Since late February 2026, the escalation of conflict in the Middle East has sent shockwaves through global energy markets.
Disruptions to oil and gas flows, particularly through the Strait of Hormuz, and attacks on energy infrastructure have triggered the largest supply shock in the history of the global oil market. Prices reacted immediately and with exceptional volatility: both Brent crude futures and Dutch TTF, the European benchmark for natural gas, surged by more than 60%.
In today’s uncertain world, energy policy is no longer only about affordability or climate targets. It is also about resilience and security.
Yet when energy supply cannot be ramped up, tackling demand becomes key. Buildings sit at the centre of this challenge. At 34% of global energy demand, they are one of the most powerful levers for reducing exposure to price shocks.
Governments have started to recognise the potential of buildings by introducing renovation incentives in line with the 2015 Paris Agreement. But ambition is still outrunning delivery.
Too expensive, too complicated?
Despite the urgency, renovations remain slow, hovering at around 1% per year. In the EU, for instance, the renovation rate needs to at least double to achieve climate neutrality by 2050.
The business case is clear. Energy-efficiency upgrades promise long-term savings, potentially cutting household energy bills in advanced economies by up to 30% and paying back the initial investment.
In the Netherlands, energy savings of USD 35,000 – 70,000 over 20 years for a 140 m² home can offset the roughly USD 40,000 upfront cost of high‑performance insulation and heat pumps.
Moreover, mass production and technological progress are helping drive costs down and performance up. Heat pumps, once a niche technology, are now central to low-emissions heating. Sales have more than doubled over the past decade. With economies of scale and improved supply chains, especially for components that account for 60-80% of production costs, manufacturing prices are falling.
In regions with low electricity prices or a mild climate, heat pumps are already cost-competitive when considering operating costs.
Yet for many households, even when the long-term benefits stack up, the upfront costs, disruption and uncertainty can still make renovation feel out of reach. That is why speeding up renovations will require more than just the promise of a longer-term payoff. It will mean making them easier, cheaper and more trusted.
Financing renovation differently
New financing models can make a difference, especially where installation requires structural modifications and upfront costs are substantial. With at least 10 million inefficient homes needing upgrades by 2034, France is considering the creation of a dedicated “renovation bank” to make financing easier to access. The scheme would rely on private banks and pre-define public subsidies, meaning the expected aid is advanced at the start of works rather than reimbursed later, reducing upfront costs and simplifying the renovation process.
Think locally, act collectively
Renovation also often becomes more affordable and less daunting when it is organised collectively. Buildings in the same area often share similar characteristics, which opens the door to standardised, cost‑effective solutions at scale. In the Netherlands, the government’s Natural Gas‑free Neighbourhoods (PAW) programme spanned 66 neighbourhoods, combining collective heat solutions with energy‑efficiency upgrades such as heat pumps. It also engaged residents as “neighbourhood ambassadors” to drive local buy‑in.
In the municipality of Leusden, a resident‑led initiative Sustainable Energy for Every Leusdener (DEEL), has organised collective procurement of home insulation and solar panels, securing tangible savings for households, including a EUR 15 per‑panel discount compared with market rates. The energy transition can start on your street with collective action.
Building trust
Many households also hesitate not just because of cost, but because of uncertainty. Which contractor can they trust? Will the work be done well? Will the promised savings materialise?
Here, trusted intermediaries can make a real difference. One-stop shops, certified installer networks and local advisory services can help households navigate the renovation journey from start to finish.
The EU supports the project EU-PEERS, which runs a European community of one-stop shop practitioners. By combining technical advice, vetted suppliers and support with paperwork, one-stop shops, that are part of the EU-PEERS network, reduce complexity and give homeowners more confidence to invest.
Reporting and regulatory stability: a match made in heaven
Finally, homeowners need to see not only the likely savings on energy bills, but also the likelihood that they will recoup their investment through gains in property value. That is why clear and credible signals about a building’s performance are critical. In the EU, Energy Performance Certificates are used to incentivise renovations, improve transparency in real estate markets and guide buyers and tenants toward more energy-efficient properties.
From shock to strategy
Energy shocks often start abroad but hit home fast. That is why better buildings matter: they help cut bills, curb demand and strengthen energy security where it matters most. To use energy shocks as a catalyst for longer-term change, governments need to connect emergency support with faster, simpler and more trusted renovation
Further reading: Future‑Proofing Real Estate Investment and Global State of National Urban Policy 2024
Ji Soo Yoon is a Policy Analyst at the Organisation for Economic Co-operation and Development (OECD), where she leads research and policy development in sustainable building decarbonisation, climate resilience and urban digital twin. Her expertise is reflected in multiple recent publications, including “Future-proofing Real Estate Investment: Place-based Approach (2025)”, "Zero-Carbon Buildings in Cities: A Whole Life-Cycle Approach" (2025) and "Global Monitoring of Policies for Decarbonising Buildings" (2024). Ji Soo holds a Master's degree in International Affairs from the Geneva Graduate Institute, and a Bachelor's degree in International Studies from Ewha Womans University in Seoul. She is fluent in Korean, English, and French.
Takahiro Yamada leads OECD’s work on Decarbonising Buildings in Cities and Regions. Before joining the OECD in 2025, Takahiro has worked for the Ministry of Land, Infrastructure, Transport and Tourism of Japan, developing polices on housing, buildings and urban planning. He holds master’s degrees in urban engineering (University of Tokyo).
Matylda Strand holds a Master’s degree in Sociology from Sciences Po Paris. Her research examines building energy performance, the professionals who assess it and the valuation dynamics shaping the green transition in real estate. She previously worked as an intern at the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE), focusing on policies to improve energy efficiency in buildings and on life-cycle approaches. She now works at the French High Council for the Evaluation of Research and Higher Education (Hcéres), where she contributes to the coordination and oversight of university programme evaluations. She also holds a Master’s degree in Literature from the École des Hautes Études en Sciences Sociales (EHESS) and a Bachelor’s degree in Literature from Charles University in Prague.