Editing IPCC:AR6/WGIII/Chapter-9 (section)

== 9.6 Global and Regional Mitigation Potentials and Costs ==

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=== 9.6.1 Review of Literature Calculating Potentials for Different World Countries ===

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[[#9.4|Section 9.4]] provides an update on technological options and practices, which allow constructing and retrofitting individual buildings to produce very low emissions during their operation phase. Since AR5, the world has seen a growing number of such buildings in all populated continents, and a growing amount of literature calculates the mitigation potential for different countries if such technologies and practices penetrate at scale. Figure 9.15 synthesises the results of sixty-seven bottom-up studies, which rely on the bottom-up technology-reach approach and assess the potential of such technologies and practices, aggregated to stock of corresponding products and/or buildings at national level.

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[[File:9fe49ca9aa5d9d2fce7c5ae75eab5d67 IPCC_AR6_WGIII_Figure_9_15.png]]

'''Figure 9.15''' | Potential GHG emission reduction in buildings of different world countries grouped by region, as reported by sixty-seven bottom-up studies. Sources: North America: Canada ( [[#Trottier--2016|Trottier 2016]] ; [[#Radpour--2017|Radpour et al. 2017]] ; [[#Subramanyam--2017a|Subramanyam et al. 2017a]] ,b; [[#Zhang--2020a|Zhang et al. 2020a]] ), the Unites States of America ( [[#Gagnon--2016|Gagnon et al. 2016]] ; [[#Nadel--2016|Nadel 2016]] ; [[#Yeh--2016|Yeh et al. 2016]] ; [[#Wilson--2017|Wilson et al. 2017]] ; [[#Zhang--2020a|Zhang et al. 2020a]] ); Europe: Albania ( [[#Novikova--2020|Novikova et al. 2020]] , 2018c), Austria ( [[#Ploss--2017|Ploss et al. 2017]] ), Bulgaria, the Czech Republic, Hungary ( [[#Csoknyai--2016|Csoknyai et al. 2016]] ), France ( [[#Ostermeyer--2018b|Ostermeyer et al. 2018b]] ), the European Union ( [[#Duscha--2019|Duscha et al. 2019]] ; [[#Roscini--2020|Roscini et al. 2020]] ; [[#Brugger--2021|Brugger et al. 2021]] ), Germany ( [[#Markewitz--2015|Markewitz et al. 2015]] ; [[#Bürger--2019|Bürger et al. 2019]] ; [[#Ostermeyer--2019b|Ostermeyer et al. 2019b]] ), Greece ( [[#Mirasgedis--2017|Mirasgedis et al. 2017]] ), Italy ( [[#Calise--2021|Calise et al. 2021]] ; Filippi [[#Oberegger--2020|Oberegger et al. 2020]] ), Lithuania ( [[#Toleikyte--2018|Toleikyte et al. 2018]] ), Montenegro (Novikova et al. 2018c), Netherlands ( [[#Ostermeyer--2018c|Ostermeyer et al. 2018c]] ), Norway ( [[#Sandberg--2021|Sandberg et al. 2021]] ), Serbia ( [[#Novikova--2018a|Novikova et al. 2018a]] ), Switzerland ( [[#Iten--2017|Iten et al. 2017]] ; [[#Streicher--2017|Streicher et al. 2017]] ), Poland ( [[#Ostermeyer--2019a|Ostermeyer et al. 2019a]] ), the United Kingdom ( [[#Ostermeyer--2018a|Ostermeyer et al. 2018a]] ); Eurasia: Armenia, Georgia ( [[#Timilsina--2016|Timilsina et al. 2016]] ); the Russian Federation ( [[#Bashmakov--2017|Bashmakov 2017]] ; [[#Zhang--2020a|Zhang et al. 2020a]] ); Australia ( [[#Energetics--2016|Energetics 2016]] ; [[#Butler--2020|Butler et al. 2020]] ; [[#Zhang--2020a|Zhang et al. 2020a]] ), Japan ( [[#Momonoki--2017|Momonoki et al. 2017]] ; [[#Wakiyama--2017|Wakiyama and Kuramochi 2017]] ; Minami et al. 2019; [[#Zhang--2020a|Zhang et al. 2020a]] ; Sugyiama et al. 2020); Africa: Egypt (Makumbe et al. 2017; [[#Calise--2021|Calise et al. 2021]] ), Morocco ( [[#Merini--2020|Merini et al. 2020]] ), Nigeria ( [[#Dioha--2019|Dioha et al. 2019]] ; [[#Kwag--2019|Kwag et al. 2019]] ; [[#Onyenokporo--2019|Onyenokporo and Ochedi 2019]] ), Rwanda ( [[#Colenbrander--2019|Colenbrander et al. 2019]] ), South Africa ( [[#Department%20of%20Environmental%20Affairs--2014|Department of Environmental Affairs 2014]] ), Uganda ( [[#de%20la%20Rue%20du%20Can--2018|de la Rue du Can et al. 2018]] ), Algeria, Egypt, Libya, Morocco, Sudan, Tunisia (Krarti -2019); Middle East – Qatar ( [[#Krarti--2017|Krarti et al. 2017]] ; [[#Kamal--2019|Kamal et al. 2019]] ), Saudi Arabia ( [[#Alaidroos--2015|Alaidroos and Krarti 2015]] ; [[#Khan--2017|Khan et al. 2017]] ), Bahrain, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, State of Palestine, Syrian Arab Republic, United Arab Emirates, Yemen ( [[#Krarti--2019|Krarti 2019]] ); Eastern Asia – China ( [[#Tan--2018|Tan et al. 2018]] ; [[#Zhou--2018|Zhou et al. 2018]] ; [[#Xing--2021|Xing et al. 2021]] ; Zhang et al. 2020); Southern Asia: India ( [[#Yu--2018|Yu et al. 2018]] ; [[#de%20la%20Rue%20du%20Can--2019|de la Rue du Can et al. 2019]] ; Zhang et al. 2020); South-East Asia and Pacific: Indonesia ( [[#Kusumadewi--2015|Kusumadewi and Limmeechokchai 2015]] , 2017), Thailand ( [[#Kusumadewi--2015|Kusumadewi and Limmeechokchai 2015]] , 2017; [[#Chaichaloempreecha--2017|Chaichaloempreecha et al. 2017]] ), Vietnam ( [[#ADB--2017|ADB 2017]] ), respective countries from the Asia-Pacific Economic Cooperation (APEC) ( [[#Zhang--2020a|Zhang et al. 2020a]] ); Latin America and Caribbean: Brazil ( [[#de%20Melo--2015|de Melo and de Martino Jannuzzi 2015]] ; [[#González-Mahecha--2019|González-Mahecha et al. 2019]] ), Colombia ( [[#Prada-Hernández--2015|Prada-Hernández et al. 2015]] ), Mexico (Grande-acosta and Islas-samperio 2020; [[#Rosas-Flores--2020|Rosas-Flores and Rosas-Flores 2020]] ).

The studies presented in Figure 9.15 rely on all, the combination, or either of the following mitigation strategies: the construction of new high energy-performance buildings taking the advantage of building design, forms, and passive construction methods; the thermal efficiency improvement of building envelopes of the existing stock; the installation of advanced HVAC systems, equipment and appliances; the exchange of lights, appliances, and office equipment, including ICT, water heating, and cooking with their efficient options; demand-side management, most often controlling comfort requirements and demand-side flexibility and digitalisation; as well as onsite production and use of renewable energy. Nearly all studies, which assess the technological potential assume such usage of space heating, cooling, water heating, and lighting that does not exceed health, living, and working standards, thus realising at least a part of the non-technological potential, as presented in Figure 9.14. The results presented in Figure 9.15 relate to measures applied within the boundaries of the building sector, including the reduction in direct and indirect emissions. The results exclude the impact of decarbonisation measures applied within the boundaries of the energy supply sector, that is, the decarbonisation of grid electricity and district heat.

The analysis of Figure 9.15 illustrates that there is a large body of literature attesting to mitigation potential in the countries of Europe and North America of up to 55–85% and in Asia-Pacific Developed of up to 45% in 2050, as compared to their sector baseline emissions, even though they sometimes decline. For developing countries, the literature estimates the potential of up to 40–80% in 2050, as compared to their sharply growing baselines. The interpretation of these estimates should be cautious because the studies rely on assumptions with uncertainties and feasibility constrains (see Sections 9.6.4, Figure 9.20 and Supplementary Material Table 9.SM.6).

The novelty since AR5 is emerging bottom-up literature, which attempts to account for potential at national and global level from applying the sufficiency approach (see Box 9.1 in [[#9.1|Section 9.1]] and decomposition analysis in [[#9.3.2|Section 9.3.2]] ). In spite of the reducing energy use per unit of floor area at an average rate of 1.3% per year, the growth of floor area at an average rate of 3% per year causes rising energy demand and GHG emissions because each new square meter must be served with thermal comfort and/or other amenities (International Energy Agency 2017; [[#Ellsworth-Krebs--2020|Ellsworth-Krebs 2020]] ). Nearly all studies reviewed in Figure 9.15 assume the further growth of floor area per capita until 2050, with many studies of developing countries targeting today per capita floor area as in Europe.

Table 9.4 reviews the bottom-up literature, which quantifies the potential from reorganisation of human activities, efficient design, planning, and use of building space, higher density of building and settlement inhabitancy, redefining and downsizing goods and equipment, limiting their use to health, living, and working standards, and their sharing, recognising the number of square meters and devices as a determinant of GHG emissions that could be impacted via policies and measures. Nearly all national or regional studies originate from Europe and North America recognising challenges, Developed Countries face toward decarbonisation. Thus, [[#Goldstein--2020|Goldstein et al. (2020)]] suggested prioritising the reduction in floor space of wealthier population and more efficient space planning because grid decarbonisation is not enough to meet the U.S. target by 2050 whereas affluent suburbs may have 15 times higher emission footprints than nearby neighbourhoods. [[#Cabrera%20Serrenho--2019|Cabrera Serrenho et al. (2019)]] argue that reducing the UK floor area is a low cost mitigation option given a low building replacement rate and unreasonably high retrofit costs of existing buildings. [[#Lorek--2019|Lorek and Spangenberg (2019)]] discusses the opportunity of reducing building emissions in Germany fitting better the structure of the dwelling stock to the declined average household size, as most dwellings have 3–4 rooms while most households have only one person.

Whereas these studies suggest sufficiency as an important option for Developed Countries, global studies argue that it is also important for the developing world. This is because it provides the means to address inequality, poverty reduction and social inclusion, ensuring the provision of acceptable living standards for the entire global population given the planetary boundaries. As Figure 9.6 illustrates, the largest share of current construction occurs in developing countries, while these countries follow a similar demographic track of declining household sizes versus increasing dwelling areas. This trajectory translates into the importance of their awareness of the likely similar forthcoming challenges, and the need in early efficient planning of infrastructure and buildings with a focus on space usage and density.

Table 9.4 | Potential GHG emission reduction in the building sector offered by the introduction of sufficiency as a main or additional measure, as reported by bottom-up (or hybrid) literature.

{| class="wikitable"
|-
| Region

| Reference

| Scenario and its result

| Sufficiency for floor space

|-
| Globe

| Grubler et al.

(2018)

| The Low Energy Demand Scenario halves the final energy demand of buildings by 2050,

as compared the WEO Current Policy (International Energy Agency 2019c) by modelling

the changes in quantity, types, and energy intensity of services.

| The scenario assumed a reduction in the

residential and non-residential building floor

area to 29 and 11 m 2 cap –1 respectively.

|-
| Globe

| Millward-Hopkins

et al. (2020)

| With the changes in structural and technological intensity, the Decent Living Energy scenario achieved the decent living standard for all while reducing the final energy consumption of buildings by factor three, as compared to the WEO Current Policy Scenario (International Energy Agency 2019c).

| The scenario assumed a reduction in floor area

to 15 m 2 cap –1 across the world.

|-
| Globe

| Levesque et al.

(2019)

| Realising both the technological and sufficiency potential, the Low Demand Scenario

and the Very Low Demand Scenario calculated a reduction in global building energy

demand by 32% and 45% in 2050, as compared to the business-as-usual baseline.

| The Low Scenario limited the residential and

non-residential floor area to 70 and 23 m 2 cap –1 ;

the Very Low Scenario – to 45 and 15 m 2 cap –1 .

|-
| EU

| Bierwirth and

Thomas (2019b)

| For the EU residential sector, the authors calculated potential energy savings of 17%

and 29% from setting the per capita floor area limits.

| A reduction of the residential floor area to 30 m 2 cap –1 and 35 m 2 cap –1 , respectively.

|-
| EU

| Roscini et al.

(2020)

| With the help of technological and non-technological measures, the Responsible Policy

Scenario for the EU buildings allows achieving the emission reduction by 60% in 2030,

as compared to 2015.

| The scenario assumed 6% decrease in the

residential per capita floor area (to max.

44.8 m 2 cap –1 ).

|-
| Canada, UK,

France, Italy,

Japan, USA,

Germany

| Hertwich et al.

(2020)

| The potential reduction in GHG emissions from the production of building materials

is 56–58% in 2050, as compared to these baseline emissions. The reduction in heating

and cooling energy demand is 9–10% in 2050, as compared to its baseline.

| Via the efficient use of living space, the scenario

assumed its 20% reduction, as compared to its

baseline development.

|-
| UK

| Cabrera Serrenho

et al. (2019)

| The scenario found that the sufficiency measures allowed mitigating 30% of baseline

emissions of the English building sector in 2050, without other additional measures.

| The scenario assumed a 10% reduction in the

current floor area per capita by 2050.

|-
| USA

| Goldstein et al.

(2020)

| The scenario calculated 16% GHG mitigation potential in 2050, as compared to the baseline, on the top of two other scenarios assuming building retrofits and grid decarbonisation already delivering a 42% emission reduction.

| The scenario assumed a 10% reduction in

per capita floor area and higher penetration

of onsite renewable energy.

|-
| Switzerland

| Roca-Puigròs et al.

(2020)

| The Green Lifestyle scenario allows achieving 48% energy savings by 2050, as compared

to the baseline, due to sufficiency in the floor area among other measures.

| The scenario assumed a reduction in residential

floor area. from 47 to 41 m 2 cap –1 .

|-
| France

| [[#Negawatt--2017|Negawatt (2017)]]

| The Negawatt scenario assumes that sufficiency behaviour becomes a mainstream across all sectors. In 2050, the final energy savings are 21% and 28% for the residential and tertiary sectors respectively, as compared to their baselines.

| The scenario assumes a limit of the residential

floor at 42 m 2 cap –1 due to apartment sharing

and compact urban planning.

|-
| France

| Virage-Energie

Nord-Pas-de-

Calais. (2016)

| The authors assessed sufficiency opportunities across all sectors for the Nord-Pas-de-Calais

region of France. Depending on the level of implementation, sufficiency could reduce the

energy consumption of residential and tertiary buildings by 13–30% in 2050, as compared

to the baseline.

| The scenario assumed sharing spaces,

downsizing spaces and sharing equipment

from a ‘soft’ to ‘radical’ degree.

|}

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=== 9.6.2 Assessment of the Potentials at Regional and Global Level ===

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This section presents an aggregation of bottom-up potential estimates for different countries into regional and then global figures for 2050, based on literature presented in [[#9.6.1|Section 9.6.1]] . First, national potential estimates reported as a share of baseline emissions in 2050 were aggregated into regional potential estimates. Second, the latter were multiplied with regional baseline emissions to calculate the regional potential in absolute numbers. Third, the global potential in absolute numbers was calculated as a sum of regional absolute potentials. When several bottom-up studies were identified for a region, either a rounded average or a rounded median figure was taken, giving the preference to the one that was closest to the potential estimates of countries with very large contribution to regional baseline emissions in 2050 (e.g., to China in Eastern Asia). Furthermore, we preferred studies, which assessed the whole or a large share of sector emissions and considered a comprehensive set of measures. The regional baseline emissions, refer to the World Energy Outlook (WEO) Current Policy Scenario (International Energy Agency 2019c). The sector mitigation potential reported in [[IPCC:Wg3:Chapter:Chapter-12|Chapter 12]] for the year 2030 was estimated in the same manner.

Figure 9.16 presents the mitigation potential in the building sector for the world and each region in 2050, estimated as a result of this aggregation exercise. The potentials presented in the figure are different from those reported in [[#9.3.3|Section 9.3.3]] , where they are estimated by IEA and IMAGE hybrid model. The figure provides two breakdowns of the potential, into the reduction of direct and indirect emissions as well as into the reduction of emissions from introducing sufficiency, energy efficiency, and renewable energy measures. The potential estimates rely on the incremental stepwise approach, assembling the measures according to the SER framework (Box 9.1) and correcting the amount of the potential at each step for the interaction of measures. The sequence of energy efficiency and renewable energy measures follow the conclusion of the IPCC Special Report on Global Warming of 1.5°C (SR1.5) ( [[#Rogelj--2018|Rogelj et al. 2018]] ) that lower energy demand allows more choice of low-carbon energy supply options, and therefore such sequencing is more beneficial and cost-effective.

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[[File:e778f2c6216f51a66c1a32857e688ccd IPCC_AR6_WGIII_Figure_9_16.png]]

'''Figure 9.16''' | Global and regional estimates of GHG emissions in the building sector in 2020 and 2050, and their potential reduction in 2050 broken down by measure (sufficiency/energy efficiency/renewable energy) and by emission source (direct/indirect). Note: the baseline refers to the WEO Current Policy Scenario (International Energy Agency 2019c). It may differ from other chapters.

Figure 9.16 argues that it is possible to mitigate 8.2 GtCO 2 or 61% of global building emissions in 2050, as compared to their baseline. At least 1.4 GtCO 2 or 10% of baseline emissions could be avoided introducing the sufficiency approaches. Further 5.6 GtCO 2 or 42% of baseline emissions could be mitigated with the help of energy efficiency technologies and practices. Finally, at least 1.1 GtCO 2 or 9% of baseline emissions could be reduced through the production and use of onsite renewable energy. Out of the total potential, the largest share of 5.4 GtCO 2 will be available in developing countries; these countries will be able to reduce 59% of their baseline emissions. Developed Countries will be able to mitigate 2.7 GtCO 2 or 65% of their baseline emissions. Only few potential studies, often with only few mitigation options assessed, were available for the countries of South-East Asia and Pacific, Africa, and Latin America and Caribbean; therefore, the potential estimates represent low estimates, and the real potentials are likely be higher.

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=== 9.6.3 Assessment of the Potential Costs ===

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The novelty since AR5 is that a growing number of bottom-up studies considers the measures as an integrated package recognising their technological complementarity and interdependence, rather than the linear process of designing and constructing buildings and their systems, or incremental improvements of individual building components and energy-using devices during building retrofits, losing opportunities for the optimisation of whole buildings. Therefore, integrated measures rather than the individual measures are considered for the estimates of costs and potentials. Figure 9.17 presents the indicative breakdown of the potential reported in Figure 9.16 by measure and cost, to the extent that it was possible to disaggregate and align to common characteristics. Whereas the breakdown per measure was solely based on the literature reviewed in [[#9.6.1|Section 9.6.1]] , the cost estimates additionally relied on the literature presented in this section, Figure 9.20, and Supplementary Material Table 9.SM.6. The literature reviewed reports fragmented and sometimes contradicting cost-effectiveness information. Despite a large number of exemplary buildings achieving very high performance in all parts of the world, there is a lack of mainstream literature or official studies assessing the costs of these buildings at scale ( [[#Lovins--2018|Lovins 2018]] ; [[#Ürge-Vorsatz--2020|Ürge-Vorsatz et al. 2020]] ).

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[[File:17f4b07b7bfc4a9b1e1f5a0a7ffbdbfa IPCC_AR6_WGIII_Figure_9_17.png]]

'''Figure 9.17''' | Indicative '''breakdown of GHG emission reduction potential of the buildings sector in developed and developing countries into measure and costs in 2050, in absolute figures with uncertainty ranges and as a share of their baseline emissions.''' Notes: (i) The baseline refers to the WEO Current Policy Scenario (International Energy Agency 2019c). It may differ from other chapters. (ii) The figure merged the results of Eurasia into those of Developed Countries.

Figure 9.17 indicates that a very large share of the potential in Developed Countries could be realised through the introduction of sufficiency measures (at least 18% of their baseline emissions). Literature identifies many opportunities, which may help operationalise it. These are reorganisation of human activities, teleworking, coworking, more efficient space design, planning and use, higher density of building and settlement inhabitancy, flexible space, housing swaps, shared homes and facilities, space and room renting, and others ( [[#Bierwirth--2019a|Bierwirth and Thomas 2019a]] ; [[#Ivanova--2020|Ivanova and Büchs 2020]] ; [[#Ellsworth-Krebs--2020|Ellsworth-Krebs 2020]] ). Whereas literature does not provide a robust cost assessment of the sufficiency potential, it indicates that these measures are likely to be at no or very little cost ( [[#Cabrera%20Serrenho--2019|Cabrera Serrenho et al. 2019]] ).

The exchange of lights, appliances, and office equipment, including ICT, water heating, and cooking technologies could reduce more than 8% and 13% of the total sector baseline emissions in developed and developing countries respectively, typically at negative cost ( [[#Department%20of%20Environmental%20Affairs--2014|Department of Environmental Affairs 2014]] ; [[#de%20Melo--2015|de Melo and de Martino Jannuzzi 2015]] ; [[#Prada-Hernández--2015|Prada-Hernández et al. 2015]] ; [[#Subramanyam--2017a|Subramanyam et al. 2017a]] ,b; [[#González-Mahecha--2019|González-Mahecha et al. 2019]] ; [[#Grande-Acosta--2020|Grande-Acosta and Islas-Samperio 2020]] ). This cost-effectiveness is, however, often reduced by a larger size of appliances and advanced features, which offset a share of positive economic effects ( [[#Molenbroek--2015|Molenbroek et al. 2015]] ).

Advanced HVAC technologies backed-up with demand-side management, and onsite integrated renewables backed-up with demand-side flexibility and digitalisation measures are typically a part of the retrofit or construction strategy. Among HVAC technologies, heat pumps are very often modelled to become a central heating and cooling technology supplied with renewable electricity. The estimates of HVAC cost-effectiveness, including heat pumps, vary in modelling results from very cost-effective to medium ( [[#Department%20of%20Environmental%20Affairs--2014|Department of Environmental Affairs 2014]] ; [[#Prada-Hernández--2015|Prada-Hernández et al. 2015]] ; [[#Akander--2017|Akander et al. 2017]] ; [[#Hirvonen--2020|Hirvonen et al. 2020]] ). Among demand-side management, demand-side flexibility and digitalisation options, various sensors, controls, and energy consumption feedback devices have typically negative costs, whereas advanced smart management systems as well as thermal and electric storages linked to fluctuating renewables are not yet cost-effective ( [[#Nguyen--2015|Nguyen et al. 2015]] ; [[#Prada-Hernández--2015|Prada-Hernández et al. 2015]] ; [[#Huang--2019|Huang et al. 2019]] ; [[#Uchman--2021|Uchman 2021]] ; [[#Duman--2021|Duman et al. 2021]] ; [[#Sharda--2021|Sharda et al. 2021]] ; [[#Rashid--2021|Rashid et al. 2021]] ). Several Developed Countries achieved to make onsite renewable energy production and use profitable for at least a part of the building stock ( [[#Horváth--2016|Horváth et al. 2016]] ; [[#Akander--2017|Akander et al. 2017]] ; [[#Vimpari--2019|Vimpari and Junnila 2019]] ; [[#Fina--2020|Fina et al. 2020]] ), but this is not yet the case for developing countries ( [[#Kwag--2019|Kwag et al. 2019]] ; [[#Cruz--2020|Cruz et al. 2020]] ; [[#Grande-Acosta--2020|Grande-Acosta and Islas-Samperio 2020]] ). Due to characteristics and parameters of different building types, accommodating the cost-optimal renewables at large scale is especially difficult in non-residential buildings and in urban areas, as compared to residential buildings and rural areas ( [[#Horváth--2016|Horváth et al. 2016]] ; [[#Fina--2020|Fina et al. 2020]] ).

Literature agrees that new advanced buildings, using design, form, and passive building construction equipped with demand-side measures, and advanced HVAC technologies can reduce the sector total baseline emissions in developed and developing countries by at least 10% and 25% in 2050, respectively, and renewable energy technologies backed-up with demand-side flexibility and digitalisation measures typically installed in new buildings could further reduce these emissions by at least 11% and 7% (see also Cross-Chapter Box 12 in Chapter 16). The literature, however, provides different and sometimes conflicting information of their cost-effectiveness. [[#Esser--2019|Esser et al. (2019)]] reported that by 2016, the perceived share of buildings similar or close to NZEB in the new construction was just above 20% across the EU. In this region, additional investment costs were no higher than 15%, as reported for Germany, Italy, Denmark, and Slovenia ( [[#Erhorn-Kluttig--2019|Erhorn-Kluttig et al. 2019]] ). Still, the European market experiences challenges which relate to capacity and readiness, as revealed by the Architects’ Council of Europe (ACE) (2019), which records a decline in the share of architects who are designing buildings to NZEB standards to more than 50% of their time, from 14% in 2016 to 11% in 2018. In contrast, the APEC countries reported additional investment costs of 67% on average ( [[#Xu--2017|Xu and Zhang 2017]] ) that makes them a key barrier to the NZEB penetration in developing countries as of today ( [[#Feng--2019|Feng et al. 2019]] ). This calls for additional R&amp;D policies and financial incentives to reduce the NZEB costs ( [[#Xu--2017|Xu and Zhang 2017]] ; [[#Kwag--2019|Kwag et al. 2019]] ).

Thermal efficiency retrofits of existing envelopes followed up by the exchange of HVAC backed up with demand-side measures could reduce the sector total baseline emissions in developed and developing countries by at least 18% and 7% respectively in 2050. There have been many individual examples of deep building retrofits, which incremental costs are not significantly higher than those of shallow retrofits. However, the literature tends to agree that cost-effective or low cost deep retrofits are not universally applicable for all cases, especially in historically urban areas, indicating a large share of the potential in the high-cost category ( [[#Department%20of%20Environmental%20Affairs--2014|Department of Environmental Affairs 2014]] ; [[#Akander--2017|Akander et al. 2017]] ; [[#Paduos--2017|Paduos and Corrado 2017]] ; [[#Semprini--2017|Semprini et al. 2017]] ; [[#Subramanyam--2017b|Subramanyam et al. 2017b]] ; [[#Streicher--2017|Streicher et al. 2017]] ; [[#Mata--2019|Mata et al. 2019]] ). Achieving deep retrofits assumes additional measures on the top of business-as-usual retrofits, therefore high rate of deep retrofits at acceptable costs are not possible in case of low business-as-usual rates ( [[#Streicher--2020|Streicher et al. 2020]] ).

For a few studies, which conducted an assessment of the sector transformation aiming at emission reduction of 50–80% in 2050 versus their baseline, the incremental investment need over the modelling period is estimated at 0.4–3.3% of the country annual GDP of the scenario first year ( [[#Markewitz--2015|Markewitz et al. 2015]] ; [[#Bashmakov--2017|Bashmakov 2017]] ; Novikova et al. 2018c; [[#Kotzur--2020|Kotzur et al. 2020]] ). These estimates represent strictly the incremental share of capital expenditure and sometimes installation costs. Therefore, these figures are not comparable with investment tracked against the regional or national sustainable finance taxonomies, as recently developed in the EU ( [[#European%20Parliament%20and%20the%20Council--2020|European Parliament and the Council 2020]] ), Russia ( [[#Government%20of%20Russian%20Federation--2021|Government of Russian Federation 2021]] ), South Africa ( [[#National%20Treasury%20of%20Republic%20of%20South%20Africa--2021|National Treasury of Republic of South Africa 2021]] ), and others, or the growing literature on calculating the recent finance flows ( [[#Novikova--2019|Novikova et al. 2019]] ; [[#Valentova--2019|Valentova et al. 2019]] ; [[#Kamenders--2019|Kamenders et al. 2019]] ; [[#Macquarie--2020|Macquarie et al. 2020]] ; [[#Hainaut--2021|Hainaut et al. 2021]] ), because they are measured against other methodologies, which are not comparable with the methodologies used to derive the incremental costs by integrated assessment models and bottom-up studies. Therefore, the gap between the investment need and recent investment flows is likely to be higher, than often reported.

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<span id="determinants-of-the-potentials-and-costs"></span>
=== 9.6.4 Determinants of the Potentials and Costs ===

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The fact that the largest share of the global flow area is still to be built offers a large potential for emission reduction that is, however, only feasible if ambitious building energy codes will be applied to this new stock (see [[#9.9.3|Section 9.9.3]] on building codes). The highest demand for additional floor area will occur in developing countries; the building replacement is also the highest in developing countries because their building lifetime could be as short as 30 years ( [[#Lixuan--2016|Lixuan et al. 2016]] ; [[#Alaidroos--2015|Alaidroos and Krarti 2015]] ). Whereas as of 2018, 73 countries had already had building codes or were developing them, only 41 had mandatory residential codes and 51 had mandatory non-residential codes (Global Alliance for Buildings and Construction et al. 2019). Therefore, the feasibility of capturing this potential is a subject to greater coverage, adoption, and strength of building codes.

Low rates of building retrofits are the major feasibility constraint of building decarbonisation in Developed Countries. Long building lifetime and their slow replacement caused a lock-in of low energy performance in old buildings of Developed Countries, especially in urban areas. A few studies of developing countries, mostly medium and high-income, also considered building retrofits ( [[#Prada-Hernández--2015|Prada-Hernández et al. 2015]] ; [[#Yu--2018|Yu et al. 2018]] b; [[#Zhou--2018|Zhou et al. 2018]] ; [[#Krarti--2019|Krarti 2019]] ; [[#Kamal--2019|Kamal et al. 2019]] ). The studies in Developed Countries tend to rely on either of the strategies: very ‘deep’ envelope retrofits followed by the exchange of HVAC with various advanced alternatives ( [[#Csoknyai--2016|Csoknyai et al. 2016]] ; Novikova et al. 2018c,b; [[#Duscha--2019|Duscha et al. 2019]] ; Filippi [[#Oberegger--2020|Oberegger et al. 2020]] ) or more shallow retrofits followed by switching to low-carbon district heating or by the exchange of current HVAC with heat pumps linked to onsite renewables backed up energy storages ( [[#Yeh--2016|Yeh et al. 2016]] ; [[#Kotzur--2020|Kotzur et al. 2020]] ; [[#Hirvonen--2020|Hirvonen et al. 2020]] ). The factors, which impact the feasibility of these strategies, therefore, are the building retrofit rates and replacement rates of building systems. To achieve the building stock decarbonisation by 2050, most studies reviewed in Figure 9.16 assume ‘deep’ retrofit rates between 2.5% and 5%, and even 10% per annum. [[#Esser--2019|Esser et al. (2019)]] reported that the annual renovation rate in EU-28 is around 0.2%, with relatively small variation across individual EU member states. [[#Sandberg--2016|Sandberg et al. (2016)]] simulated retrofit rates in eleven European countries and concluded that only minor future increases in the renovation rates of 0.6–1.6% could be expected. Therefore, without strong policies supporting these renovations, the feasibility to achieve such high ‘deep’ retrofit rates is low.

Among key factors affecting the costs-effectiveness of achieving high-performance buildings remain low energy prices in many countries worldwide ( [[#Alaidroos--2015|Alaidroos and Krarti 2015]] ; [[#Akander--2017|Akander et al. 2017]] ) and high discount rates reflecting low access to capital and high barriers. [[#Copiello--2017|Copiello et al. (2017)]] found that the discount rate affects the economic results of retrofits four times higher than the energy price, and therefore the reduction in upfront costs and working out barriers are the feasibility enablers.

The good news is that literature expects a significant cost reduction for many technologies, which are relevant for the construction of high energy-performance buildings and deep retrofits. Applying a technology learning curve to the data available for Europe and reviewing dozens of studies available, [[#Köhler--2018|Köhler et al. (2018)]] estimated the cost reduction potential of biomass boilers, heat pumps, ventilation, air conditioning, thermal storages, electricity storages, solar PVs and solar thermal systems of 14%, 20%, 46–52%, 29%, 29%, 65%, 57%, and 43% respectively in 2050; no significant cost reduction potential was found, however, for established and wide-spread insulation technologies. More investment into Research, Development and Demonstration (RD&amp;D) to reduce the technology costs and more financial incentives to encourage uptake of the technologies would allow moving along this learning curve.

Furthermore, some literature argues that the key to cost-effectiveness is not necessarily a reduction in costs of technologies, but a know-how and skills of their choosing, combining, sequencing, and timing to take the most benefits of their interdependence, complementarity, and synergy as illustrated by many examples ( [[#Lovins--2018|Lovins 2018]] ; [[#Ürge-Vorsatz--2020|Ürge-Vorsatz et al. 2020]] ). However, the scenarios reviewed lack such approaches in their cost assessments. Few indicative examples of cost reduction at scale were provided though not by the scenario literature, but case studies of the application of One-Stop Shop (OSS) approach at scale ( [[#9.9.4|Section 9.9.4]] ). In 2013, the Dutch Energiesprong network brokered a deal between Dutch building contractors and housing associations to reduce the average retrofit costs from EUR130,000 down to EUR65,000 for 111,000 homes with building prefabrication systems and project delivery models while targeting energy savings of 45–80% ( [[#Ürge-Vorsatz--2020|Ürge-Vorsatz et al. 2020]] ); out of which 10,000 retrofits have been realised by 2020. The French Observatory of Low Energy Buildings reported to achieve the cost-effective deep renovations of 818 dwellings and 27 detached houses in France setting a cap for absolute primary energy consumption to achieve after renovation and a cap for the budget to deliver it. The cost-effectiveness was, however, calculated with grants and public subsidies ( [[#Saheb--2018|Saheb 2018]] ).

The literature emphasises the critical role of the time between in 2020 and 2030 for the building sector decarbonisation ( [[#IEA--2020a|IEA 2020a]] ; [[#Roscini--2020|Roscini et al. 2020]] ). To set the sector at the pathway to realise its whole mitigation potential, it is critical to exponentially accelerate the learning of this know-how and skills to reduce the costs and remove feasibility constraints to enable the penetration of advanced technologies at speed that the world has not seen before. The World Energy Outlook ( [[#IEA--2020c|IEA 2020c]] ) shown in the Net Zero Emissions by 2050 Scenario (Box 9.2) the challenges and commitments the sector will have to address by 2030. These include bringing new buildings and existing buildings to near zero, with a half of existing buildings in Developed Countries and a third of existing buildings in developing countries being retrofitted by 2030. These also mean banning the sale of new fossil fuel-fired boilers, as well as making heat pumps and very efficient appliances standard technologies. The Net Zero Emissions by 2050 Scenario achieves almost fully to decarbonise the sector by 2050, with such commitments reflected neither in the planning and modelling efforts ( [[#9.9|Section 9.9]] ) nor in policies and commitments ( [[#9.9|Section 9.9]] ) of most world countries, with the countries of South-East Asia and Pacific, Southern Asia, Africa, and Latin America and Caribbean having the least research.

As discussed in [[#9.6.1|Section 9.6.1]] , the alternative and low-cost opportunity to reduce the sector emissions in the countries with high floor area per capita and the low stock turnover is offered by the introduction of the sufficiency approach. [[#9.9.3.1|Section 9.9.3.1]] discusses a range of policy instruments, which could support the realisation of the sufficiency potential. As the approach is new, the literature does not yet report experiences of these measures. In the framework of project OptiWohn, the German cities of Göttingen, Köln und Tübingen just started testing the sufficiency approach and policy measures for sufficiency ( [[#Stadt%20Göttingen--2020|Stadt Göttingen 2020]] ). Therefore, the feasibility of realising the sufficiency potential depends on its recognition by the energy and climate policy and the introduction of supporting measures ( [[#Samadi--2017|Samadi et al. 2017]] ; [[#Ellsworth-Krebs--2020|Ellsworth-Krebs 2020]] ; [[#Goldstein--2020|Goldstein et al. 2020]] ). More research is needed to understand which measures will work and which will not.

Similar to buildings, the energy consumption and associated emissions of appliances and equipment is driven by the replacement of old appliances and the additional stock due to the increase in penetration and saturation of appliances. The feasibility of appliance stock replacement with efficient options is higher than the feasibility of building stock replacement or retrofit due to their smaller size, shorter lifetime, and cheaper costs ( [[#Chu--2006|Chu and Bowman 2006]] ; [[#Spiliotopoulos--2019|Spiliotopoulos 2019]] ). Some literature argues that once appliances achieve a particular level of efficiency their exchange does not bring benefits from the resource efficiency point of view ( [[#Hertwich--2019|Hertwich et al. 2019]] ). Even through the data records a permanent energy efficiency improvement of individual devices (Figure 9.12), their growing offsets energy savings delivered by this improvement. The emerging literature suggests addressing the growing number of energy services and devices as a part of climate and energy policy ( [[#Bierwirth--2019b|Bierwirth and Thomas 2019b]] ). [[#9.5.2.2|Section 9.5.2.2]] describes measures for limiting demand for these services and [[#9.5.3.6|Section 9.5.3.6]] addresses reducing the number of technologies through their ownership and use patterns. ( [[#Grubler--2018|Grubler et al. 2018]] ) also suggested redefining energy services and aggregating appliances, illustrating the reduction of energy demand by a factor of 30 to substitute over 15 different end-use devices with one integrated digital platform. More research is needed to understand opportunities to realise this sufficiency potential for appliances, and more research is needed to understand policies which may support these opportunities ( [[#Bierwirth--2019a|Bierwirth and Thomas 2019a]] ).

The difference between baselines is among the main reason for difference between the potential estimates in 2030 reported by [[IPCC:Wg3:Chapter:Chapter-6|Chapter 6]] on buildings of AR4 (Levine et al. 2017) and the current section of AR6. For Developed Countries, the sector direct and indirect baseline emissions in AR6 are 43% and 28% lower than those in AR4 respectively. For developing countries, the sector direct baseline emissions in AR6 are 47% lower than those in AR4, and the sector indirect baseline emissions are 3% higher than those in AR4. As AR6 is closer to 2030 than AR4 and thus more precise, the likely reason for the difference (besides the fact that some potential was realised) is that AR4 overall overestimated the future baseline emissions, and it underestimated how quickly the fuel switch to electricity from other energy carriers has been happening, especially in developing countries. As illustrated, the baseline is one of determinant of the potential size and hence, all reported estimates shall only be interpreted together with the baseline developments.

The potential is a dynamic value, increasing with the technological progress. Most potential studies reviewed in [[#9.6.1|Section 9.6.1]] consider today mature commercialised or near to commercialisation technologies with demonstrated characteristics ‘freezing them’ in the potential estimates until the study target year. Until 2050, many of these technologies will further improve, and furthermore new advanced technologies may emerge. Therefore, the potential estimates are likely to be low estimates of the real potential volumes. Furthermore, models apply many other assumptions and they cannot always capture right emerging societal or innovation trends; these trends may also significantly impact the potential size into both directions ( [[#Brugger--2021|Brugger et al. 2021]] ).

With the declining amount of emissions during the building operation stage, the share of building embodied emissions in their lifetime emissions will grow, also due to additional building material ( [[#Peñaloza--2018|Peñaloza et al. 2018]] ; [[#Cabeza--2021|Cabeza et al. 2021]] ). Reviewing 650 lifecycle assessment case studies, [[#Röck--2020|Röck et al. (2020)]] estimated the contribution of embodied emissions to building lifetime emissions up to 45–50% for highly efficient buildings, surpassing 90% in extreme cases.

Recently, a significant body of research has been dedicated to studying the impacts of using bio-based solutions (especially timber) for building construction instead of conventional materials, such as concrete and steel, because more carbon is stored in bio-based construction materials than released during their manufacturing. Assuming the aggressive use of timber in mid-rise urban buildings, [[#Churkina--2020|Churkina et al. (2020)]] estimated the associated mitigation potential between 0.04–3.7 GtCO 2 per year depending on how fast countries adopt new building practices and floor area per capita. Based on a simplified timber supply-demand model for timber-based new floor area globally by 2050, [[#Pomponi--2020|Pomponi et al. (2020)]] showed that the global supply of timber can only be 36% of the global demand for it between 2020 and 2050; especially much more forest areas will be required in Asian countries, such as China and India and American countries, such as the USA, Mexico, and Argentina. Goswein et al. (2021) conducted a similar detailed analysis for Europe and concluded that current European forest areas and wheat plantations are sufficient to provide timber and straw for the domestic construction sector.

The increased use of timber and other bio-based materials in buildings brings not only benefits, but also risks. The increased use of timber can accelerate degradation through poor management and the pressure for deforestation, as already recorded in the Amazon and Siberia forests, and the competition for land and resources ( [[#Carrasco--2017|Carrasco et al. 2017]] ; [[#Brancalion--2018|Brancalion et al. 2018]] ; [[#Hart--2020|Hart and Pomponi 2020]] ; [[#Pomponi--2020|Pomponi et al. 2020]] ). [[#Churkina--2020|Churkina et al. (2020)]] emphasised that promoting the use of more timber in buildings requires the parallel strengthening of legislation for sustainable forest management, forest certification instruments, and care for the people and social organisations that live in forests. In tropical and subtropical countries, the use of bamboo and other fibres brings more benefits and less risks than the use of timber (ibid). One of the main barriers associated with the use of bio-based materials in buildings is fire safety, although there is extensive research on this topic ( [[#Östman--2017|Östman et al. 2017]] ; [[#Audebert--2019|Audebert et al. 2019]] ). This is a particularly important criterion for the design of medium and high-rise buildings, which tend to be the most adequate typologies for denser and more compact cities. Overall, more robust models are needed to assess the interlinkages between the enhanced use of bio-based materials in the building stock and economic and social implications of their larger supply, as well as the associated competition between forest and land-use activities (for food), and ecological aspects. Furthermore, more research is required on how to change forest and building legislation and design a combination of policy instruments for the specific political, economic and cultural county characteristics ( [[#Hildebrandt--2017|Hildebrandt et al. 2017]] ). Benefits and risks of enhanced use of wood products in buildings are also discussed in Chapter 7, [[IPCC:Wg3:Chapter:Chapter-7#7.4.5.3|Section 7.4.5.3]] .

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