Skip to content

Primers: Energy Efficiency in Buildings

Vauban, Germany

Vauban, Germany


Buildings represent over 30% of final energy consumption globally, and around 40% of primary energy consumption in many countries. Greening the building sector through energy efficiency and is an essential component of creating sustainable cities and can offer important health benefits to occupants. Energy efficiency measures for buildings range from technical solutions, such as better insulation, windows and building material, to building design, such as installing high efficiency boilers or connecting to a district energy system. Technical innovations will be needed along with energy efficiency codes and standards as well as deep retrofits of the existing building stock to improve the footprint of the built environment.

Legislation and Policy
Energy efficiency in buildings can be a challenge for cities as the primary mechanism for improving building performance is through the building code, which is typically outside the jurisdiction of local governments. However, as municipalities are the first point of contact with building developers, cities can still play an important role in enforcing the building code by ensuring that energy efficiency standards are being met.

Leading cities are also implementing a number of innovative policy tools that promote or require improved building performance. A number of incentives can be used to encourage energy efficiency, such as building permit fee or development construction charge rebates; tax exemptions; priority processing of building development applications; and density bonuses, which allow developers a higher level of density (floor area ratio) in exchange for a higher level of energy efficiency performance. Cities have been implementing requirements for buildings to meet certain energy efficiency standards, such as LEED, that go beyond the building code performance standard. Incentive programs have also been developed to help offset the cost to conduct home energy assessments, which can help to encourage homeowners to implement energy efficiency projects in their homes.

Boston, MA

Boston, MA

Potentially the most important policy to create momentum for energy efficiency in the building sector is mandatory energy performance labelling. Requiring energy assessments and labelling, and disclosure of energy ratings, allows the marketplace to incorporate the value of improved energy performance, driving retrofits and greater awareness among building owners and developers. Municipalities can explore whether the implementation of labelling requirements falls within their jurisdiction, or can push for their adoption at higher levels of government. The City of Boston, for example, requires medium and large-sized buildings to publically report on annual building energy use and to conduct an energy assessment every five years, through the Building Energy Reporting and Disclosure Ordinance.

Building Political and Citizen Will
The sustainability planning process can be used to help educate the public and political communities about the economic, environmental, and health benefits of improved efficiency. Furthermore, through sustainability planning, the municipality can set targets and timelines, which can help to build support among investors and building developers by providing certainty and long-term visibility in the market. For example, the City of Amsterdam has a target for all new buildings to be climate neutral by 2015.

Another important catalysing tool available to cities to build political and citizen will is to showcase energy efficiency through demonstration projects in municipal buildings. These initiatives can provide an example of what opportunities exist for energy efficiency in buildings and help advance the business and political case for future policies and projects.


Net Zero Home, Canada

Finance, Investment and the Business Case
Major energy efficiency projects are typically leveraged through public or private financial institutions, and the volume of, and experience with, these kinds of investments is growing rapidly around the world. Cities have also been developing a number of mechanisms to enable energy efficiency investment, including issuing green bonds, working with energy service companies (ESCOs), and providing on-bill financing programs. These programs allow homeowners to pay for energy efficiency measures through low cost loans typically serviced by or in partnership with the local utility. Repayment is made via the monthly energy bill and the cost is generally covered by the value of the energy savings. On-bill financing programs are able to leverage the existing relationship between the customer and the utility, help overcome the barrier of upfront capital costs for energy efficiency improvements, and help to access new segments of the housing market, such as customers that would not have the credit rating to secure a loan through a bank. The City of Portland, for example, launched the Clean Energy Works program in 2009, which has since been expanded to be a statewide program.

Technology and Infrastructure
Energy efficient building design is a rapidly growing sector. High performance buildings such as near-zero, net-zero homes, passive or climate neutral building design have the potential to dramatically improve the footprint of new buildings. Several leading cities, such as Vauban, Germany, which has included passive house design into the neighbourhood model, are at the forefront of driving investment in these new technologies and building models. Modern distributed energy systems will incorporate buildings as dynamic participants in the supply, use and storage of energy through district energy networks, smart grids, on-site renewable generation.


Amsterdam, Netherlands