Myth-busting low-carbon buildings & retrofits: separating hype from reality

The building retrofit market reached $102.4 billion in 2024 and is projected to grow to $234.7 billion by 2033 at a 9.5% CAGR—yet procurement teams continue to make costly mistakes based on persistent myths about low-carbon building solutions (Market Intelo, 2024). This buyer's guide separates evidence-based evaluation criteria from marketing hype, with particular focus on the EU's revised Energy Performance of Buildings Directive (EPBD) that entered into force on May 28, 2024, fundamentally reshaping buyer requirements across Europe.

Why It Matters

Buildings account for approximately 40% of global energy consumption and 36% of carbon emissions, making the built environment a critical battleground for decarbonization. For procurement professionals, the stakes have never been higher. New York City's Local Law 97 imposes fines of $268 per metric ton of CO₂ for excess emissions, while the EU EPBD mandates that 16% of the worst-performing non-residential buildings must be renovated by 2030 and 26% by 2033 (European Commission, 2024).

The financial implications extend beyond compliance penalties. According to CBRE, the company spent $6.29 billion with sustainable suppliers in 2024 alone, reflecting how green procurement is becoming a competitive differentiator. Meanwhile, over 40,000 Environmental Product Declarations (EPDs) have been verified as of early 2025, signaling that transparent lifecycle data is now table stakes for any serious retrofit solution (World Green Building Council, 2025).

Procurement teams that fail to distinguish genuine performance from greenwashing risk stranded assets, regulatory penalties, and reputational damage. Those who master evidence-based evaluation will capture lower operating costs, premium rents, and access to increasingly preferential green financing terms.

Key Concepts

The EPBD Framework: Europe's New Buyer Standard

The revised EPBD establishes the most comprehensive regulatory framework for building decarbonization in history. Understanding its requirements is essential for any European procurement decision:

Zero-Emission Building (ZEB) Standards: All new public buildings must meet ZEB standards by 2028, with all new construction following by 2030. Large buildings exceeding 1,000 m² face earlier compliance deadlines starting in 2028.

Minimum Energy Performance Standards (MEPS): Non-residential buildings must undergo renovation according to nationally determined thresholds, with binding targets of 16% by 2030 and 26% by 2033 for the worst performers.

Whole-Life Carbon (WLC) Reporting: Beginning in 2030, all new buildings require mandatory WLC reporting based on EN 15978 methodology and the Level(s) framework. This shifts procurement focus from operational energy alone to embodied carbon in materials and construction.

Sector-Specific KPIs for Retrofit Procurement

KPI Category	Metric	Target Range (2025)	Best-in-Class
Energy Intensity	kWh/m²/year	80-120	<50
Carbon Intensity	kgCO₂e/m²/year	20-40	<15
Envelope Performance	U-value (W/m²K)	0.20-0.35	<0.15
Airtightness	ACH50	3.0-5.0	<1.0
HVAC Efficiency	COP/SEER	3.5-4.5	>5.0
Payback Period	Years	7-15	<5
EPD Coverage	% of materials	60-80%	>90%

Understanding Embodied vs. Operational Carbon

A critical distinction for procurement teams is understanding the balance between embodied carbon (emissions from materials, construction, and demolition) and operational carbon (emissions from building energy use over its lifetime). The EPBD's focus on WLC reporting reflects growing recognition that embodied carbon can represent 20-50% of a building's total lifecycle emissions, particularly for highly efficient new builds or deep retrofits.

This has significant implications for material selection. The Scope 3 Embodied Carbon in HVAC Retrofits market alone reached $6.48 billion in 2024, with North America accounting for $2.23 billion (34% of the global market) (Growth Market Reports, 2024).

What's Working

Evidence-Based Procurement Approaches

Integrated Digital Assessment: Organizations like Johnson Controls have demonstrated the power of digital-first approaches. Their OpenBlue Retrofit Platform, launched in April 2025, achieves 30% energy reduction through AI-driven analytics that combine building performance data with occupancy patterns and weather forecasting. This represents a shift from siloed procurement of individual systems to integrated platform procurement.

EPD-Verified Material Sourcing: Leading procurers now require EPD documentation for all major materials. The UK's Great British Insulation Scheme upgraded 46,900 households in 2024, demonstrating that standardized material verification can be scaled across residential portfolios. EPDs provide third-party verified data on embodied carbon, enabling apples-to-apples comparison between competing solutions.

Performance-Based Contracting: Rather than specifying technologies, progressive procurement teams are shifting to performance-based contracts that guarantee energy and carbon outcomes. This transfers technology risk to suppliers while ensuring buyers achieve their sustainability targets.

Regional Success Stories

Example 1: Landsec's Net Zero Transition (UK) British real estate investment trust Landsec committed to reducing embodied carbon intensity by 50% by 2030. Their procurement approach requires all contractors to provide EPDs and participate in carbon reduction workshops. By 2024, they had achieved a 35% reduction in embodied carbon across new developments through material substitution and design optimization.

Example 2: Vasakronan's Deep Retrofit Program (Sweden) Swedish property company Vasakronan has implemented Europe's most aggressive retrofit program, targeting 100% fossil-free operations. Their procurement specification requires heat pump systems with COP >4.5 and mandates that all insulation materials have verified EPDs with embodied carbon below 10 kgCO₂e/m². This approach delivered 45% energy reduction across their 170-building portfolio.

Example 3: CBRE's Sustainable Procurement Framework (Global) Global real estate services firm CBRE established a comprehensive sustainable procurement framework that integrates carbon criteria into all vendor evaluations. In 2024, the company directed $6.29 billion toward sustainable suppliers, demonstrating how procurement scale can drive market transformation. Their framework requires suppliers to report Scope 1, 2, and 3 emissions and demonstrate year-on-year improvement trajectories.

What's Not Working

Common Procurement Pitfalls

Over-Reliance on Single Metrics: Many procurement teams still evaluate solutions primarily on upfront cost or simple payback period, ignoring total cost of ownership and carbon performance. This leads to selection of cheaper but less durable materials that require earlier replacement, ultimately increasing lifecycle costs and emissions.

Specification Gaming: Some vendors optimize products to meet minimum specification thresholds without delivering genuine performance. For example, a window specified at U-value 1.4 W/m²K may technically comply while offering far inferior performance to available alternatives at U-value 0.8 W/m²K for modest additional cost.

Ignoring Installation Quality: The performance gap between laboratory-rated and as-installed building components remains a persistent challenge. Air-tightness testing reveals that actual building performance often falls 30-50% below design specifications due to poor installation practices. Procurement approaches that focus exclusively on product specifications without addressing installation quality assurance consistently underperform.

EPD Inconsistency: While EPD adoption is growing, methodological inconsistencies between product categories and certification bodies create comparison challenges. Product Category Rules (PCRs) vary significantly, making it difficult to compare EPDs for similar products certified under different programs.

Myths That Persist

Myth: "Deep retrofits don't pay back within reasonable timeframes." Reality: The EU EPBD target of 16 kWh/m²/year reduction by 2030 typically delivers 7-10 year paybacks at current energy prices, with ongoing savings thereafter. Projects incorporating heat pumps and envelope improvements consistently achieve positive NPV under realistic discount rates.

Myth: "Embodied carbon doesn't matter for retrofits." Reality: Material selection in deep retrofits can account for 20-30% of total project emissions. Specifying low-carbon concrete, recycled steel, and bio-based insulation can reduce embodied carbon by 40-60% compared to conventional alternatives.

Key Players

Established Leaders

• Johnson Controls – Global building technology leader with comprehensive retrofit platform; OpenBlue system integrates HVAC, lighting, and building automation with AI-driven optimization
• Siemens Smart Infrastructure – Offers end-to-end building performance solutions from energy audits through implementation; strong EPD documentation for building technologies
• Schneider Electric – EcoStruxure Building platform provides integrated energy management; extensive sustainability consulting services for procurement teams
• Carrier Global – Leading HVAC provider with comprehensive heat pump portfolio; strong focus on refrigerant transition to low-GWP alternatives
• Kingspan Group – Insulation and building envelope specialist with industry-leading EPD transparency; targets net-zero manufacturing by 2030

Emerging Startups

• Measurabl – ESG data management platform helping real estate portfolios track and report sustainability metrics across building assets
• Brainbox AI – AI-powered HVAC optimization delivering 20-40% energy savings through autonomous building control
• Infogrid – IoT sensors and analytics platform for real-time building performance monitoring and optimization
• Passivdom – Modular prefabricated passive house units with integrated renewable systems and embodied carbon transparency
• CarbonCure Technologies – Concrete technology that sequesters CO₂ during production, reducing embodied carbon in construction materials

Key Investors & Funders

• Breakthrough Energy Ventures – Bill Gates-backed fund actively investing in building decarbonization technologies
• European Investment Bank – Largest public investor in climate projects, offering preferential green building finance
• HSBC Climate Solutions – Major provider of sustainability-linked lending for building retrofit projects
• Grantham Environmental Trust – Philanthropic funder supporting research and policy development in building decarbonization
• German KfW Development Bank – Leading public financier of building efficiency through low-interest loan programs

Action Checklist

• Audit current building portfolio against EPBD MEPS thresholds to identify priority retrofit candidates
• Establish EPD requirements in all material procurement specifications, targeting minimum 80% EPD coverage
• Implement performance-based contracting with guaranteed energy and carbon outcomes rather than technology specifications
• Require post-occupancy evaluation and commissioning verification for all major retrofit projects
• Integrate whole-life carbon assessment into procurement scoring, weighting embodied carbon at minimum 20%
• Develop supplier scorecards that include Scope 1, 2, and 3 emissions reporting requirements
• Engage with Building Renovation Passports to create 15-20 year roadmaps for staged improvements
• Establish relationships with certified one-stop shops for renovation advice and contractor vetting

FAQ

Q: How should procurement teams prioritize between operational and embodied carbon in retrofit decisions? A: The optimal balance depends on building type and remaining operational life. For buildings with 30+ years remaining life, operational carbon typically dominates, and high-performance HVAC and envelope investments deliver the greatest impact. For buildings approaching major renovation or with 15-20 year horizons, embodied carbon becomes increasingly significant. A reasonable starting framework allocates 70% weighting to operational carbon reduction and 30% to embodied carbon for most commercial retrofit decisions, though this should be adjusted based on building-specific lifecycle analysis.

Q: What documentation should we require from vendors to verify sustainability claims? A: At minimum, require third-party verified EPDs conforming to EN 15804 or ISO 14025 for all major materials. For building systems, require manufacturer performance data verified by independent testing laboratories (not just claimed specifications). For integrated solutions, require case studies with independently verified performance data from comparable building types. Consider requiring suppliers to disclose their own Scope 1, 2, and 3 emissions and demonstrate alignment with Science Based Targets initiative (SBTi) where applicable.

Q: How do we evaluate competing retrofit solutions when EPD methodologies differ? A: Focus on Product Category Rules (PCRs) compliance and ensure EPDs are comparing equivalent functional units. Where methodological differences exist, request underlying LCA data and normalize to common assumptions for system boundaries and impact categories. Consider engaging third-party LCA consultants for major procurement decisions exceeding €1 million. The EU's forthcoming standardized GWP calculation method (due by end of 2025) will improve comparability, but until then, procurement teams must actively manage methodological variation.

Q: What role should building renovation passports play in procurement strategy? A: Building Renovation Passports provide 15-20 year staged renovation roadmaps that can inform sequential procurement decisions. Use passports to identify which improvements deliver the greatest impact at each stage, avoiding lock-in to suboptimal intermediate solutions. Passports should be integrated with procurement planning to ensure that early-stage improvements (e.g., lighting upgrades) do not compromise future deep retrofit potential (e.g., by installing undersized electrical infrastructure that limits future heat pump capacity).

Q: How will the January 2025 fossil fuel heating incentive ban affect procurement decisions? A: The EPBD prohibition on financial incentives for new standalone fossil fuel boilers fundamentally changes the procurement landscape. Procurement teams should exclude conventional gas boilers from consideration and focus evaluation on heat pump technologies (air-source, ground-source, and hybrid configurations), district heating connections where available, and biomass systems in appropriate contexts. Replacement heating systems during major renovations must use renewable technologies, making early engagement with heat pump suppliers essential for procurement planning.

Sources

• European Commission. (2024). Energy Performance of Buildings Directive (EU/2024/1275). Official Journal of the European Union.
• Market Intelo. (2024). Building Energy Retrofit Market Research Report 2033.
• Grand View Research. (2024). Energy Retrofit Systems Market Size Report 2030.
• World Green Building Council. (2025). EPD Verification Status Report Q1 2025.
• Growth Market Reports. (2024). Scope 3 Embodied Carbon in HVAC Retrofits Market Research Report.
• CBRE. (2024). Annual Sustainability Report: Sustainable Procurement Metrics.
• Coherent Market Insights. (2025). Low Carbon Building Market Size Analysis 2025-2032.
• Buildings Performance Institute Europe. (2024). The EPBD Decrypted: Implementation Guide.