Handbook on Energy Efficiency in Buildings

1   INTRODUCTION

This technical handbook has been prepared for energy communities working in the buildings and building construction sector (e.g., engineers, architects, building developers) in members of the Asian Development Bank (ADB), as well as ADB operations teams to support demand-side investment projects and technical assistance.

There is growing consensus that over 50% of global emissions need to be reduced by 2030, from 2010 levels, to be on track for the 1.5-degree Celsius (°C) target by 2050.¹ The buildings and building construction sector is among the most emission-intensive sectors and offer considerable potential for carbon dioxide (CO2) emission reduction. In 2020, this sector consumed about 36% of global total final energy consumption (i.e., residential, nonresidential, and buildings construction industry), as shown in Figure 1, and generated 37% of energy-related CO2 emissions (i.e., construction and operation of buildings). Some progress has been made since 2015 in decoupling energy consumption from floor space expansion as well as the adoption of efficient heating technologies, particularly because of policy adoption in developed countries. In 2020, the buildings and building construction sector emitted 11.7 gigatons of CO2, an unprecedented drop of emissions by 10% from 2019, largely due to the coronavirus disease (COVID-19) pandemic. However, the sector is not on track to meet the climate commitments by 2050, according to the International Energy Agency (IEA). In 2021, there was a sharp rebound of CO2 emissions globally, nearly back to the pre-pandemic level, adding the urgency for concrete and immediate actions.² Energy efficiency offers the most cost-effective and one of the fastest measures to cut emissions. It is thus essential to improve energy efficiency and ultimately decarbonize the buildings and building construction sector.

Figure 1: Share of Buildings and Building Construction Sector of Total Final Energy Consumption (left) and Building Energy Consumption by End Use from 2010 to 2020 (right), 2020

EJ = exajoule.

Source: United Nations Environment Programme (UNEP). 2021. 2021 Global Status Report for Buildings and Construction: Towards a Zero-Emission, Efficient and Resilient Buildings and Construction Sector

. United Nations Environment Programme.

This handbook covers in detail a range of actions and measures needed to help reduce emissions and ultimately decarbonize the sector, such as the promotion of energy-efficient design strategies and technologies, the development of optimized financing instruments, and business models for future scale-up. It is to develop capacity and knowledge of ADB operations, decision-makers, and professionals in developing member countries (DMCs) of ADB by providing a practical reference for the design of building energy efficiency projects. This handbook is a contribution to opening a sensible avenue for the transition to a zero-carbon, efficient, and resilient building stock.

Energy efficiency improvements typically refer to the utilization of less energy to provide the same services. Buildings, together with transport and industry, are among the key areas for energy efficiency improvement. In the global discussion, a distinction is made between supply-side energy efficiency (SSEE), aiming at decreasing energy losses in energy production and in the delivery of electricity or heat, while demand-side energy efficiency (DSEE) focuses on the consumption of less energy for the same level of service³ in energy consuming sectors such as industry, buildings, and transport. Yet, buildings can be energy producers as well. Further, decarbonizing the buildings and building construction sector requires efforts to cut emissions throughout the entire life cycle, including land use and urban planning, design, construction and retrofits, manufacture of building materials, operation, decommissioning, and appliances. Energy efficiency in buildings usually covers building construction and operation, including building envelope, appliances, and equipment (e.g., lighting, space heating, cooling, ventilation, water heating, management system). This handbook looks at the efficiency at the point of consumption in buildings (DSEE) and focuses on heating, ventilation, and air-conditioning, which make up around 40% of energy use, in the technology chapters.

Energy-efficiency measures can be applied to all types of buildings. This handbook will differentiate between new construction and building retrofits where necessary. Most technologies considered apply to both levels irrespectively. As the first step, it is important to make an initial survey of the building types being considered, as shown in Figure 2, before formulating the energy efficiency project or program.

Figure 2: Examples of Types of Buildings

Source: Author.

This handbook also aims to raise awareness of building energy efficiency measures and provide a better understanding of the potential, proven technologies, and financing instruments applicable to this sector to foster project opportunities within DMCs.

This handbook comprises the following chapters:

•   Chapter 1 provides the objectives and scope of this handbook.

•   Chapter 2 presents the latest building energy efficiency data in the world and in Asia and the Pacific, the key stakeholders of the buildings and building construction sector, four enabling factors of improving energy efficiency, the co-benefits, and ADB’s efforts in this field.

•   Chapter 3 focuses on green building⁴ certification schemes, also known as rating tools, and provides an overview of international schemes and national schemes in Asia, and examines the energy criteria followed by cases applied in DMCs.

•   Chapter 4 elaborates on selected sustainable cooling strategies and technologies throughout the design and operation phases. It looks broadly at the control of heat gains, ventilative cooling, cooling technologies and sources, and air distribution.

•   Chapter 5 continues the technical discussions on heating and explores clean heating options, including heat pumps, solar space heating, and solar water heating.

•   Chapter 6 provides an overview of investment in building energy efficiency and presents proven financial instruments, including traditional and specialized innovative instruments.

•   Chapter 7 explores business models for building energy efficiency projects by presenting three successful examples from Europe and Asia.

•   Chapter 8 concludes the handbook and provides policy recommendations.

Case studies and examples from developing and advanced economies from Asia and other regions are identified and illustrated in boxes.

2   BACKGROUND

Key Stakeholders

Building energy efficiency (BEE) is not a single-party problem—it is cross-sectoral and involves different stakeholders. Collaboration among developers, users, owners, and others is essential. It applies to both public sector proponents as well as for the private sector ones.

Stakeholders within the public sector, policymakers and officials at all jurisdictional levels must cooperate. As BEE involves several ministries and public offices, it is critical that one of the ministries is mandated and responsible for BEE but respects the competence and professionalism of others.

The value chain for BEE is complex and varies according to the building type. Comprehensive support and multistakeholder analysis might be required. It may involve urban planners, architects, developers, investors, construction companies, utilities, banks, and financial institutions as well as retailers—e.g., for household appliances, installers, technical consultants, energy auditors, the owners, the lessors, and facility managers, and finally specialized companies such as energy service companies (ESCOs). It is not a homogeneous group. They all have individual goals, levels of expertise, knowledge, and needs that may differ within the stages of the process and the countries in question. They may all need initial support. Programs must be comprehensive and inclusive and consider the market as a whole instead of singling out one party. The gaps between them need to be mended.⁵ Careful analysis of the drivers of each stakeholder is required to ensure a common objective and deliver a positive outcome. Figure 3 illustrates the positions of various stakeholders.

Sector Overview

Globally, buildings and building construction sector consumed 36% of the global total final energy consumption in 2020 as shown in Figure 1, among which operational energy use accounted for 31% or around 127 exajoule (EJ), and constructions accounted for 5% or around 22 EJ. In terms of global buildings, energy consumption by end use, spacing heating, and cooling together make up about 40%. Space cooling has been the fastest-growing use of energy, particularly in countries that are not members of the Organisation for Economic Co-operation and Development (OECD). In 2020, the CO2 emissions of the buildings and building construction sector amounted to 11.7 gigatons, around 10% down from 2019, mainly due to the slowdown of the global economy and construction activities. Countries like the United States (US) already saw a sharp bounce-back of emissions in 2021, increasing by 6% from the 2020 level (Plumer 2022). The 11.7 gigatons of CO2 emissions accounted for 37% of energy-related emissions: 27% from building operations, and 10% from construction and materials, i.e., embodied emissions⁶ considering the carbon footprint across the entire life cycle of buildings. Embodied emissions have gained increasing attention over the recent years, as the sector is moving toward zero-carbon emissions, and a significant number of carbon-intensive buildings are still expected to be constructed. Several European countries have taken early actions to regulate embodied emissions that need to have comprehensive regulations in place.

Figure 3: Stakeholders’ Roles Throughout the Entire Life of Buildings

Source: World Resources Institute (WRI). 2016. Accelerating Building Efficiency: Eight Actions for Urban Leaders

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The global building stock is expected to increase by 75% from 2020 to 2050, 80% of which is projected to be in emerging and developing economies (IEA 2021d). Asia and the Pacific is the fastest-growing region in the world and accounts for nearly 40% of the global gross domestic product (GDP) (IMF 2021) and generates about 50% of emissions. The buildings and building construction sector in Asia is booming. In 2018, buildings in the Association of Southeast Asian Nations (ASEAN), the People’s Republic of China (PRC), and India consumed 27% of these countries’ total final energy consumption, slightly lower than the world average at 30% and generated 24% of energy-related CO2 emissions, or 3.2 gigatons of CO2, which accounted for nearly one-third of the global amount (Figure 4).

Figure 4: Buildings’ Share of Total Final Energy Consumption and Total Carbon Dioxide Emissions in ASEAN, People’s Republic of China, and India

ASEAN = Association of Southeast Asian Nations, CO2 = carbon dioxide, PRC = People’s Republic of China.

Sources: GlobalADB/IEA/UNEP. 2020. GlobalABC Regional Roadmap for Buildings and Construction in Asia 2020-2050: Towards a Zero-Emission, Efficient, and Resilient Buildings and Construction Sector.

Continuous economic growth, rapid urbanization, and increasing population are driving the fast expansion of building stocks, especially in developing and emerging economies. IEA projected that 65% of the new floor area to be constructed from 2017 to 2050, about 70 billion square meters (m²), will be in the PRC, ASEAN, and India, as shown in Figure 5. This coincides with GlobalABC’s study showing that Asia will accommodate nearly half of all new constructions (UNEP 2021). The Asia Pacific Energy Research Centre (2019) estimated that Southeast Asia will lead the growth of building energy demand in Asia and the Pacific. This will likely lead to significant increases in fossil fuel consumption and CO2 emissions if the transition toward efficient and low-carbon buildings is slow. Taking India as an example, two-thirds of the buildings that will exist in 2040 in the country are yet to be built, based on the current policy settings (IEA 2021c). The buildings and building construction sector, together with industry and transport, will largely shape the energy demand of the country in the coming decades. In addition, the higher airflow rates for ventilation and filtration and changes in working patterns may increase energy consumption in the post-pandemic era.

Figure 5: Total Building Stock in 2017 and Expected Growth to 2060 in Key Regions

ASEAN = Association of Southeast Asian Nations, OECD = Organisation for Economic Co-operation and Development, PRC = People’s Republic of China.

Source: International Energy Agency (IEA). 2017. Energy Technology Perspective 2017.

To decarbonize the buildings and building construction sector, electrification and energy efficiency are two major measures followed by fuel switching. According to British Petroleum’s projection, all the growth of primary energy demand will come from the developing world (Figure 6). Under British Petroleum’s net-zero scenario, which aligns with the 1.5°C target, the total primary energy demand of buildings is expected to rise only around 4.7% from 2018– 2050, driven by energy efficiency improvement as well as behavioral changes, in comparison to a growth of 38% under the business-as-usual scenario, assuming the building stock grows by more than 75% over the same period.

Figure 6: Historical and Projections for Building Primary Energy Demand Under the Rapid, Net-Zero Scenario and Business-as-Usual Scenarios by 2050 for Emerging and Developed Economies

Source: BP. 2020. BP Energy Outlook 2020 edition

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Overall, the primary energy demand of buildings has to decrease by around 20%–30% by 2050 from the current level to achieve the 1.5-degree target. Meanwhile, electricity will become the dominant energy use, and on-site fossil fuels will be nearly eliminated, as shown in Figure 7. At the country level, fuel use varies significantly in Asia. For instance, electricity accounted for 35% of building energy consumption in the PRC in 2019 but only 19% in India.

Figure 7: Historical and Projection of Building Final Energy Consumption by End Use (Upper) and by Fuel (Lower) Under the Net-Zero Scenario for 2030 and 2050

Source: International Energy Agency (IEA). 2021d. Net Zero by 2050: A Roadmap for the Global Energy Sector.

In terms of end use, the share of space heating is likely to decrease significantly, contributed by improved efficiency of buildings and appliances, as well as a warmer climate in the future. The heating market is transitioning slowly from inefficient carbon intensity status toward low-carbon solutions. Besides heat pumps, solutions like solar thermal heating and biomass boilers still need to be further and faster scaled up. In contrast, spacing cooling demand will see substantial growth. In particular, India and ASEAN countries, among the hottest regions in the world, are expected to have a great rise in cooling demand as living conditions improve from their existing low access rate to cooling facilities. Therefore, cooling design and efficient technology have been identified as the priority areas for action (GlobalADB/IEA/UNEP 2020). Chapter 4 will elaborate more on this topic.

Since the Paris Agreement, progress has been made in energy efficiency for the buildings and building construction sector in terms of energy consumption, enabling policies as well as investment (Figure 8).

Figure 8: Summary of Key Changes in the Global Building Sector Between 2015 and 2020 Based on Six Different Indicators

bn = billion, CO2 = carbon dioxide, kg = kilogram, m² = square meter, MJ = megajoule, NDC = nationally determined contribution.

Source: UNEP. 2021. 2021 Global Status Report for Buildings and Construction: Towards a Zero-emission, Efficient and Resilient Buildings and Construction Sector

. United Nations Environment Programme. .

Over the last 2 decades, the global building energy intensity improved by roughly 0.5%–1% annually. However, this is not sufficient to offset the growth of building stock. The global building energy intensity will need to drop at least 2.5% per year, i.e., 31% down in 2030 from 2019 level, to achieve the 2°C scenario. Europe is expected to achieve the intensity reduction of 23%; other developing Asia, 15%; and the PRC, 45% by 2030, as shown in Figure 9. Without accelerated actions, the global emissions from the buildings and building construction sector can be doubled or even tripled by midcentury (Broadwater 2016).

Figure 9: Historical and Projected Building Energy Intensity in the Sustainable Development Scenario from 2000 to 2030 for Europe, World, Other Developing Asia, and the People’s Republic of China

PRC = People’s Republic of China, SDS = sustainable development scenario.

Source: GlobalADB/IEA/UNEP. 2020. GlobalABC Regional Roadmap for Buildings and Construction in Asia 2020-2050: Towards a Zero-Emission, Efficient, and Resilient Buildings and Construction Sector

; International Energy Agency. 2021e. Tracking Buildings 2021

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Energy efficiency is more than simply saving energy and mitigating emissions. It is a paradigm shift. First, policymakers need to understand the wider implications to be able to put out relevant policies, laws, and regulations. Second, the transition toward zero-carbon emissions will primarily rely on technological advancement, including digital or smart solutions and behavioral change. Third, investment and financing in zero-carbon buildings will be crucial. Last, the availability and the quality of data are worth mentioning separately concerning the lack of data and information at both global and regional levels, in particular in developing economies, which has become one major challenge. The following section will elaborate more on the four enabling factors for BEE.

Enabling Factors

Political Framework and Regulations

Energy efficiency needs to be treated as a first fuel and by that receives the same attention and position as renewable energy. A successful policy should cover new and existing buildings of any type and the entire life cycle from planning to decommissioning phases.

Clear Target

It is vital to set up clear and specific targets for building energy efficiency in climate strategies and plans at the country level. From 2020, economies were requested to communicate their new or updated nationally determined contributions (NDCs) to the Secretariat of the United Nations Framework Convention on Climate Change (UNFCCC) as part of the 5-year cycle of reviewing their climate targets and commitments under the Paris Agreement. As of September 2021, 192 economies had submitted their first NDC, 113 of which were updated, and 11 economies had submitted their second NDC. Across the communicated NDCs, improvement in building energy efficiency has been explicitly mentioned in 63% of the NDCs, becoming the second most frequently indicated mitigation option following renewable energy generation (UNEP 2021).

About 72% of those economies in Central Asia, South Asia, East Asia, and Southeast Asia mentioned buildings in their NDCs by 2019. However, many still did not include specific actions to address buildings and building construction sector energy use and emissions (GlobalABC, IEA, and UNEP 2020). Following the new reporting phase beginning in 2020, various policy actions to support improvements in building energy performance and climate resilience have been increasingly mentioned in updated first or second NDCs submitted by many economies in Asia.

However, as shown in Table 1, the progress is far less than sufficient. The breadth and depth of the mitigation (and adaptation) measures for buildings and construction as laid out in most NDCs are not adequate to put the countries in the region on track with the envisaged net-zero emissions scenario by 2050. The increasing population, rapid urbanization, and growth demand for floor area and space conditioning are among the key factors that present a serious challenge to transforming the buildings and building construction sector in Asia toward energy efficiency, low-carbon emissions, and climate resilience. Based on the United Nations population growth projections, it has been expected that 73% of the 294.3 million population to be added in Asia from 2021 to 2030 will live in countries that have NDCs in which building codes and/or building energy efficiency measures are not mentioned (UNEP 2021). This indicates a significant gap in ambition and commitment, calling for increasing recognition of the strategic importance of buildings in NDCs and large-scale adoption of more explicit and ambitious actions and pathways to decarbonize buildings in line with the Paris Agreement.

Table 1: Building-Related Climate Actions in Nationally Determined Contributions of Selected Developing Member Countries of ADB

NDC = nationally determined contribution, tCO2e = ton of carbon dioxide equivalent.

Source: UNFCCC. 2022. NDC Registry. United Nations Framework Convention on Climate Change.

Regulations

There is no single pathway to implement energy efficiency policies for buildings but a mix of various measures. They are broadly set along with the following categories.

Figure 10: Policy Categories for Energy Efficiency in Buildings

ESCOs = energy service companies.

Source: Author.

Building codes are probably the most important individual measure in promoting energy efficiency. Especially in countries with a fast-growing real estate sector, such as in developing and emerging Asia, the decisions laid out by the building codes today have far-reaching consequences in the future.

Building energy codes, a subset of building codes, set up baseline requirements for buildings’ energy performance and building construction. Codes are either prescriptive, meaning that they describe in detail the technical standard or performance base, where the energy level of a building must meet a certain level, or even outcome-based, requiring a specified performance to be achieved over a certain period (C40 2019). They can be mandatory or voluntary, issued at national or subnational level. Usually, they apply to both old and new buildings as well as to public and private ones. Codes usually regulate areas of construction such as insulation; window and door specifications; heating, ventilation, and air-conditioning (HVAC) equipment efficiency; and lighting fixtures (WBDG 2016). Often, public buildings are used to break reservations and act as best practice examples. This can be a successful way if the example is easily replicable, and the proponent has smooth access to all necessary permits and administrative clearances.⁷

To meet the 1.5°C target by 2050, all countries must have comprehensive mandatory building energy codes implemented by 2030. All new constructions need to be compliant with stringent building codes by 2030, while the majority of retrofits need to be compliant by 2050. IEA’s tracking data as of 2021 shows that only 80 countries globally, most of which are advanced economies, have launched mandatory or voluntary building codes (IEA 2021e). Around two-thirds of countries, where floor areas grow at a fast pace, are yet to launch mandatory building energy codes. Codes should be developed to govern the building retrofit as well. Furthermore, the building retrofit rate is less than 1% per year in most key countries, which is far below the requirement of 2.5% till 2030 for the 1.5°C target. The rate shall increase to 1.5% by 2025, at least in Asia (GlobalABC/IEA/UNEP 2020). This requires immediate action from policymakers. Concerning the long life span of buildings (30–100 years) compared to other energy-consuming assets, there are risks of lock-in effects of inefficient buildings, in particular in developing Asia, if the renovation rate of existing buildings remains low or new constructions are poorly designed and operated.

In Asia and the Pacific, 24 economies have mandatory and 6 have voluntary building energy codes out of 62 tracked economies, while 9 economies are developing the codes, and 23 do not have building energy codes as of the end of 2021 (IEA 2021b). As shown in Figure 11, many economies in Asia have or are in the process of developing building energy codes. However, some of them were not properly aligned with supporting policies such as energy performance certificates, incentives, and voluntary rating schemes, and they lack enforcement and compliance as well as monitoring and data evidence. Enforcement is one of the main stumbling blocks in energy efficiency in buildings. It requires designated authorities and an independent evaluation system.

Figure 11: Status of Building Energy Codes by Economy, 2019–2020

Source: UNEP. 2021. 2021 Global Status Report for Buildings and Construction: Towards a Zero-emission, Efficient and Resilient Buildings and Construction Sector

. United Nations Environment Programme.

Besides building energy codes, building performance standards, or minimum energy performance standards (MEPS, for buildings) is another important policy approach that is relatively new (BECWG 2021). Several economies regulate energy consumption in buildings by setting mandatory energy performance standards, such as performance rating and carbon intensity levels. Besides the disclosure of building energy consumption and regulations on green procurement, there are other proven energy efficiency policy options.⁸ MEPS can be adjusted over time, starting with a modest but short implementation period to more stringent requirements with longer implementation periods.⁹ It can allow building owners a longer time to bring buildings into compliance. They are closely linked to energy performance certification for buildings, like rating systems already well-known for appliances, such as Energy Star of the US. Building certification and rating systems can provide energy-related benchmarks and a basis for performance standards.