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Driving Transformation to Energy Efficient Buildings: Policies and Actions

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Driving Transformation to EE Buildings: Policies & Actions – Full Report

Energy efficiency in the built environment is vital to achieving climate, energy and development objectives in emerging economies. There is increased recognition that the cost of reducing energy consumption is lower than the cost of generating new energy. But the scale and pace of current actions around the world are insufficient to transform the built environment into an engine of the low-carbon economy.

Buildings form the fabric of the rapidly growing urban landscape. Energy efficient buildings bring many benefits to their owners, their occupants, and society as a whole. Owners benefit from lower operating costs due to reduced energy usage, and occupants from greater comfort through better insulation and lighting. Benefits to society as a whole include reducing greenhouse gas emissions, increasing energy security, and improving air quality through lower consumption of electricity, the majority of which comes from burning fossil fuels.

Making new but also existing buildings more efficient worldwide offers more potential carbon emission mitigation than any other major abatement strategy. This decade is critical from the standpoint of urban infrastructure due to record levels of urbanization in developing countries. China, for example, is expected to add more than twice the amount of current U.S. office space between 2000 and 2020.¹

Increasing the efficiency of the built environment at scale can also help improve the quality of life of millions of people. The benefits of investing in building efficiency go beyond energy savings and should be factored into the calculation of cost-effectiveness. Multiple economic, environmental and social benefits accrue from constructing and retrofitting efficient buildings, as well as from decisions related to their location. In some developing countries, the stakes are even higher: Failure to invest in efficient, resilient infrastructure will put at risk thousands if not millions of people. Decades of development could be put at risk in minutes where buildings are poorly adapted to withstand extreme weather events.

Achieving synergies between energy efficiency and climate resilience objectives poses a challenge for policymakers because mitigation and adaptation are treated in isolation within most countries’ policy planning and in the international climate regime. In the building efficiency community, climate resilience remains a new area of work, though analogous efforts have focused on preparedness for earthquakes and floods. With the right design, many buildings can be made more resilient to the impacts of climate change. The awareness of the benefits of deploying investment into climate resilience in the built environment is on the rise, especially at the city level.²

There are opportunities to improve the energy efficiency of buildings at each stage in the building’s life. At each stage, barriers to energy efficiency must be overcome in order to achieve the full economic potential of energy efficiency. Today, a number of policy options are being developed around the world to tackle each of these barriers. These policies will help bridge the efficiency gap, enabling critical actors in the market to make decisions that favor energy efficiency. Each country or city must map their own policy pathway to transform the built environment in a way that is most appropriate for them.

The aim of this paper is to review policy options available for policymakers in developing countries that can accelerate energy efficiency improvements in the built environment and track results over time. It reviews recent attempts to transform buildings through policy, discusses options for governmental action and policy and outlines a pathway to implementation. The options for government action and policy fall into six categories.

Building efficiency codes and standards are regulatory tools that require a minimum level of energy efficiency in buildings, appliances, equipment or lighting. If they are well designed, they can cost-effectively decrease energy costs over the lifetime of that building, appliance, equipment or light bulb.
Energy efficiency improvement targets are goals that can be set for a country or city. Setting a target for an entire geography can motivate greater action, especially if there is an entity responsible for meeting that target. In addition, governments can set efficiency improvement targets for publicly-owned buildings to build capacity and stimulate the building efficiency market.
Policies and actions that increase awareness, information and market transparency can enable building owners, tenants and operators to make informed energy management decisions. Transparent, timely information can help track performance against goals. These policies and actions include competitions, audits, rating and certification programs like LEED, disclosure of energy performance, and public awareness campaigns.
Financial incentives can help energy efficiency projects overcome cost barriers. These include grants and rebates, tax incentives, government risk mitigation guarantees, revolving loan funds, tax-lien financing, and policies that enable energy performance contracting.
Utility programs engage utilities in making their customers more energy efficient. These types of programs include energy efficiency spending requirements for utilities, on-bill financing, and advanced metering and pricing to more accurately price electricity.
Human and technical capacity can be built through policies and actions both inside government through direct technical assistance and in the market through workforce training programs.

There are three critical phases in developing financially viable energy efficiency programs. In the readiness phase, the policy pathway is defined and capacity is built that will enable the market to scale up over time. In the prototyping phase, governments support the development and financing of initial projects and actions. In the phase when the market goes to scale, or reaches critical mass, financing mechanisms will be needed that enable the market to scale up.

Tracking the results of building efficiency actions needs to be done at the policy level, individual building level and consumer level in order to allow all actors to make good energy management decisions and to accurately evaluate progress toward energy efficiency goals.

A central conclusion from this project is that a large opportunity exists for collaboration between decision-makers and the building efficiency community in the creation of effective, measurable energy efficiency policy for the built environment. Never before have so many governments announced their intentions to design low-carbon development plans. A unique opportunity emerges for the building efficiency sector if new collaboration with pioneering countries can be created, thereby helping accelerate experimentation and implementation around building efficiency and resilience.

The design of energy efficiency policy for the built environment in emerging economies including nationally appropriate mitigation actions (NAMA s) and low-carbon development strategies – provides a concrete entry point for collaboration.
Performance tracking offers a key area for combining know-how in the assessment of energy savings at the building level (M&V) and in the assessment of policy (MRV ).
The benefits accruing from building efficiency go beyond energy savings and emission reductions, creating opportunities for policy interventions that incentivize integrated building design.
Scaling up building efficiency will require new forms of engagement with the investor community to design scalable, replicable financing mechanisms with a special focus on emerging economies.