Net Zero Carbon Buildings in Cities: Interdependencies between Policy and Finance

The report identifies 22 systemic barriers to net zero carbon buildings, categorized as financial, investment risk/opportunity, market readiness, and regulatory. Using network analysis, it establishes that financial barriers are the most critical from a demand perspective but are often dependent on the mitigation of regulatory and market readiness barriers. The authors map 31 policy and 44 financial instruments, categorizing them into fundamental inputs (such as capacity development and fiscal instruments) and dependent inputs (such as debt instruments and asset finance models). The report highlights five high-impact pathways for cities: phasing out fossil-fuel appliances, implementing energy efficiency building codes, deploying results-based grants for cooling, using skills development for embodied carbon reduction, and publishing climate risk data for adaptation. It emphasizes that mandates are central to the transition, as they enable the development of new financial mechanisms.

• Buildings account for 37% of global energy-related greenhouse gas emissions, with operational electricity use (18%), on-site energy generation (9%), and materials and construction (10%) as the primary drivers.
• Financial barriers are perceived as the most critical obstacles to net zero carbon buildings, particularly for residential buildings, which comprise 80% of the global building stock floor area.
• While financial barriers are high priority, they are often the result of underlying regulatory and market readiness issues; for instance, a lack of specialized financial instruments can stem from a lack of technology standards or limited technical experience.
• The report identifies a hierarchy of instruments where capacity development and fiscal instruments act as systemic enablers that must be in place before mandates and incentives can be effective.
• Mandates, such as building codes and data disclosure requirements, are the most interdependent instrument category and are essential for making net zero solutions visible to banks and supporting the creation of dedicated debt instruments.
• To reduce emissions from cooling, the report recommends results-based grants to make energy-efficient solutions affordable, as well as Pay-As-You-Save (PAYS) and Property Assessed Clean Energy (PACE) programs to remove upfront costs.
• Reducing embodied carbon requires a pathway of workforce training and life-cycle carbon calculation and reporting to enable the successful implementation of embodied carbon building codes.
• Adaptation investment is hindered by the difficulty of monetizing future losses; the report suggests cities publish open hazard and risk data to inform the creation of hazard-specific building code amendments.
• A just transition requires subsidies, such as capital and service subsidies or concessional loans, to overcome high upfront costs for low-income households and ensure the viability of social housing.

APA

Micale, V., LaSalle, J. M., Rosane, P., Solomon, M., Meattle, C., Press-Williams, J., & Negreiros, P. (2023). Net Zero Carbon Buildings in Cities: Interdependencies between Policy and Finance. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/01/Full-Report_Net-Zero-Carbon-Buildings-in-Cities_Interdependencies-between-Policy-and-Finance.pdf

Chicago

Micale, Valerio, John Michael LaSalle, Paul Rosane, Matthew Solomon, Chavi Meattle, Jessie Press-Williams, and Priscilla Negreiros. Net Zero Carbon Buildings in Cities: Interdependencies between Policy and Finance. Climate Policy Initiative, 2023. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/01/Full-Report_Net-Zero-Carbon-Buildings-in-Cities_Interdependencies-between-Policy-and-Finance.pdf.

Wikipedia

{{cite report |last1=Micale |first1=Valerio |last2=LaSalle |first2=John Michael |last3=Rosane |first3=Paul |last4=Solomon |first4=Matthew |last5=Meattle |first5=Chavi |last6=Press-Williams |first6=Jessie |last7=Negreiros |first7=Priscilla |title=Net Zero Carbon Buildings in Cities: Interdependencies between Policy and Finance |publisher=Climate Policy Initiative |date=December 2023 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2024/01/Full-Report_Net-Zero-Carbon-Buildings-in-Cities_Interdependencies-between-Policy-and-Finance.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{micale2023net, author = {Micale, Valerio and LaSalle, John Michael and Rosane, Paul and Solomon, Matthew and Meattle, Chavi and Press-Williams, Jessie and Negreiros, Priscilla}, title = {{Net Zero Carbon Buildings in Cities: Interdependencies between Policy and Finance}}, institution = {Climate Policy Initiative}, year = {2023}, month = dec, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2024/01/Full-Report_Net-Zero-Carbon-Buildings-in-Cities_Interdependencies-between-Policy-and-Finance.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }