- Building Innovations
- Building Retrofits
- Commercial Building Energy Efficiency
- Policy and Regulation
New Policies Are Driving the Building Retrofit Market in the US and Europe
According to the European Commission, buildings in the European Union are responsible for 40% of energy consumption and 36% of greenhouse gas (GHG) emissions. Moreover, three-quarters of the existing building stock in the EU is inefficient. Upgrading obsolete and inefficiently designed building systems—including building envelope, HVAC, lighting, and controls—can significantly reduce buildings’ energy consumption and their GHG impact.
The pace of building retrofits has been slow so far. Now, new policy developments in the US and Europe are providing a much needed push to make building retrofits a core element of GHG reduction strategy.
Building Retrofit Business Opportunities Are Growing with Policy Support
A flurry of new policy activity from 2019-2020 is setting the stage for how the buildings sector will likely contribute to required GHG emissions reductions by 2050 and signaling opportunity for building technology OEMs and service providers. Notable developments include:
- The new administration in the US announced an ambitious plan to upgrade approximately 4 million existing buildings as a part of a nearly $2 trillion accelerated investment. The program’s intent is to boost the economy while reducing energy consumption to lower GHG emissions.
- New York enacted LL97 as part of the New York City Climate Mobilization Act in 2019. The law is the single most extensive carbon reduction effort among cities. It places carbon caps on buildings larger than 25,000 square feet—representing roughly 50,000 residential and commercial properties across New York City—starting in 2024 that will eventually reduce emissions by 80% by 2050.
- On October 14, 2020, the European Commission launched its Renovation Wave Strategy as part of the European Green Deal. The European Commission intends to double the existing building stock renovation rate in the next 10 years and make sure renovations lead to higher energy efficiency. It is estimated that 35 million buildings can be renovated by 2030. The strategy will use regulation, funding, and technical assistance across the whole value chain to achieve its target. The strategy will also prioritize heating and cooling decarbonization, tackling energy poverty and the most inefficient buildings and retrofitting public buildings such as schools, hospitals, and administrative facilities.
OEMs and Service Providers Should Watch Future Policy Initiatives
OEMs and service providers in HVAC, lighting, building envelope, building automation, control, and smart building technology stand to benefit from retrofit policies in the coming decades. As market opportunities for retrofits grow, OEMs can position their highly efficient products for single upgrades and systemwide building retrofits. High efficiency, connectivity, systems integration, and automation will be highly sought-after product characteristics for retrofit technology as building owners are required to comply with new regulations and future-proof their buildings.