[Report] Monetary Benefits of Ambitious Building Energy Policies

Mainstreaming high-performance buildings could deliver a 124% return on investment globally through building-related energy cost savings by 2050 says a new comprehensive assessment study of the costs and benefits of low energy building pathways published by the GBPN.

The new report “Monetary Benefits of Ambitious Building Energy Policies” commissioned by the GBPN to the Central European University’s Center for Climate Change and Sustainable Energy Policy (3CSEP) and Advanced Building and Urban Design (ABUD), offers a first attempt to quantify the global and regional cost implications of ambitious scenarios for implementing large-scale energy efficiency improvements in buildings.

Key Findings:

1° Shallow energy efficiency improvements do not pay-off in the long run. The “Deep efficiency scenario” for buildings is the only possible path to achieve R.O.I by 2050

By 2050, the “Deep efficiency scenario” is cost-effective for the world, and for the four major regions covered by the report (EU-27, USA, China and India). The analysis shows that the total cumulative energy cost savings under the “Deep efficiency scenario” exceed the total cumulative additional investment costs with a return on investment of 124% by 2050. With a more shallow set of building efficiency programs under the “Moderate scenario”, the ROI is -6%. Hence, it is economically much more efficient to promote the proliferation of very high performance buildings rather than to focus on accelerated investment into “shallow” energy efficiency improvements during the building retrofit or construction. This is valid both for developed countries, where the main construction activity focuses on retrofit of existing buildings, and for emerging economies and developing countries, where significant volumes of new buildings are added every year. In general most opportunity for cost efficient energy savings was found in residential buildings and in particular in single-family housing. This is also the area where there is the largest experience with ultra low energy construction and deep renovation as well as the largest replicated experience so far.

2° Policy-Makers need to take a long-term view

The study proves that long-term cost analysis of building use scenarios, despite all its uncertainties, is crucial in order to have a comprehensive overview of the financial costs and benefits of alternative pathways in the building sector. This is because buildings have long lifespans, and the full benefit of advanced measures can only be seen after several decades of the building’s operation. Most of the major regions reach cost-effectiveness between 2030-2040, i.e. beyond the 2030 horizon, which is often used for analysis of energy savings potential in buildings.

3° Energy prices and capacity building are key enablers of the deep efficiency scenario

If a low-energy building future becomes an important policy goal, its economic efficiency can be best promoted by catalyzing fast and effective technology learning (such as through demonstration projects, well-targeted and designed investment subsidy schemes, etc.), as well as eliminating the distortion of energy prices by subsidies.

4° More data and more research are needed

More data on deep renovation, integrated design and on costs is needed. The report documents that experience with such high-performance buildings and supporting policies is still too low especially in emerging markets such as China and India (where most new construction takes place) and there is a general lack of good data on costs for integrated solutions. Most experience is found in adding elements to existing buildings and this approach doesn’t work for holistic design or effective bioclimatic design. There is a need for large-scale demonstration and comparative studies.

This study is a continuation of the GBPN’s Best-practices scenario analysis (Ürge-Vorsatz et al. 2012b), and is also based on the 3CSEP HEB model (Center for Climate Change and Sustainable Energy Policy High Efficiency Buildings Model), which was extended to include the Cost analysis module. As with the previous study (Ürge-Vorsatz et al. 2012b), this report is focused on the four key regions, including both developed regions (EU-27, USA) as well as emerging economies (China, India). The global costs and benefits for the two outlined scenarios are calculated based on the aggregation of the results for the 11 regions, defined in the Global Energy Assessment (Ürge-Vorsatz et al. 2011).

Diana Urge-Vorsatz, András Reith, Katarína Korytárová, Mónika Egyed, János Dollenstein: Monetary Benefits of Ambitious Building Energy Policies, January 2015.
Research report prepared by ABUD (Advanced Building and Urban Design) for the Global Building Performance Network (GBPN)

Related Report Bundles

• Monetary Benefits of Ambitious Building Energy Policies
• Best Practice Policies for Low Carbon & Energy Buildings Based on Scenario Analysis
• 积极的建筑能效政策的经济效益