Real Estate Sector Under Pressure to Decarbonize

Felicity Bradstock, a freelance writer specializing in Energy and Finance with a Master’s in International Development from the University of Birmingham, UK, discusses how many countries are implementing new building regulations to reduce carbon emissions. The focus is on requiring developers to include renewable energy sources and clean technologies in construction. Governments are working to balance the costs of green building measures with the aim of keeping housing affordable and addressing the retrofitting of existing buildings. Regions like the EU, the UK, and Canada have set ambitious targets and adopted policies to achieve significant decarbonization in the building sector.

Cities and countries globally are implementing stringent new building regulations to facilitate a transition to green practices. Authorities are urging developers to incorporate clean technology and renewable energy, such as solar panels and heat pumps, into corporate, commercial, and residential construction. Given that the real estate sector contributes significantly to global carbon emissions, enforcing sustainable construction and power standards can help reduce emissions at the source.

Nearly 40 percent of energy-related global carbon dioxide emissions stem from the real estate sector, with building operations accounting for about 70 percent and construction activities for 30 percent. The world is experiencing rapid urbanization, with an anticipated 2.5 billion more people set to reside in urban areas by mid-century. Apart from decarbonization objectives, incorporating green energy and clean tech into new construction projects can help alleviate energy poverty and improve public health outcomes, as per OECD research findings.

The introduction of new construction measures faces challenges, chiefly regarding costs. Governments must ensure that new building regulations do not inflate costs for homebuyers excessively, making housing unaffordable. With a significant portion of buildings in the EU constructed before 1945, retrofitting existing buildings with energy-efficient technologies is crucial but can be costly and disruptive. Despite these challenges, many countries have launched ambitious housing strategies to achieve sectoral decarbonization.

For instance, the EU aims for carbon neutrality by 2050 through initiatives like the Fit for 55 packages and REpowerEU, while the revised Energy Performance of Buildings Directive (EBPD) targets renovating poorly performing buildings and mandates new EU buildings to be zero-emission by 2030. The EU Solar Rooftop Standard, applicable to various building categories from 2027, aims to drive significant rooftop solar installations across Europe in the coming years. Countries like the UK and Canada are also making strides in incorporating renewable energy technologies into housing to reduce emissions and energy costs.