IEA: Building efficiency gains could cut global energy bills and emissions

Buildings worldwide have the potential to become substantially more energy efficient over the next decade, helping households and businesses lower their energy bills, strengthen energy security and cut emissions, according to a new special report from the International Energy Agency (IEA). The analysis was prepared at the request of Türkiye and Australia under the strategic partnership between the COP31 Presidency and the IEA. It examines a proposed global target to improve the energy intensity of buildings by at least 25% by 2035. The report finds this target is achievable using technologies and policy approaches already available. However, meeting it would require more than doubling current rates of improvement.

Today, energy used in buildings accounts for around 30% of total final consumption, half of all electricity consumption and 2.8 gigatonnes of direct CO2 emissions. This highlights the sector’s role in achieving global efficiency and electrification targets, as well as emission reductions. The IEA’s proposed pathway aligns with the goal agreed at COP28 in Dubai of doubling the global rate of energy efficiency improvement by 2030. It also supports the proposed COP31 goal of raising electricity’s share in total final energy consumption to 35% by 2035. Decisions made now will shape energy consumption for decades, given the long lifetime of buildings.

The report identifies four main areas where faster progress could deliver the required gains: improving building envelopes, electrifying end-uses, strengthening equipment efficiency and expanding access to clean cooking. Together, these measures could reduce buildings’ energy intensity by more than 25% by 2035, even as population growth and rising incomes increase demand for energy services. They could also cut the sector’s direct CO2 emissions by nearly 40%. The relative contribution of each measure would vary across countries. Differences in climate, existing building stock, technology use and access to clean cooking all shape national pathways.

At the global level, more efficient equipment makes the largest contribution to the intensity improvement in the IEA pathway, accounting for 40% of the reduction. Better building envelopes contribute another 20%, electrification up to 15%, and expanded access to clean cooking solutions, replacing highly inefficient traditional use of biomass, another 25%.

“More energy-efficient buildings can cut emissions worldwide while making a tangible difference to people’s daily lives,” said IEA Executive Director Fatih Birol. He added that accelerating progress can lower energy bills and help more people access secure, affordable energy. “This report shows that we already have the technologies and policy tools to deliver these benefits. The priority now is to put them to work.”

The report notes that governments already have proven policy tools at their disposal, but faster progress will depend on combining them effectively. Strengthening and enforcing building energy codes, accelerating renovations of existing buildings, and expanding minimum energy performance standards and energy labels can reinforce one another. Measures to improve the economics of technologies such as heat pumps, together with expanding access to clean cooking, further amplify these gains. The right mix will depend on national circumstances and starting points. Faster efficiency improvements would help countries meet growing demand at a lower cost while putting the global buildings sector on a path toward significantly lower emissions.