Financing Net Zero Carbon Buildings

This research paper by the Climate Policy Initiative serves as a foundational guide for the Cities Climate Finance Leadership Alliance to analyze challenges and priorities for decarbonizing the buildings sector. It outlines the global investment needs, the role of different financial instruments, and the specific regulatory and environmental contexts of Nigeria and Indonesia.

• Buildings are responsible for 37% of global energy-related CO2 emissions, with 18% coming from grid electricity, 9% from on-site energy generation, and 10% from materials and construction.
• To limit global warming to well below 2°C, the IEA estimates that global buildings sector investment must rise from USD 4.9 trillion in 2017 to approximately USD 5.4 trillion by 2050. Approximately 60% of these investments will be directed toward China, India, the European Union, and the United States, with 67% allocated to new construction and 18% to heating and cooling in existing buildings.
• Low and middle-income countries in Africa and Asia are expected to experience 93% of urban population growth between 2020 and 2050, driving new building construction. While cooking and heating are currently the largest energy end-uses, cooling is the fastest-growing end-use, particularly in emerging markets.
• Financial instruments for net zero buildings include traditional tools like mortgages, bonds, and equipment leases, which work at scale but do not independently shift the market. Specialized mechanisms such as energy service contracts, on-bill repayment, and property assessed clean energy loans target energy efficiency savings but have struggled to scale or reach lower-income households.
• In Nigeria, key challenges include poor quality building materials, expected heat waves, and the use of fossil fuel generators for power shortages. In Indonesia, a new green buildings regulation establishes national standards, but success depends on the implementation capacity of municipalities and the construction industry, with cooling being the primary energy end-use.

APA

Climate Policy Initiative (2022). Financing Net Zero Carbon Buildings. https://www.climatepolicyinitiative.org/publication/financing-net-zero-carbon-buildings/

Chicago

Climate Policy Initiative. Financing Net Zero Carbon Buildings. 2022. https://www.climatepolicyinitiative.org/publication/financing-net-zero-carbon-buildings/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Financing Net Zero Carbon Buildings |date=11 July 2022 |url=https://www.climatepolicyinitiative.org/publication/financing-net-zero-carbon-buildings/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2022financing, author = {{Climate Policy Initiative}}, title = {{Financing Net Zero Carbon Buildings}}, institution = {Climate Policy Initiative}, year = {2022}, month = jul, url = {https://www.climatepolicyinitiative.org/publication/financing-net-zero-carbon-buildings/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }