As countries seek to reach net-zero carbon emissions targets by 2050, demand for buildings to be retrofit to improve energy efficiency will more than double, according to a new report from the Ontario Teachers’ Pension Plan that highlights several aspects of its sustainable investment strategy.
“The good news is that the expertise and technology required to substantially de-carbonize buildings already exists,” noted the pension fund in the report. “What’s needed is the right mix of investment, incentives and new behaviours to effect change at scale.”
According to the United Nations Environment Program, which the Ontario Teachers’ cited in its report, the construction and operation of buildings generated about 37 per cent of global emissions in 2021. While developing efficient buildings is relatively simple, the report found the majority of those expected to be operating by the middle of the 21st century have already been constructed, almost all designed without sustainability in mind.
While older buildings can be retrofit to make them more sustainable, the International Energy Agency found just one per cent of buildings in developed economies undergo retrofitting each year. In order for the sector to meet the obligations of the Paris Agreement, retrofitting rates will need to reach 2.5 per cent per year.
While developing new buildings with sustainable designs and retrofitting old ones may bring down operational emissions, it won’t cut the amount of carbon released as a result of their construction. The Ontario Teachers’ predicted this will lead to surging demand for sustainable building materials.
According to the IEA, new constructions add an area about the size of Paris to global building stock on a weekly basis. “The buildings sector relies heavily on materials which are produced using carbon-intensive processes,” said the report. “The emissions associated with making and transporting these materials make up a building’s embodied carbon.”
It also highlighted the investment case for technologies supporting the energy efficiency of buildings, as well as power grids, including sensors, smart metres and other connected devices that can gather useful information on water and energy uses. “Technology also makes consumption-based pricing easier, a key driver of lower usage.”