Financing Net Zero Carbon Buildings

This scoping paper by the Climate Policy Initiative analyzes the challenges and priorities for cities in decarbonizing the buildings sector to reach net zero carbon. It examines the drivers of building stock growth, technical mitigation solutions, and the financial instruments and policies required to scale these solutions, with specific deep dives into Nigeria and Indonesia.

• Buildings are responsible for 37% of global energy-related CO2 emissions, with 9% coming from on-site energy generation, 18% from grid electricity, and 10% from materials and construction.
• Global investment in the buildings sector must increase from USD 4.9 trillion in 2017 to approximately USD 5.4 trillion by 2050 to limit warming to below 2°C, with 60% of these investments expected to be in China, India, the European Union, and the United States.
• Embodied carbon, primarily from materials like concrete and cement, accounts for about 10% of total energy-related emissions and one-third of buildings-related emissions. The World Green Building Council estimates that half of total emissions from buildings built between 2020 and 2050 will be embodied emissions.
• Cooling is the fastest-growing energy end-use, with demand concentrated in emerging markets and developing countries. This growth is driven by rising temperatures, urbanization, and increasing household incomes.
• Financial instruments for net zero buildings include traditional tools (equipment leases, mortgages, bonds) and specialized mechanisms (on-bill repayment, energy service contracts, and property assessed clean energy loans). While traditional instruments work at scale, specialized instruments targeting net zero buildings have struggled to scale and reach low-income households.
• In Nigeria, key challenges include the use of fossil fuel generators to address power shortages, poor quality building materials, and a severe lack of clean cooking access, with only 10% of the population having access to clean cooking.
• Indonesia's buildings sector is the country's third-largest final energy consumer, accounting for 21% of total energy consumption. A major priority is the implementation of new national green building regulations by local governments and addressing the rising demand for cooling.
• The report identifies a critical gap in the availability of affordable financial products for low-income households in developing and emerging countries, who often live in the most energy-intensive buildings but lack access to financing.

APA

LaSalle, J. M., Micale, V., Fernandes, P. D. A., Haesra, A., Masale, E., Rosane, P., Wijaya, E., Zeki, M., & Negreiros, P. (2022). Financing Net Zero Carbon Buildings. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2022/07/Buildings-Scoping-Paper-final.pdf

Chicago

LaSalle, John Michael, Valerio Micale, Pedro de Aragão Fernandes, Alke Haesra, Eyerusalem Masale, Paul Rosane, Ery Wijaya, Muhammed Zeki, and Priscilla Negreiros. Financing Net Zero Carbon Buildings. Climate Policy Initiative, 2022. https://www.climatepolicyinitiative.org/wp-content/uploads/2022/07/Buildings-Scoping-Paper-final.pdf.

Wikipedia

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BibTeX

@techreport{lasalle2022financing, author = {LaSalle, John Michael and Micale, Valerio and Fernandes, Pedro de Aragão and Haesra, Alke and Masale, Eyerusalem and Rosane, Paul and Wijaya, Ery and Zeki, Muhammed and Negreiros, Priscilla}, title = {{Financing Net Zero Carbon Buildings}}, institution = {Climate Policy Initiative}, year = {2022}, month = jul, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2022/07/Buildings-Scoping-Paper-final.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }