Few topics have gained as much traction in recent years as building decarbonization – from net zero goals to the growing business case for electrification. But many still talk in abstract terms about the topic, leaving many unclear exactly how decarbonization works.
This article solves that problem and provides a clear overview of the subject. While we explore the important benefits of decarbonization, we also put things into practical terms – to help you actually start the process.
Building Decarbonization: An Executive Overview
What is Building Decarbonization?
Building decarbonization is the process of reducing greenhouse gas (GHG) emissions associated with a building’s operations and construction. This involves improving energy efficiency, transitioning to renewable energy sources, and minimizing embodied carbon in materials.
Decarbonization efforts can apply to both new developments and existing buildings through retrofitting strategies that optimize energy use and reduce reliance on fossil fuels.
Four Reasons to Pursue Building Decarbonization
1. Ethical and environmental
Buildings are responsible for nearly 40% of all global GHG emissions; a recent paper in Science showed that energy use within the built environment could increase up to 73% by 2050 without significant intervention.
Building decarbonization is therefore a crucial front in the fight against climate change. Owners, operators, designers, and architects all have an ethical duty to prioritize initiatives that will curb energy usage and reduce the impact of buildings on climate change.
2. Compliance
Governments worldwide are tightening regulations to curb building-related emissions. Building Performance Standards (BPS) and other energy efficiency mandates are being introduced to enforce compliance.
Owners and operators who fail to meet these requirements may face penalties, fines, and operational restrictions. For example, New York’s LL97 emission limits will land non-compliant buildings with fines of $268 per ton of carbon dioxide equivalent emissions that exceed the specified cap in a given year.
3. Utility savings
Energy efficiency improvements and renewable energy adoption can reduce operational costs. Decarbonization efforts such as upgrading insulation, optimizing HVAC systems, and deploying solar panels can lead to substantial reductions in energy expenses. Additionally, reducing dependence on fossil fuels insulates building owners from volatile energy markets, ensuring greater financial stability and predictability in utility expenses.
One study looked at the economic impact of decarbonization on a single-family home – and the results were striking. Switching to an all-electric energy supply could save up to $8,500 in construction costs, with further savings of up to $24,000 throughout the lifecycle.
4. Value increases
Considering the points raised above, it shouldn’t be surprising that both investors and tenants are attracted to decarbonized buildings. While tenants in all-electric buildings realize significant energy bill savings, investors see the trends toward ESG and growing regulation as pivotal to long-term strategies.
The takeaway is clear: building decarbonization is an ethical, financial, and compliance necessity for most building owners. But how exactly should you go about it?
How Building Decarbonization Works: Everything You Need to Know
Three Key Steps to Decarbonize a Building
1. Assessment and Benchmarking
Every building has specific decarbonization requirements, based on its existing energy systems, structural constraints, economic profile, and energy needs; assessing these factors provides a foundation for planning and executing decarbonization.
You need to know:
- How HVAC systems work and what is required to optimize them
- How efficient existing energy systems are and how much they could be improved through alterations
- Where factors like air quality and safety will be impacted by the energy system
- Which market factors such as location and competition impact the financial viability of decarbonization
All of these can be evaluated through expert testing and research; they should be paired with benchmarks to understand the exact requirements and expected ROI of your initiatives.
2. Plan and roadmap
Your energy assessment should form the basis for a clear decarbonization plan, often split into multiple phases to manage costs and enable more efficient work. A few key factors to consider here include:
Energy Efficiency
Improving energy efficiency is one of the most cost-effective ways to reduce emissions. This includes:
- Upgrading insulation to minimize heat loss and gain
- Installing energy-efficient windows to improve thermal performance
- Transitioning to LED lighting to cut electricity use
- Enhancing HVAC systems for optimized heating and cooling performance
Electrification
Switching from fossil fuel-based energy systems to electric alternatives is a major component of building decarbonization. This involves replacing:
- Gas-powered heating with heat pumps
- Traditional water heaters with high-efficiency electric models
- Gas stoves with induction cooktops
For example: McKinsey argues that simply fitting heat pumps into residential buildings could cut emissions by 60%.
Renewable Energy Integration
Incorporating renewable energy sources further reduces a building’s carbon footprint. Options include:
- Installing on-site solar panels or wind turbines
- Sourcing clean energy from off-site renewable providers
- Utilizing battery storage systems to maximize energy efficiency and reliability
Ultimately, the full mix of these factors will come down to your specific building’s requirements – as well as economic and practical considerations.
3. Execute and Monitor
Your final step is to implement the plan in a structured and sustainable manner. This will require strong collaboration with industry experts, contractors, and technology providers. Building operators should also consider leveraging government incentives, grants, and financing programs to offset upfront costs. Additionally, performance tracking and continuous optimization should be integrated into the plan to measure success and adjust strategies as needed.
But don’t get caught up here; decarbonization should be viewed as an ongoing process, not a “one-off” fix. Regular monitoring, data analysis, and periodic retrofits will ensure that the building continues to operate efficiently and meets evolving regulatory and sustainability requirements.
Three Common Challenges for Decarbonization Projects
Explore how budgeting, executive buy-in and confusion around regulations all make decarbonization projects harder to action.
1. Budgeting and Executive Buy-In
Many building owners and operators hesitate to commit to decarbonization due to perceived risks, return on investment concerns, and a lack of familiarity with evolving regulations. This creates a “tug-of-war” where some executives or stakeholders see the benefits, while others fear the steep up-front costs – especially during periods of economic turbulence.
This problem can often be overcome through careful framing and smart financial planning. McKinsey notes that leading companies typically secure funding for the first 20-40% of decarbonization while also reducing costs, leading to an improvement in EBITDA – and enabling them to unlock the rest of the necessary capital later in the process.
2. Regulatory Complexity
Many of the stronger business cases for decarbonization face push-back due to uncertainty and complexity. Compliance requirements vary between regions; ESG scores notoriously lack a single universally accepted measurement model. This makes it harder to create robust plans – and creates extra perceived risk for executives and stakeholders.
The root of the problem is an idea of “perfect” decarbonization. While efforts can be more or less successful, there is no single way of lowering carbon emissions – and nor is there a single goal for any given building or portfolio. The objective should be a general reduction and a gradual improvement in building performance.
3. Lack of Expertise in HVAC and Building Systems
Many organizations struggle with a lack of in-house expertise in many key areas related to energy assessments – such as HVAC optimization, building automation, and energy management. These are key factors to determine how best to decarbonize your building – and can define your entire project’s success.
This is where partnering with NEBB-certified professionals becomes invaluable. NEBB-certified firms offer specialized knowledge in testing, balancing, and commissioning building systems to maximize efficiency and ensure compliance with decarbonization goals.
Want to explore NEBB-certified firms to support your decarbonization planning?