Sustainability Atlas
Mobility & Built Environment·12 min read··...

Data story: key signals in Low-carbon buildings & retrofits

The 5–8 KPIs that matter, benchmark ranges, and what the data suggests next. Focus on KPIs that matter, benchmark ranges, and what 'good' looks like in practice.

In 2024, JLL forecasted a staggering 70% shortage of low-carbon office buildings by 2030 across 21 major global cities, while the global low-carbon building market reached $654.77 billion with projections to nearly triple to $1.6 trillion by 2034. Yet deep retrofits of existing building stock—responsible for approximately 40% of global energy consumption and 37% of energy-related carbon emissions—remain stuck at roughly 1% annually, far below the 3-4% rate needed to meet mid-century decarbonization targets. This data story unpacks the 5-8 key performance indicators that actually predict success in low-carbon buildings and retrofits, providing benchmark ranges and evidence-based guidance on what "good" looks like in practice.

Why It Matters

The built environment represents one of the largest and most persistent sources of global greenhouse gas emissions. According to the International Energy Agency (IEA), buildings account for nearly 40% of global energy consumption and approximately 37% of energy-related CO₂ emissions when including both direct building operations and upstream power generation. This makes building decarbonization not merely an environmental concern but an economic imperative affecting asset values, regulatory compliance, and operational costs across virtually every sector.

The financial stakes are substantial. Research from the World Economic Forum indicates that deep retrofits can reduce energy consumption by 50-75% compared to baseline performance, with documented case studies achieving 80% or greater reductions in greenhouse gas emissions. In monetary terms, JLL estimates that light-to-medium retrofits across 46,600 buildings in 14 markets could generate $2.9-11.4 billion in annual energy savings, while whole-building retrofits could unlock up to $16.8 billion in savings. Beyond operational cost reductions, retrofitted buildings command approximately 15% higher asset values, and occupants experience productivity gains valued at up to $7,500 per person annually along with 20% reductions in staff sick days.

From a regulatory perspective, building performance standards are proliferating rapidly. New York's Local Law 97 mandates 25% emissions reductions by 2024 and 40% by 2030 for buildings exceeding 25,000 square feet. Washington D.C.'s Building Energy Performance Standards require buildings over 50,000 square feet to meet median Energy Use Intensity (EUI) targets with 15% reductions every five years. The European Union's Energy Performance of Buildings Directive recast requires zero-emissions standards for all new buildings from 2027 and renovations from 2030. Failure to meet these standards carries significant penalties—in Denver, for example, a 50,000 square foot office building missing its target EUI by 8.3 kBtu/sq.ft. faces $124,500 in fines per compliance cycle.

Key Concepts

Understanding low-carbon building performance requires familiarity with several core metrics that serve as the foundation for benchmarking, target-setting, and regulatory compliance.

Energy Use Intensity (EUI) measures total energy consumed per unit of floor area, typically expressed as kBtu/sq.ft./year in the United States or kWh/m²/year internationally. Site EUI captures direct energy from utility bills, while Source EUI accounts for total raw fuel including transmission losses, enabling peer comparisons via ENERGY STAR. Current high-performance benchmarks for offices target EUI below 40 kBtu/sq.ft., while average performers typically fall in the 50-70 range, and low performers exceed 80-100 kBtu/sq.ft.

Greenhouse Gas Intensity (GHGI) expresses carbon emissions per square foot (kgCO₂e/sq.ft./year) and has become increasingly central to building performance standards following the 2024 update to ASHRAE Standard 100. This metric captures both Scope 1 emissions from on-site combustion (natural gas, fuel oil heating) and Scope 2 emissions from purchased electricity, aligned with GHG Protocol reporting standards.

Embodied Carbon addresses the carbon footprint of building materials and construction processes, measured in kgCO₂e/m² for lifecycle stages A0-A5. The UK Net Zero Carbon Buildings Standard released in September 2024 sets embodied carbon targets for shell and core office buildings at 475 kgCO₂e/m² for 2024-2025, declining progressively toward 35 kgCO₂e/m² by 2050.

Retrofit Depth categorizes interventions by energy savings magnitude: light retrofits achieve 10-20% reductions through operational optimization and controls upgrades; medium retrofits reach 20-40% through equipment replacements and partial envelope improvements; and deep retrofits target 50%+ reductions through comprehensive envelope, HVAC electrification, and renewable energy integration.

KPIDefinitionUnitsLow PerformanceAverageHigh Performance
Energy Use Intensity (EUI)Energy per sq.ft. annuallykBtu/sq.ft./yr>8050-70<40
GHG Intensity (GHGI)Carbon per sq.ft.kgCO₂e/sq.ft./yr>158-12<5
Retrofit RateAnnual renovation percentage% of stock/year<1%1-2%>3%
Energy Cost ReductionPost-retrofit savings% reduction<15%15-30%>30%
Renewable Energy ShareOn-site or purchased% of total<10%20-40%>50%
Payback PeriodInvestment recovery timeYears>157-12<7

What's Working

Deep Retrofit Performance

Evidence from multiple jurisdictions demonstrates that deep retrofits consistently deliver transformational energy and emissions reductions. A Canadian Federal pilot program achieved 69% energy reduction and over 80% GHG reduction through comprehensive building envelope and systems upgrades. The University of Calgary's MacKimmie Complex retrofit delivered 80% energy reduction and 85% reduction in Energy Use Intensity. In New York City, a 14-building multifamily deep retrofit survey documented an average 33% reduction in site EUI, with individual projects significantly exceeding this benchmark.

Policy-Driven Market Transformation

Jurisdictions with mandatory building performance standards are catalyzing measurable market shifts. Combined retrofit spending across China, the United States, and the European Union increased over 20% since 2019, reaching approximately $120 billion in 2024 according to IEA data. The proliferation of benchmarking requirements has created unprecedented data transparency, with ENERGY STAR Portfolio Manager now serving as the de facto platform for compliance reporting across most U.S. jurisdictions.

Technology Convergence

The building envelope segment dominates the retrofit market at 52% of total investment, encompassing windows, insulation, roofing, and façades. HVAC electrification through high-efficiency heat pumps has achieved commercial viability, with modern systems reducing heating and cooling energy consumption by 30% or more. Building automation and IoT monitoring enable continuous commissioning, identifying operational inefficiencies that manual inspections miss.

What's Not Working

Insufficient Retrofit Rates

Despite proven performance, global retrofit rates remain stubbornly around 1% annually—far below the 3-4% required to decarbonize building stock by mid-century. The IEA's target of renovating 20% of existing building stock to zero-carbon-ready levels by 2030 requires a step-change that current market dynamics show no sign of delivering.

Skills Shortage

The retrofit industry faces an acute workforce crisis. While 18 million workers are currently employed in energy efficiency globally, 72% of employers report worker shortages. Canada alone needs an estimated 500,000 additional workers to meet its decarbonization targets, and similar gaps exist across Europe and North America. This constraint limits execution capacity regardless of available capital or policy ambition.

Financing Barriers

Access to capital remains challenging beyond established green bond markets. Upfront costs for deep retrofits—typically $40,000 or more per residential unit for comprehensive insulation and heat pump installation—deter many building owners despite favorable long-term economics. Split incentives between landlords and tenants further complicate investment decisions in rental properties.

Slow Energy Efficiency Progress

Despite policy momentum, global energy efficiency improvement is projected at only 1.8% in 2025—less than half the 4% annual improvement targeted at COP28. This gap reflects implementation challenges that policy announcements alone cannot address.

Key Players

Established Leaders

Johnson Controls International operates globally across building automation, HVAC, fire and security systems, with dedicated retrofit solutions and performance contracting services. Their OpenBlue digital platform integrates building systems data for optimization.

Schneider Electric provides end-to-end building decarbonization services spanning energy management, building automation, and renewable energy integration. Their EcoStruxure platform serves as a leading building management system.

CBRE Group offers sustainability advisory and retrofit project management through its dedicated ESG practice, serving institutional building owners navigating performance standards compliance.

Siemens Smart Infrastructure delivers building technology and grid integration solutions, with particular strength in complex commercial and industrial retrofit projects.

Emerging Startups

Sublime Systems (Holyoke, MA) has developed an electrochemical process for producing low-carbon cement, securing up to $87 million in DOE awards plus backing from Microsoft's Climate Innovation Fund.

CarbonCure Technologies (Canada) injects captured CO₂ into concrete during mixing, sequestering carbon while improving material performance. Investors include Breakthrough Energy Ventures, Microsoft Climate Innovation Fund, and Amazon Climate Pledge Fund.

Dandelion Energy makes geothermal HVAC systems accessible for residential buildings, dramatically reducing heating and cooling carbon footprints.

Gropyus (Austria/Germany) raised €100 million in October 2024 for modular construction approaches that reduce embodied carbon and construction waste.

Key Investors

Breakthrough Energy Ventures (Bill Gates-backed) focuses on decarbonization technologies including cement, building materials, and construction innovation.

Fifth Wall specializes in built world innovation across seed to growth stages, with sustainability increasingly central to its investment thesis.

Cemex Ventures invests $500K-$5M in green construction, productivity, and supply chain startups, publishing annual Top 50 ConTech rankings.

Saint-Gobain Nova provides strategic investments in sustainable construction and new materials technologies aligned with the parent company's building materials leadership.

Examples

Empire State Building, New York

The iconic 102-story tower underwent a comprehensive retrofit from 2009-2013 that reduced energy consumption by 38% and saves $4.4 million annually in energy costs. Key interventions included refurbishment of 6,514 windows into superwindows with suspended film and gas fill, chiller plant upgrades, tenant energy management systems, and building-wide radiator insulation. The project demonstrated that historic buildings can achieve dramatic performance improvements while preserving architectural character.

Amsterdam Light Festival District Heating Integration

The City of Amsterdam has connected multiple retrofitted buildings to district heating networks fed by waste heat from data centers and industrial facilities. This systems-level approach reduces individual building heating requirements while utilizing otherwise-wasted thermal energy. Buildings connecting to the network have documented 40-60% reductions in heating-related carbon emissions.

Energiesprong (Netherlands/International)

This Dutch initiative has pioneered net-zero energy retrofits for social housing through industrialized, whole-house renovation delivered in under two weeks. Prefabricated façade panels, integrated solar roofing, and heat pump systems are manufactured off-site and installed rapidly, minimizing occupant disruption. The model has expanded to the UK, France, Germany, and North America, demonstrating scalable approaches to mass-market retrofit.

Action Checklist

  • Benchmark all buildings over 20,000 sq.ft. in ENERGY STAR Portfolio Manager to establish baseline EUI and identify underperformers requiring priority attention
  • Conduct ASHRAE Level II energy audits for buildings at risk of non-compliance with current or anticipated building performance standards
  • Develop a multi-year capital plan that sequences retrofits by regulatory deadline, energy savings potential, and available incentives
  • Electrify HVAC systems during planned equipment replacement cycles, prioritizing heat pump installations over like-for-like fossil fuel replacements
  • Invest in building automation and controls to capture low-cost operational savings while planning deeper interventions
  • Engage tenants through green lease provisions and submetering to address split-incentive barriers in leased properties
  • Monitor workforce availability in local markets and establish relationships with qualified contractors before demand peaks
  • Track regulatory developments across all jurisdictions where you own or operate buildings, as compliance timelines continue to accelerate

FAQ

Q: What is the typical payback period for a deep building retrofit? A: Payback periods vary significantly based on retrofit scope, local energy prices, and available incentives. Light retrofits focused on controls and operational optimization often achieve payback in 2-4 years. Medium retrofits involving equipment replacements typically recover investment in 5-8 years. Deep retrofits targeting 50%+ energy reductions generally require 8-15 years for payback, though asset value appreciation and regulatory compliance value are often not captured in simple payback calculations.

Q: How do building performance standards differ across jurisdictions? A: Jurisdictions have adopted varying approaches. New York City's Local Law 97 sets absolute carbon emissions caps based on building type and size. Washington D.C.'s BEPS uses EUI targets relative to building type medians with mandatory improvement every five years. Boston's BERDO targets worst performers for priority action. Denver sets specific EUI thresholds by building type. Understanding local requirements is essential, as approaches differ in metrics, timelines, and penalty structures.

Q: Should we prioritize new construction or retrofit existing buildings? A: Both are necessary, but retrofits deserve greater emphasis. Over 70% of buildings standing in 2050 have already been built, making existing stock decarbonization essential. Deep retrofits consume 50-75% less carbon than new construction for equivalent floor area. Retrofit also avoids embodied carbon in new materials. However, new construction to high-performance standards remains important for population growth and replacing obsolete stock.

Q: What role does embodied carbon play relative to operational carbon? A: For new construction and major renovations, embodied carbon—the emissions from material production and construction—can represent 50% or more of lifetime building emissions. This proportion increases as operational efficiency improves. The UK Net Zero Carbon Buildings Standard now sets binding embodied carbon targets alongside operational energy limits. Forward-thinking asset owners are specifying low-carbon materials including mass timber, recycite steel, and alternative cements.

Q: How can building owners finance deep retrofits given capital constraints? A: Several financing mechanisms have emerged to address upfront cost barriers. Energy Service Companies (ESCOs) offer performance contracts where retrofit costs are repaid from guaranteed energy savings. Property Assessed Clean Energy (PACE) financing allows repayment through property tax assessments, transferring with property ownership. Green bonds and sustainability-linked loans offer favorable terms for qualifying projects. Many jurisdictions provide grants, rebates, and tax incentives that can cover 20-40% of project costs.

Sources

Topics

lowcarbonbuilding codesfleet electrificationopexmicromobilityEV charging

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