Rocinha Favela in the front, and high-rise buildings closer to the beach at the back, in Rio de Janeiro, Brazil. Rocinha Favela is the biggest urbanized slum in Brazil with approximately 100,000 inhabitants. Source: Alicia Nijdam / CC BY (
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The building sector, which includes residential and commercial structures, is responsible for 39% of the total U.S energy consumption (EIA, 2019) and 21% of annual U.S. direct and indirect greenhouse gas (GHG) emissions (1.4 GtCO2e) (EPA, 2019). Globally, buildings and their construction are responsible for over 33% of global final energy consumption and nearly 40% of total direct and indirect CO2 emissions globally (IEA, 2020). The U.S. Energy Information Administration (EIA) projects that global energy consumption in buildings will grow by 1.3% per year on average from present day to 2050, with non-OECD countries having five times the rate of growth compared to OECD countries (EIA, 2019).

The merits of improving the operational efficiencies in the building sector are quite high. Energy efficiency improvements span how buildings are designed, their heating and cooling equipment, and lighting. The U.S. Department of Energy (DOE) estimates that, at the lower end, 20% of building energy consumption can be reduced by leveraging technology known to be commercially viable today (DOE, 2015).


Wool insulation being installed into a wood framed wall. Sheep wool is an efficient insulator that is renewable, recyclable, and compostable. It also lasts long and is fire resistant, among other beneficial properties. Source: Wikimedia Commons.

The building envelope separates the indoor conditioned environment of the building from the external atmosphere and includes walls, their insulation, windows, foundations, and roofing. Designing and installing building insulation minimizes heat transfer and thermal bridging, thus reducing a building’s energy usage. Advanced Energy Economy (AEE) estimates that proper insulation in buildings can bring down heating and cooling energy demand by 10-15% (AEE, 2016). Improving building envelope efficiency also offers significant cost savings. AEE estimates that building envelope retrofits can have cumulative economic savings of $80 billion across the U.S., with significant savings for individual homeowners and businesses (AEE, 2016).

The DOE’s Better Buildings Initiative has additional resources on building envelope improvement technologies and policies.

As discussed in the Justice in the Transition section, low and middle income (LMI) households often stand to gain more from building envelope efficiency improvements – both because low income housing is often more poorly insulated, and because LMI households spend disproportionately more of their income on heating and cooling costs.


Outdoor section of a heat pump. Source: Kristoferb at English Wikipedia / CC BY-SA (

Space and water heating accounts for nearly 50% of the energy consumption in buildings (IEA,2013). In the 2010s, 85% of residential heating loads and 65% of commercial building heating loads across the globe were satisfied by fossil fuels. Improving heating and cooling energy efficiencies is, therefore, critical. Depending on the current age and anticipated life-span of existing fossil-based HVAC equipment, it can be retrofitted or replaced to significantly improve energy efficiency.

Retrofitting existing boilers and furnaces to include condensing equipment (that retrieves latent heat from condensed steam at the end of the cycle) is an option when current HVAC equipment is far from its replacement timeline. This measure can improve thermal efficiencies by 12-25% with moderate capital investments. When existing HVAC equipment is ready to be replaced, electric air source heat pumps (ASHPs) or solar thermal heaters can be considered. ASHPs offer thermal efficiencies of 300-600%, as opposed to the 60-80% that conventional furnace + boiler systems offer. ASHPs require a low-medium capital investment and can offer superior savings and payback times. When powered by renewable electricity, they can further eliminate the carbon emissions associated with space heating. ASHPs can also provide cooling in the summer months, often more efficiently than conventional air conditioners. Therefore, ASHPs can decrease natural gas consumption in the winter months and electricity consumption in the summer months. Solar thermal heaters offer 100% thermal efficiencies and require a low to medium capital investment. They are a viable option in geographic regions with good sun exposure.

The International Energy Agency (IEA) has detailed information on additional heating and cooling technologies of the future and specific policy recommendations to implement them across the globe.

Residential air source heat pumps (ASHPs) and heat pump water heaters are approaching Levelized Cost of Service (LCOS) (in $/MBtu) parity with incumbent natural gas technologies in moderate to warm climates, but in cold climates, incumbent gas technologies continue to exhibit an advantage relative to ccASHP. However, this observation—based on national average annual natural gas prices—may not apply in regions with above average natural gas prices (e.g., the Northeast), or over months or in seasons with higher gas prices that would make LCOSs for ccASHPs much more favorable. Source: Mai, et al. 2018. Electrification Futures Study: End-Use Electric Technology Cost and Performance Projections through 2050. National Renewable Energy Laboratory.


A National Renewable Energy Laboratory research engineer displays an LED smart light bulb that can be controlled via smart phones. This lighting technology is being used in Home Energy Management Systems to enhance energy efficiency. Source: National Renewable Energy Laboratory.

Global lighting accounts for 15% of global electricity consumption and 5% of worldwide GHG emissions (DOE, 2015). Lighting also constitutes approximately 15% of the electricity consumption in residential buildings and 25% in commercial buildings. Commercial sector buildings such as retail stores and office buildings have large lighting loads that operate consistently for 7-9 hours/day. Lighting energy savings can be achieved by 1) shortening the duration of lighting and 2) using efficient lighting technologies. Occupancy sensors can be installed in buildings to significantly reduce the duration of lighting to only the times people are present. A study that tracked three separate installations of occupancy centers – a mid-sized office, a large office and a school – concluded that energy savings could be between 0.4 and 0.6 kWh/sq ft./year.

Efficient lighting technology is the other piece of the puzzle. Replacing incandescent light bulbs with LEDs can have significant energy and economic savings. The U.S. Environmental Protection Agency (EPA) highlights the success story of Lovell Federal Health Care Center in Chicago where incandescent light bulbs were replaced with LEDs (U.S. EPA) resulting in an annual reduction of 15% in energy consumption (400,000 kWh), the equivalent of 3,357 metric tons of carbon dioxide emissions reduction. In addition to the annual energy savings, reduced maintenance and operation requirements resulted in anticipated savings of $500,000 over ten years.

The business and environmental case for replacing conventional lighting with solid state lighting such as LEDs are well-documented. The cost of purchasing and installing LEDs and CFLs, however, can be starkly different in areas of differing socio-economic make-up. For example, the Urban Energy Justice Lab at the University of Michigan found that LEDs and CFLs were more expensive and less readily available in high-poverty urban neighborhoods (Reames et al. 2018), underscoring the need to craft transition plans for an energy-efficient future that provide targeted support for low income neighborhoods.