Electrification and Energy Optimization

The building industry is one of the largest global energy consumers, as buildings’ operations account for 30% of final energy consumption. About 40% of this energy is used for heating, ventilation, and air conditioning, with the remainder used for lighting, equipment, elevators and escalators, and more. In 2022, buildings’ operations comprised 27% of global CO₂ emissions, 9.8 Gt CO₂ ⁽⁸⁾. To sequester that much CO₂ emissions, we would need a forest roughly the size of China.

The good news is that buildings are shifting to renewables and electricity as an energy source, enabling long-term carbon elimination if power generation is fully decarbonized. The bad news is that, in absolute terms, the use of fossil fuels in buildings has increased at an average annual growth rate of 0.5% since 2010 ⁽⁸⁾. The primary driver behind this growth is an increase in global floor area, which has grown faster than the energy intensity (the energy consumed per floor area) has declined. Another driver is the increased use of space cooling. Energy consumption for space cooling has more than tripled since 1990. There is also a multiplier effect as more than half of floor space additions until 2030 will occur in areas with high needs for space cooling. This trend is going to continue. By 2030, global floor area is expected to increase by around 15%, equivalent to the entire built floor area of North America today ⁽⁹⁾. To align with the net-zero scenario from the International Energy Agency (IEA), fuels used by buildings must be further decarbonized and energy intensity reduced.

Decarbonizing building fuels and reducing the energy intensity will require optimizing thermal energy generation in buildings: recovery, storage, and consumption.

Optimizing thermal energy generation for heating means transitioning from fossil-fueled systems to heat pumps powered by renewable electricity. According to the IEA, tripling the global heat pump stock by 2030 could reduce CO₂ emissions by 500 Mt annually ⁽¹⁰⁾. However, most heat pumps nowadays use hydrofluorocarbon refrigerants with high global warming potential (GWP). Without intervention, the 2030 heat pump stock could emit 740 Mt of CO₂ equivalent ⁽¹⁰⁾. Solutions include transitioning to hydrofluorocarbons with lower GWP, hydrocarbons, or other natural refrigerants. Hydrofluorocarbons, though, require further research in the field of toxicity and atmospheric decomposition, and hydrocarbons need additional safety precautions for flammability. For cooling, demand is projected to more than triple by 2050 due to climate adaptation ⁽⁷⁾. Mitigating the associated increase in energy intensity will require improving the efficiency of cooling systems and greater adoption of passive cooling solutions. In addition, on-site photovoltaic electricity and storage can help to decarbonize increased energy intensity due to cooling.

Another way to decarbonize buildings’ fuel mix is by recovering and redistributing waste heat. Increasingly, excess heat from municipal waste plants, data centers, metro tunnels, industrial sites, electrolyzers, or nuclear power plants will be captured and redistributed through district heating networks. Enabled by the adoption of heat pump technology, anergy networks are also expected to gain momentum. Anergy networks transfer thermal energy between buildings at ambient temperatures (10-25°C [50-77°F]), reducing heat losses.

Heat pumps and waste heat usage will also drive stronger adoption of thermal storage units (or thermal batteries), serving as an efficient way to balance energy supply and demand. Heat pumps can convert surplus electricity from renewable sources like wind or solar photovoltaics into thermal energy when electrical power is abundant, and electricity prices are low ⁽¹⁰⁾. And waste heat from industrial processes or data centers can be stored for later consumption, preventing the energy from dissipating unused into the environment. Thermal energy storage is also highly efficient, achieving 90-98% efficiency for multi-day storage and 70-80% for seasonal storage.

However, one of the most efficient and cost-effective ways to reduce the energy intensity of buildings is through the broader application of building automation and control systems (BACS). That especially applies to the building stock, the majority of which needs upgrading. For instance, in the EU, 97% of the buildings are considered energy inefficient ⁽¹²⁾. ISO 52120-1 highlights that upgrading from standard BACS (class C) to high-energy performance BACS (class A) can achieve energy savings of up to 40%. These retrofits often require minimal changes, such as adding dynamic hydronic balancing valves, variable water-flow systems, demand-controlled airflow, or modulating room controls with occupancy detection. Given its high impact and low cost, the adoption of advanced BACS is expected to accelerate, particularly as the current retrofit rate of 1.0% per year falls short of the 2.5% required to achieve net-zero by 2050 ⁽¹³⁾.