sector and region using technologies and practices
             expected to be available in 2030. The potentials do not include non-technical options such as lifestyle changes.
             Source: IPCC, 2007a.




10
Chapter 1




affect every aspect of a building’s energy use over               electricity was available. More significantly, the
its lifetime. Most countries, and even states within              generation of electricity itself is a major source of
countries, have multiple climate zones.                           GHG emissions, unless it comes from renewable
                                                                  sources such as hydroelectric power plants and
More significantly, however, the level of greenhouse              solar energy, or from nuclear energy. At the global
gas emissions from buildings is closely correlated                level, it has been estimated that direct combustion
with the level of demand, supply and source of                    of energy from fossil fuels in buildings released
energy. In many low-income countries, especially                  approximately 3 GtCO2 in 2004, compared with 8.6
in rural areas, a large proportion of operational                 GtCO2 per year from all energy end users (Levine
energy is derived from burning wood and other                     et al, 2007). Similarly, the Carbon Monitoring For
biomass, such as dung and crop residues. The                      Action (CARMA) database of carbon emissions of
IEA estimates that as many as 2.4 billion people                  more than 50,000 power plants and 4,000 power
use biomass for cooking and heating, and that                     companies in every country suggests that power
this number is likely to increase in the future (IEA,             generation using fossil fuels accounts for 40% of all
2002). In many countries, the technologies used                   carbon emissions in the United States and about
to burn the biomass, such as cooking stoves, are                  one-quarter of global emissions (CARMA web site).
often very inefficient. In China, for example, rural
energy use per capita was three times greater                     In most countries the residential sector accounts for
than urban energy use due to the low efficiency                   the major share of total primary energy consumption.
of biomass combustion for cooking and space                       Nevertheless, the energy consumption in non-resi-
heating (Tonooka, Y. et al. 2003).                                dential buildings such as offices, public buildings and
                                                                  hospitals is also significant and growing. China for
As countries develop, and traditional fuels are                   example is expected to add the equivalent of twice
complemented by and replaced by electricity and                   the current U.S. stock of office buildings by 2020
gas, the potential for greenhouse gas emissions                   (LBL, 2007). In terms of international averages, most
increases profoundly for two main reasons. Access                 residential energy in developed countries is consumed
to electricity can stimulate demand for electrical                for space heating (60%, although not as important
appliances, thereby increasing demand for energy                  in some developed countries with a warm climate,
over and beyond the level it had been before                      but in this case energy may be used for cooling

Figure 3. Life Cycle Phases of Buildings
Source: Graham, 2003.


            Avoiding &               Initial Emissions                        Ongoing Emissions
        Minimising Potential               Accrue                                  Accrue
            Emissions

                                           Project Life Cycle Process


        Feasibility:                                                                                 Demolition,
      Pre-design and      Building                                                 Reuse and
                                        Construction           Operation                             reuse and           Landfill
       development        design                                                 refurbishment
         planning                                                                                     recycling



                                                       Reuse of existing structure;        Material salvage for reuse
                                                        deconstruction and reuse           on other building projects
                                                       of components or materials         or for reprocessing by other
                                                                                                    industries




                                                                                                                                          11
The Contribution of Buildings to Climate Change




           Table 1. Major Barriers to Energy Efficiency in the Building Sector.
           Sources: Carbon Trust (2005) & Levine et al 2007 * New categories & columns (UNEP-SBCI, 2007).

            Barrier          Definition         Examples                       Countries*      Possible remedies*      References
            categories
            Economic/        Ratio of invest-   Higher up-front costs for      Most coun-      Fiscal and economic     Deringer et
            financial bar-   ment cost to       more efficient equipment       tries           instruments such as     al 2004
            riers            value of energy    Lack of access to financing                    tax rebates, Kyoto      Carbon
                             savings            Energy subsidies               Especially      Flexibility Mecha-      Trust 2005,
                                                Lack of internalization of     developing,     nisms, subsidized       Levine et al
                                                environmental, health, and     but also        loans, regulatory       2007
                                                other external costs           developed       instruments. Or in-
                                                                               countries       crease energy price,
                                                                                               remove energy price
                                                                                               subsidies




            Hidden costs/    Cost or risks      Costs and risks due to         All countries   Appliance standards,    Carbon
            benefits         (real or per-      potential incompatibilities,                   building codes (to      Trust 2005,
                             ceived) that are   performance risks, transac-                    overcome high trans-    Levine et al
                             not captured       tion costs etc.                                action costs), EPC/     2007
                             directly in fi-    Poor power quality, partic-                    ESCOs, public leader-
                             nancial flows      ularly in some developing                      ship programs
                                                countries




            Market fail-     Market struc-      Limitations of the typical     All countries   Fiscal instruments      Carbon
            ures             tures and          building design process                        and incentives          Trust 2005,
                             constraints        Fragmented market struc-                       Product standards       Levine et al
                             that prevent       ture                                           Regulatory-normative    2007
                             a consistent       Landlord/tenant split and                      Regulatory-informa-
                             trade-off be-      misplaced incentives                           tive
                             tween specific     Administrative and regula-                     Economic instru-
                             EE investment      tory barriers (e.g. in the                     ments
                             and energy         incorporation of distributed                   Technology transfer,
                             saving benefits    generation technologies)                       mechanisms
                                                Imperfect information
                                                Unavailability of energy ef-
                                                ficiency equipment locally




12
Chapter 1




Table 1. Continued

 Barrier           Definition         Examples                        Countries*    Possible remedies*       References
 categories
 Behavioural       Behavioural        Tendency to ignore small        Developed     Support, information     Carbon
 and organiza-     characteristics    energy saving opportuni-        countries     and voluntary action:    Trust 2005,
 tional barriers   of individuals     ties                                          Voluntary agreements     Deringer
                   and companies      Organizational failures (e.g.                 Information and train-   et al 2004,
                   that hinder en-    internal split incentives)      Developing    ing programs             Levine et al
                   ergy efficiency    Non-payment and electric-       countries                              2007
                   technologies       ity theft
                   and practices      Tradition, behaviour and
                                      lifestyle, Corruption
                                      Transition in energy
                                      expertise: Loss of tra-
                                      ditional knowledge and
                                      non-suitability of Western
                                      techniques

 Information       Lack of in-        Lacking awareness of            Especially    Awareness raising        Carbon
 barriers*         formation          consumers, building man-        developing,   campaigns, Training      Trust 2005,
                   provided on        agers, construction compa-      but also      of building profes-      Yao et
                   energy saving      nies, politicians               developed     sionals, regulatory-     al. 2005,
                   potentials                                         countries     informative              Evander et
                                                                                                             al. 2004

 Political and     Structural         Process of drafting local       Most de-      Enhance implementa-      Yao et al.
 structural        characteristics    legislation is slow             veloping      tion of standards        2005
 barriers*         of political,      Gaps between regions at         (and some                              Deringer et
                   economic,          different economic level        developed)    Incentive policy         al 2004
                   energy system      Insufficient enforcement of     countries     encouraging EE build-
                   which make ef-     standards                                     ing design, Enhance
                   ficiency invest-   Lack of detailed guidelines,                  international coopera-
                   ment difficult     tools and experts                             tion and technology
                                      Lack of incentives for EE                     transfer, Public lead-
                                      investments                                   ership programs
                                      Lack of governance leader-
                                      ship/ interest
                                      Lack of equipment testing/
                                      certification
                                      Inadequate energy service
                                      levels




                                                                                                                                  13
The Contribution of Buildings to Climate Change




             emission reduction / unit
                                                                                                                         Figure 4. Small savings
                                                                                                                         from large numbers of
                                                                                                                         end-use units constitute
                                                                     Long tail                                           the long-tail distribution of
                                                                                                                         building sector projects
                                                                                                                         Source: Adapted from
                                                                                                                         Hinostroza et al., 2007, in
                                                                                                                         UNEP, 2008.

                                         medium                   Unit
                                                                  Unit number
                                                                       number
                                         to large
                                                       large number of small end-use units (buildings) owned
                                         units
                                                       by many owners
                                         (buildings)




             purposes) with this application followed in order by                              diverse energy needs. Unlike energy production and
             water heating (18%) and domestic appliances (6%                                   other sectors which have large emission reduction
             for refrigeration and cooking, 3% for lighting) with                              potentials at a small number of intervention points,
             other uses accounting for 13% (UNEP, 2007). In                                    the buildings sector has many small reduction
             hotter climates, much less or no energy is used for                               opportunities spread across millions of buildings.
             space heating but a significant proportion of energy                              For this reason, some experts have referred to
             may be used for cooling purposes. However, the                                    energy efficiency projects in buildings as typical
             relative share of different energy applications varies                            “long tail” projects – it is relatively easy to achieve
             from country to country, as well as from household to                             large emission reductions per unit at the top end of
             household. This is partly explained by differences in                             the range of buildings (going from large to small),
             income levels and behavior of building occupants.                                 but becomes increasingly difficult as the size of the
                                                                                               buildings gets smaller (Figure 4). Given the large
                                            Barriers to realizing                              number of buildings, the aggregate savings from
                                            emission reduction                                 the “long tail” are likely to exceed the savings from
                                            potentials                                         the top end.

             Most countries have introduced policies to reduce                                 Fragmentation of the building sector
             greenhouse gas emissions from buildings through                                   Buildings have a long life cycle with many different
             measures to improve energy efficiency. However,                                   stakeholders involved in different phases of
             these policies have not resulted in an actual                                     a building’s life, such as property developers
             reduction in emissions. Many studies have been                                    and financiers, architects, engineers, building
             conducted to try to understand why the energy                                     managers, occupants and owners. The decisions
             savings potential in buildings is so difficult to                                 taken by these various stakeholders will all have
             achieve (see Table 1, p. 12-13; also UNEP, 2007a;                                 an impact on the level of emissions of the building
             Deringer et al, 2004; Westling et al, 2003; Vine,                                 over its lifetime, but there are very few opportunities
             2005; IPCC, 2007, WBCSD, 2007 and 2009).                                          or incentives for coordination between them. For
             Some of the underlying causes for the slow uptake                                 example, as noted in Figure 4 above, decisions
             of energy efficiency measures in the sector are                                   taken during the Feasibility Assessment and
             discussed below.                                                                  Design phases in the early stages of a building’s life
                                                                                               will have a major impact on the level of emissions
             A large number of small reduction                                                 during the Operational Phase, but most feasibility
             opportunities                                                                     assessments do not account for the life-time
             There are hundreds of millions of individual buildings                            running costs of the building because these are not
             in the world, each one presenting multiple and                                    paid for by the property developer.




14
Chapter 1




Perceived “first cost” barrier and split                          The Need for a Long-Term
economic interests                                                Perspective
Perhaps the largest barrier to energy efficiency
improvements in buildings is the “first cost” barrier of   Due to their long life cycle, it is essential that
energy efficiency measures in existing buildings due       measures to reduce emissions for both new and
to the limited time which an occupant of a building        existing buildings are designed to have the maximum
has to recover the cost. In rented properties, many        impact and are costed over the expected lifetime
tenants are unwilling to make investments in energy        of the buildings. For developed countries and
                                                           economies in transition, most of the buildings that
saving features because they do not expect to live
                                                           will be operating in 2050 have already been built,
in or use that property long enough to recoup their
                                                           and therefore policies to reduce emissions from
investment through savings in their energy bills. In
                                                           the Building Sector should focus on adapting and
addition, energy costs are often a comparatively
                                                           retrofitting existing buildings to the optimal energy
small part of the overall running costs of a building.
                                                           efficiency standard. Initiatives which encourage
The economic incentives derived from lower energy          retrofits at sub-optimal level may “lock in” much
costs are therefore too weak to induce owners and          of the mitigation potential of buildings, thereby
tenants to invest in energy efficiency measures.           failing to achieve the maximum level of emission
                                                           reductions. In order to encourage building owners
Lack of awareness about low cost                           to maximize the emission reduction potential from
energy efficiency measures                                 retrofits, policy tools should be designed to support
The above barrier is compounded by the perception          multiple actions, which, taken as a whole, achieve
amongst property developers and contractors that           maximum efficiency performance. The ‘zero rate
energy efficiency measures add significantly to            eco-loan’ introduced for homes in France, for
the overall costs of a building project, in particular     example, was designed so that it can be used
through costly technological solutions. There is           in conjunction with tax credits and for a range of
therefore a need for awareness raising activities          retrofitting activities (see Box 2, p. 28).
across the spectrum of stakeholders about low
                                                           In developing countries, retrofitting existing buildings
cost energy efficiency measures that have been
                                                           at the optimal level is also a priority. In this regard,
proven to be equally, if not more, effective than the
                                                           there is tremendous scope for using this opportunity
application of high cost technologies.
                                                           to update the heating and cooling technologies
                                                           used in buildings, as well as implementing low cost
Lack of indicators to measure energy                       but effective passive solutions to improve energy
performance in buildings                                   efficiencies such as thermal mass and sunshades.
Most building occupants have little or no information      Developing countries, particularly those undergoing
about the energy savings potentials of the buildings       rapid construction growth, should set optimal energy
they live in and occupy. Furthermore, the lack of          performance standards if they are to avoid the “lock
clear and verifiable indicators with which to measure      in” effect described above. It should be noted that
and compare energy consumption makes it difficult          global architectural trends, such as the use of glass
to gauge the savings derived from energy efficiency        envelopes in high-rise office buildings, may not be
improvements. Energy performance requirements              appropriate for their climatic conditions (particularly
and indicators are therefore one of the main               in hot climates). More research on appropriate
“building blocks” for a successful greenhouse gas          building materials, in terms of embodied energy,
                                                           durability, thermal mass, and cost, for developing
mitigation strategy for buildings.
                                                           countries, is required.




                                                                                                                            15
Chapter 2
“Building Blocks” for Developing
GHG Mitigation Strategies for
the Building Sector
“Building Blocks” for                                 greenhouse gas emissions from both existing and
Developing GHG Mitigation                             new buildings.
Strategies for the Building
Sector                                                Building Commissioning
                                                      Energy performance indicators are used in the
The experience of countries which implemented         commissioning process of buildings, in other
energy efficiency measures following the two          words, to assess whether a building’s systems
major energy crises of the 1970s show that current    have been designed, installed and made ready to
barriers to energy efficiency in buildings can be     perform in accordance with the design intent and
overcome. To do this, Decision-Makers must            the building owner’s operational needs. Because
first have a number of essential “building blocks”    of the lack of energy performance indicators,
in place. These include energy performance            energy management tools and procedures have
requirements and indicators; appropriate data         not been systematically established and applied
and information about their Building Sector, the      to the design and commissioning of buildings,
capacity to analyze this data, and the ability to     especially in developing countries, and knowledge
coordinate and facilitate policies which address      and expertise remain at a low level.
GHG emissions from buildings.
                                                      Self Regulation and Fine-Tuning of
      Energy Performance                              Energy Use
      Requirements and                                Energy performance indicators allow building
      Indicators
                                                      owners and building users to assess the costs and
                                                      benefits of energy efficiency investments during the
Energy performance indicators measure the
                                                      operational phase of the building. During this phase,
performance of buildings in terms of their
                                                      continuous monitoring and periodic adjustments to
energy use and efficiency. Energy performance
                                                      design features can lead to substantial savings. For
requirements are set using these indicators,
                                                      example, close monitoring of a sustainable building
according to area of space covered, for example
                                                      site in Oberline, Ohio in the USA led to controls
in heating space or lighting, and adjusted for
                                                      and equipment changes that reduced initial site
building type, location, usage, and so on. While
                                                      energy use by 37 percent (Torcellini et al., 2006).
some countries have energy performance
                                                      Experiences in developing countries show similar
requirements, in many countries there are no
                                                      results: one study found that fine-tuning during
agreed methodologies or indicators to compare
the energy efficiency in buildings against. As        the first year of operation reduced total energy
energy performance requirements are an essential      consumption in several sustainable buildings
component of any GHG mitigation strategy for          in Kuala Lumpur, Malaysia by 20 to 30 percent
the Building Sector, they should be established at    (Kristensen, 2007).
the national, and, where appropriate, the regional
and municipal levels. Examples of how energy          National Greenhouse Gas Inventories
performance requirements are used summarized          Energy performance indicators are critical in
below.                                                compiling reliable national inventories of energy
                                                      consumption and greenhouse gas emission from
Building Codes                                        the national building stock. Their usage can also
Energy performance requirements can be used to        expand the range of financing options open to
set performance targets in building codes. Building   countries, especially under the Clean Development
codes have been found to be one of the most           Mechanism of the UNFCCC, because they can be
effective and cost-effective policies in reducing     used to compare emissions over time.



                                                                                                              17
“Building Blocks” for Developing GHG Mitigation
 Strategies for the Building Sector




             Part of the difficulty in setting energy performance       data on energy use and efficiency. Given the
             requirements come from the great diversity in how          diversity in types of buildings, this is a serious
             buildings use energy. This is why it is important for      challenge for many countries. In South Africa,
             policy makers to have as much information about            for example, residential housing has been divided
             the size and characteristics of the Building Sector        into four categories: dwelling house < 80 m2
             as possible.                                               (estimated to number 3.8 million, or 30% of the
                                                                        residential building stock in 2006); dwelling-house
                    Data and information                                => 80 m2 (estimated at 3.6 million, or 29% of
                    about the size and                                  building stock); flats and townhouses (1.0 million
                    characteristics of the                              or 8% of building stock), and other types, including
                    Building Sector                                     backyard properties, informal and squatter units,
                                                                        and traditional/rural housing (estimated 4.1
             Most countries have fairly good data about                 million, or 33% of building stock) (BMI-BRSCU,
             aggregate energy production and consumption at             StatsSA 2008, as cited in Milford, 2008) (Figure
             the national level, but not many have sector-level         5). Without disaggregated data, such as climate

             Figure 5. Different Types of Residential Housing in South Africa
             Source: BMI-BRSCU, StatsSA 2008, as cited in Milford, 2008




                             Dwelling units ≥ 80 m2                                      Townhouses




                                      Flats                                         Dwelling units < 80 m2




                             Informal Dwelling Units                              Rural / Traditional Housing



18
Chapter 2




and temperature, size, age, and other character-        requires appropriate training and understanding of
istics such as construction materials and potential     what the policies are and what steps are needed
or actual use of natural ventilation, it is extremely   if the object which is subject to the regulation falls
difficult to design and implement policies for          short of the legal standard. The lack of enforcement
greenhouse gas emission reduction. The lack of          has been identified as a major weakness of energy
such data has been cited as a major obstacle to         efficiency policies in developing countries.
estimating the greenhouse gas emission reduction
potential in several studies (de Buen, 2008 for         Technical knowledge and skills
Mexico, Milford, 2008 for South Africa).                In order to propagate a new technology or
                                                        building technique, the building professionals
      Capacity to Design                                involved must be able to actually apply them. In
      and Implement Energy                              this regard, Baden et al (2006), list the following
      Efficiency Measures                               training needs for the development of personnel
                                                        to certify a building’s performance: qualification
An important, but often overlooked, determinant         of raters; development of code of standards for
of success in reducing greenhouse gases from            the field and performance testing verification;
buildings lies in the capacity of governments and       definition of quality assurance requirements; and
other stakeholders in the Building Sector to design     the definition of insurance requirements.
and implement policies effectively. Policies to
address greenhouse gas emissions from buildings         Today, many governments have dedicated
are usually multi-faceted and involve more than         agencies and staff working for the promotion
one stakeholder. Capacity-building activities must      of energy efficiency. According to a survey of
therefore involve the relevant parties to have the      70 countries conducted by the World Energy
desired effects. Different types of skills are needed   Council and ADEME in 2008, about two thirds
as indicated below.                                     of the countries surveyed have a national energy
                                                        efficiency agency and over 90 percent have a
Data collection, analysis and use                       Ministry department dedicated to energy efficiency
As noted above, energy performance indicators           (WEC, 2008). The European Union has even
are a critical ingredient in a wide variety of policy   created an “Intelligent Energy Europe” agency
measures. However, without the capacity to              to manage energy efficiency projects including
collect, analyse and use data pertaining to energy      for buildings, as well as help establish local and
consumption in buildings, government officials          regional energy efficiency agencies (European
and building professionals alike will not be able       Commission Intelligent Energy Europe web site).
to use them. Building this capacity requires both       These agencies often play a coordinating role to
training as well as the availability of equipment       facilitate consultative processes and communica-
to measure energy use. The availability of better       tions between stakeholders, including between
data could also facilitate the application of energy    different branches of the government itself.
use simulation software for buildings, which are
proving to be effective tools for building designers           Consultative Frameworks
and engineers.                                                 for Policy Making and
                                                               Communication
Enforcement of regulatory policies
Regulatory policies, such as Building Codes or          The Building Sector is so vast, and is dispersed over
Energy Efficiency Standards for appliances, will        such a wide area that governments will not be able
only make an impact on reducing greenhouse              to bring about greenhouse gas emission reductions
gas emissions if they are enforced. Enforcement         from buildings without the active involvement of




                                                                                                                       19
“Building Blocks” for Developing GHG Mitigation
 Strategies for the Building Sector




             all stakeholders concerned. These stakeholders            2007. It involved non-governmental organizations,
             include municipalities, private businesses and the        union representatives, employers, local authorities,
             financial sector, NGO and Civil Society actors,           and French government officials. Workgroups
             research and educational institutions, and of             in different environmental policy areas drew the
             course, ordinary citizens. To harness their collective    French environmental roadmap for the next few
             energies, national governments must take the lead         years. The process is shown in Figure 6.
             in the coordination and facilitation of greenhouse
             gas mitigation policies. Various forums can serve         The Grenelle resulted in a number of important rec-
             to facilitate consultative processes. In France, for      ommendations for the building sector, including:
             example, a multiparty environmental summit was
             held over several months in 2007 and resulted in          • For new buildings, primary energy use is
             several major policy changes with regard to energy          expected to be under 50 kilowatt hours per
             use in buildings (Box 2). Meanwhile in the U.K.,            square meter per year by the end of 2010 for
             the government launched a major consultative                public and tertiary buildings and for all new
             process in 2008 to agree on how to define zero              buildings by the end of 2012. The ultimate goal
             carbon homes that will apply to all new homes               for 2020 is for all new buildings to be passive or
             built from 2016, as well as to seek views from both         energy-positive, meaning buildings will generate
             the building and construction industry and non-             more energy than they consume.
             governmental organizations on the potential to            • For existing buildings, an ambitious target of
             achieve non-domestic, zero carbon buildings from            38% reduction in overall energy consumption by
             2019 (UK Department for Communities and Local               2020 was adopted, with a special set of actions
             Government, 2008).                                          for public buildings. To support this process,
                                                                         a complete set of financial schemes has been
             The Grenelle de l’Environnement was a multiparty            implemented or reinforced. For example, the
             national summit which took place over several               “Zero Rate Eco-loan”, which provides loans to
             months in mid-2007 and concluded late October               property owners of up to €30,000 loan over 10


              Figure 6. Outcome of the French Grenelle de l’Environnement


                            Stage 1                            Stage 2                         Stage 3
                            Defining                             Public
                                                                                            Decision-making
                         proposed action                         Debate


                                                            Local meetings
                                                          involving citizens in
                                                               the debate
                         6 Workgroups &                                                      The Environment
                          2 Intergroups                                                        Round Table
                                                               Themed
                                                          discussion forums
                                                            on the Internet




                            15 July to                      28 September to
                                                                                                 24/25 October
                          25 September                         22 October




20
Chapter 2




   years, was officially launched in April 2009. The
   objective of this financial tool is to encourage
   owners to adopt a “global energy performance
   approach” when refurbishing their properties,
   either through a combination of energy efficiency
   investments or by achieving an overall minimum
   energy performance. As of mid-September
   2009, 30,000 zero rate eco-loans have been
   granted.

The French authorities have already begun
implementing some of the Grenelle objectives.
On April 30, 2008, French Minister of State and
Minister of Ecology Jean-Louis Borloo announced
the completion of Grenelle 1, a legal framework
that translates the Grenelle conclusions into law.
The Grenelle 2 law is currently in process and
the corresponding finance law has been voted.
(Source: UNEP, 2008b. For more information
about the Grenelle, go to http://www.legrenelle-
environnement.fr )




                                                             21
Chapter 3
Policy Options for Reducing
Emissions from Buildings
Policy Options for Reducing                               The following sections outline the main policy
Emissions from Buildings                                  instruments available to governments, grouped by
                                                          target. In almost all cases, these targets are best
In their Assessment of Policy Instruments for             achieved through a combination of policies, or
Reducing Greenhouse Gas Emissions from                    “policy packages”, rather than one or two policies
Buildings (UNEP, 2007a), the authors classify             implemented alone. Furthermore, there may be
policies for reducing greenhouse gas emissions            overlap between the policy targets, for example,
from buildings into four categories, regulatory and       promoting investment in energy efficiency measures
control instruments; economic and market-based            (Target 1) while changing consumer behavior
instruments; fiscal instruments and incentives;           (Target 4). Decision-makers can “mix-and-match”
and support, information and voluntary actions,
                                                          their policies to find the optimum solutions to their
and assess each for its cost effectiveness and
                                                          particular carbon energy scenarios.
its effectiveness in actually reducing greenhouse
gas emissions (Table 2 - next page). Many policy
                                                                Target 1: Improve the
instruments were not only found to be effective
in achieving emission reductions, but they also
                                                                Energy Efficiency of New &
resulted in net savings, in some cases of up US$                Existing Buildings
200 per ton of CO2 eqv avoided, if the benefits of
saved energy and the associated avoided expenses          Broadly speaking, the energy efficiency of a building
are factored into the cost-benefit assessment. As         is determined by the rate at which energy is lost
can be seen from Table 2, regulatory and control          through the physical structure of the building (the
instruments were found to be effective in terms of        building envelope), and the rate at which energy
emission reductions as well as cost. Economic             is used to meet the energy needs and physical
and market-based instruments also scored fairly           comfort of the occupants. These two factors are
well on both counts, as did one fiscal instrument         often closely interrelated, because the physical
(tax exemptions and reductions).                          structure and design of a building, interacting with
                                                          the local climate, strongly influence the choice of
To select the most appropriate policies for the “carbon
                                                          energy system and the associated efficiency of
emissions” scenario of the Building Sector of their
                                                          that system. When considering policies to improve
countries, governments should consider what policy
                                                          the energy efficiency of buildings, therefore, it is
objective they wish to target. Broadly speaking, the
five major policy objectives, or targets, for reducing    important to keep both factors in mind.
greenhouse gas emissions from buildings are:
                                                          Building Codes
Target 1: Increase the energy efficiency of new           Almost all developed countries have Building
          & existing buildings (both the physical         Codes which include energy efficiency standards,
          envelope, and the operational aspects           while many developing countries are now passing
          such as energy systems for heating,             legislation for such codes. In most cases, these
          ventilation and other appliances);              codes tend to regulate new buildings, but recently
Target 2: Increase the energy efficiency of               many developed country governments have
          appliances (white goods, entertainment,         amended their codes to cover renovations and re-
          personal computers and telecommuni-             furbishments of existing buildings. Most building
          cation equipment);                              codes are performance based: that is, they set a
Target 3: Encourage energy and distribution               maximum limit for level of heat transfer through the
          companies      to    support    emission        building envelope and the level of heating/cooling
          reductions in the Building Sector;              demand, as well as require building equipment such
Target 4: Change attitudes and behavior;                  as heating and air conditioning systems, ventilation,
Target 5: Substitute fossil fuels with renewable          water heaters and even pumps and elevators to
          energies.                                       meet certain energy performance standards.



                                                                                                                  23
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