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New regulations sparked an energy efficiency revolution in buildings. Is it enough?

Updated: Aug 23

New regulations from governments around the world are driving demand for energy efficiency measures as perhaps the most boring but effective tool in the fight against climate change.

It's amazing how the most mundane tools can sometimes be the most powerful weapons that consumers and businesses have to combat something as massive as global warming. But it's true.

Simply changing an incandescent light bulb for an LED, or putting in a smart thermostat, or adding occupancy sensors for lighting controls add up to huge energy savings.

It also helps reduce reliance on energy imports that can sometimes come at the expense of national and international security.

In the wake of the war in Ukraine and efforts to curtail dependency on Russian oil and gas, the European Union set a target to reduce energy demand by 11.7% over current levels by 2030. And in the U.S. new incentives for energy efficient appliances are aiming to bring down the costs of new products to make them competitive.

This carrot and stick model has led to huge growth in sales for things like heat pumps, lightbulbs, windows, and building energy management systems (among the most boring, but critical tools to reduce energy demand).

The focus on efficiency is key because energy sucking devices in buildings are responsible for around 27% of all greenhouse gas emissions globally.

"Buildings have a bigger role to play in helping us meet our climate goals... because of the emissions buildings produce," said Manish Kumar for the story, the Executive Vice President of Digital Energy at Schneider Electric.

Kumar outlined three ways that tackling buildings can help address climate change -- the first is changing the source of power from fossil fuels to renewables, the second is reducing demand (the efficiency piece), and the third is electrifying everything in a home.

New regulations in Europe are calling for every building to be net-zero from an emissions perspective by 2030. And each nation in the EU has committed to reduce their energy demand by 11% by 2030.

Governments are also offering huge payouts to consumers and businesses to make the switch to more energy efficient products.

Those payouts (and the high cost of gas thanks to the war in Ukraine) are yielding results. In March, the International Energy Agency reported that heat pump sales in Europe jumped by 40% in 2022.

For Kumar the problem isn't necessarily a technological one. "The technology exists, but the speed of deployment is a bigger problem in my mind," the Schneider Electric executive said.

And regulations may be necessary to encourage adoption, because benefits to building owners may not be all that clear. Despite the fact that energy efficient commercial and residential rental properties are more valuable, incentives to add energy efficiency and climate-related technology and services typically mean savings for renting tenants and an upfront cost for property owners that many just aren't willing to entertain.

So regulators may need to step in to make a difference in reducing what amounts to roughly 40% of greenhouse gas emissions globally.

Energy experts like Kumar are applauding these steps because, well, it's good for business, but also happens to be good for reducing greenhouse gas emissions.

And it's not just about building new buildings and projects -- it's equally important to maintain and upgrade existing real estate holdings.

"Existing building renovation and retrofit is very very important," said Kumar. "50% of the buildings that will exist in 2050 already exist… [and] we can use the existing building and renovate and make it greener… All of us need to make sure our existing buildings get to the next level of greenification," he said.

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