Buildings account for about 40 per cent of global greenhouse-gas emissions but they are rapidly getting greener. Cheaper technology plus the threat of regulation are encouraging the creation of ‘smart buildings’, while the prospect of better working or living conditions makes these energy-efficient properties attractive.

Healthcare buildings, especially hospitals, were leaders in incorporating smart systems into new properties. Big technology companies, banks and car firms have followed, but most systems are installed in existing properties rather than new buildings using proprietary hardware and software, resulting in a highly fragmented, disparate ecosystem of quasi-intelligent systems.

However, over the past three years, more intelligent analytics, aided by cloud computing and the internet-of-things, are allowing products to be connected to each other as well as to a central system.

That is making building-automation systems an economic reality. The costs of installing a basic system has fallen by two-thirds with energy savings rising to 25 per cent compared with 20 per cent from traditional systems. An installation cost of USD37,500 on a 50,000 sq-ft building can now produce annual savings of USD23,000, giving a payback period of less than two years.

Greater environmental awareness by companies and government is driving a shift towards more efficient buildings with lower emissions.

Decarbonising power-generation alone will not be sufficient to meet the Paris Agreement’s global-warming target and with sectors such as petrochemicals hard to change, attention has turned to buildings.

We calculate that green buildings could substantially narrow the emissions gap through efficiency gains in heating and cooling equipment such as boilers and air-conditioning, in appliances such as fridges and washing machines, and in the building envelope itself – the façade, roof, insulation and glass.

Technological advances have a crucial role to play at the design and construction phase for buildings, as well as in retrofitting existing stock. Several countries and cities are already targeting the buildings sector to help meet emission-reduction goals. European nations have some of the more ambitious policies and the European Union’s Green Deal aims to achieve the first climate-neutral continent.

The deal’s initial outline suggests the renovation rate of Europe’s building stock must almost double to meet energy efficiency and climate targets – potentially requiring more stringent legislation.

And on a global level, the UN Climate Action Summit in September 2019 announced a ‘Zero-Carbon Buildings for All’ initiative aimed at decarbonising all new buildings by 2020 and all existing buildings by 2050.

We believe cities will be an increasingly important driver for green buildings. They generate up to 70 per cent of all greenhouse-gas emissions with residential and commercial buildings contributing about one-eighth of that through direct use of fossil fuels – and possibly twice this amount including power generated using fossils. Cities in the US, UK, Canada and Australia have already made commitments to cut emissions.

Emerging markets are still urbanising rapidly but developed countries have reached peak urbanisation and are increasingly challenged to keep people in cities. Constructing better buildings that provide a superior user experience is one way to make cities attractive and to retain talent.

First published 11 March 2020.

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