Are our buildings costing the earth? Protecting our pockets and the planet

Rents and repayments alone are not the only expense attached to our buildings. Many are leaking energy, leaving a hole in our pockets as well as climate ambitions. And it’s high time to fix them.

A hole in our pocket

Households around the world are reeling from rising energy bills. Gas spot prices in Europe are 10 times higher than a year ago, and the price of oil has nearly doubled over the same period.

Surging energy prices will hit the poor hardest. Even before the latest pressures due to the conflict in Ukraine, 20% of low-income people in OECD countries reported having difficulty heating their homes. The pressure is increasing for many more. Council of Europe (CEB) analysis suggesting the percentage of people unable to warm their homes will rise by up to 0.75% for each 1% increase in energy prices.

Improving the energy efficiency of our buildings can make a real difference. Year-on-year improvements in household energy-efficiency standards have already helped reduce energy spending. Savings can reach 0.71% annually and cut energy poverty rates by 0.21% for each 1% improvement in energy efficiency.

…and our climate ambitions

Leaky buildings are costing the planet as well as our pockets. Buildings account for around 28% of total final global energy consumption. In large cities like Paris, London, New York or Tokyo, energy-related CO2 emissions from the building sector reach ~70%. The majority (77%) of this is thermal energy – energy used for heating, cooling, hot water and cooking – which could be easily conserved through better insulation, ventilation and delivery systems.

Creating jobs and improving health

Investment in energy efficiency is also good for job creation and health outcomes. Evidence suggests that spending on improving building efficiency creates more jobs than investment in fossil fuel industries. In the US, it is estimated that an average of 2.65 jobs are created per USD 1 million of spending on fossil fuels, while more than 7 jobs are generated from investing in green home improvements and commercial retrofits.A Japanese survey of  more than 2,000 houses and 4,000 occupants found a significant reduction in blood pressure of residents after energy efficiency renovations due to improved indoor air temperature.

Going local

Our cities and regions must take the lead for three reasons. First, because cities and regions can lead by example in their own buildings. In France, local and regional authorities own about 20% of non-residential building stock. Encouragingly, in our latest survey, 95% of cities and regions have established energy-efficiency policies for public buildings. More than 60% require higher energy efficiency than national levels and nearly a third call for net-zero emissions.

Second, because cities and regions have unique knowledge about the local-building stock and can target and tailor strategies to fit the needs. They are in an ideal position to bring together local construction firms, energy companies, businesses and citizens in a collective effort to decarbonise buildings.

Finally, because many cities and regions are already responsible for building and zoning regulations. They can use these to drive up standards. Overall, 88% of surveyed cities and regions demand higher energy-efficiency standards than the national level in building energy codes. An quarter even call for a net-zero emissions.

Many cities, such as Metropole of Lille, Copenhagen and Seoul, are including ambitious measures to enhance energy efficiency retrofits. They are also looking at renewable energy use in COVID-19 recovery strategies. Support from the European Commission’s Renovation Wave aims to double annual energy renovation rates by 2030. The objective is to renovate 35 million building units and create 160 000 jobs.

Tackling barriers

Against this backdrop, cities and regions still face major challenges in meeting their ambitions. Retrofitting old buildings is a challenge as it can be complex and costly. The average insulation level of external walls in buildings built before 1945 is more than 5 times lower than those built after 2010. In the EU, buildings built before 1980 account for 65% of all building stock.

Local leaders also face key challenges in overcoming funding and skills gaps. Three quarters of cities and regions reported that they need further support from national governments. An example of this support is scaling up pilot projects and raising awareness among the general public.

It is clear that when it comes to fixing our leaky buildings, action is needed at all levels. And we need to start now to protect our pockets as well as our planet.

Read more in the new report: Decarbonising Buildings in Cities and Regions just published at the OECD.

OECD Policy Analyst at | Website | + posts

Ji-Soo Yoon is a Policy Analyst at the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE) where she actively contributes to the work of  Decarbonising Buildings in Cities and Regions. Her role involves proving support to national and subnational policy makers in decarbonising building policies including energy efficiency in buildings, life-cycle approach (LCA) to embodied carbon, and the integration of digital technologies, all aimed at harnessing the building sector's potential to combat climate change through mitigation and adaptation measures.

Before joining the OECD, she worked in the energy division at the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) where she conducted research on blockchain technology application for clean energy transition, mainly on P2P renewable energy trading. She holds a Master’s degree in International Affairs from the Geneva Graduate Institute (Institut de Hautes Études Internationales et du Developpement, IHEID) in Switzerland and a Bachelor’s degree in International Studies from Ewha Womans’ University in Korea.

Senior Policy Manager at | Website | + posts

Atsuhito Oshima leads OECD’s work on decarbonising buildings in cities and regions. Since joining the OECD, he has started and implemented the new OECD program Building Energy Efficiency in Cities and Regions that aims to support countries, regions and cities in driving low-carbon transition in building stock, through localised data and analysis, international policy dialogue and tailored case studies.

Before joining the OECD in 2019, Atsuhito has worked for the Ministry of Land, Infrastructure, Transport and Tourism of Japan for more than 10 years. He led a number of initiatives in housing and urban policies, including green building, public and social housing, and disaster resilience programmes. He also served Nara Prefecture in Japan as the director of housing department, leading the efforts to adapt the region to its demographic change (in particular ageing and depopulation) through long-term housing strategy and pilot programmes on public housing. Atsuhito holds master’s degrees both in public policy (Georgetown & Syracuse University) and urban planning (University of Tokyo).