IPCC Fourth Assessment Report: Climate Change 2007
Climate Change 2007: Working Group III: Mitigation of Climate Change

Effectiveness of and experience with policies for reducing CO2 emissions from energy use in buildings

Realizing such emissions reductions up to 2020 requires the rapid design, implementation and enforcement of strong policies promoting energy efficiency for buildings and equipment, renewable energy (where cost-effective), and advanced design techniques for new buildings (high agreement, much evidence) [6.5].

There are, however, substantial barriers that need to be overcome to achieve the high indicated negative and low cost mitigation potential. These include hidden costs, mismatches between incentives and benefits (e.g., between landlords and tenants), limitations in access to financing, subsidies on energy prices, as well as fragmentation of the industry and the design process. These barriers are especially strong and diverse in the residential and commercial sectors; overcoming them is therefore only possible through a diverse portfolio of policy instruments combined with good enforcement (high agreement, medium evidence).

A wide range of policies has been shown in many countries to be successful in cutting GHG emissions from buildings. Table TS.8 summarizes the key policy tools applied and compares them according to the effectiveness of the policy instrument, based on selected best practices. Most instruments reviewed can achieve significant energy and CO2 savings. In an evaluation of 60 policy evaluations from about 30 countries, the highest CO2 emission reductions were achieved through building codes, appliance standards and tax-exemption policies. Appliance standards, energy-efficiency obligations and quotas, demand-side management programmes and mandatory label-ling were found to be among the most cost-effective policy tools. Subsidies and energy or carbon taxes were the least cost-effective instrument. Information programmes are also cost effective, particularly when they accompany most other policy measures (medium agreement, medium evidence) [6.8].

Table TS.8: The impact and effectiveness of selected policy instruments aimed at mitigating GHG emissions in the buildings sector using best practices [Table 6.6].

Policy instrument Emission reduction effectivenessa Cost-effectivenessb Special conditions for success, major strengths and limitations, co-benefits 
Appliance standards High High Factors for success: periodic update of standards, independent control, information, communication and education. 
Building codes High Medium No incentive to improve beyond target. Only effective if enforced.  
Public leadership programmes, inc. procurement regulations  High High/Medium Can be used effectively to demonstrate new technologies and practices. Mandatory programmes have higher potential than voluntary ones. Factor for success: ambitious energy efficiency labelling and testing.  
Energy efficiency obligations and quotas High High Continuous improvements necessary: new EE measures, short term incentives to transform markets, etc. 
Demand-side management programmes High High Tend to be more cost-effective for commercial sector than for residences. 
Energy performance contracting/ESCO supportC High Medium Strength: no need for public spending or market intervention, co-benefit of improved competitiveness. 
Energy efficiency certificate schemes Medium Medium No long-term experience. Transaction costs can be high. Institutional structures needed. Profound interactions with existing policies. Benefits for employment.  
Kyoto Protocol flexible mechanismsd Low Low So far limited number of CDM &JI projects in buildings. 
Taxation (on CO2 or fuels) Low Low Effect depends on price elasticity. Revenues can be earmarked for further efficiency. More effective when combined with other tools. 
Tax exemptions/ reductions High High If properly structured, stimulate introduction of highly efficient equipment and new buildings. 
Capital subsidies, grants, subsidised loans High Low Positive for low-income households, risk of free-riders, may induce pioneering investments. 
Labelling and certification programmes Medium/High High Mandatory programmes more effective than voluntary ones. Effectiveness can be boosted by combination with other instruments and regular updates.  
Voluntary and negotiated agreements Medium/High Medium Can be effective when regulations are difficult to enforce. Effective if combined with financial incentives, and threat of regulation. 
Education and information programmes Low/Medium High More applicable in residential sector than commercial. Success condition: best applied in combination with other measures. 
Mandatory audit and energy management requirement High, but variable Medium Most effective if combined with other measures such as financial incentives. 
Detailed billing and disclosure programmes Medium Medium Success conditions: combination with other measures and periodic evaluation.  


a) includes ease of implementation; feasibility and simplicity of enforcement; applicability in many locations; and other factors contributing to overall magnitude of realized savings.

b) Cost-effectiveness is related to specific societal cost per carbon emissions avoided.

Policies and measures that aim at reducing leakage or discourage the use of refrigerants containing fluorine may reduce emissions of F-gases substantially in future years (high agreement, medium evidence) [6.8.4].

The limited overall impact of policies so far is due to several factors: 1) slow implementation processes; 2) the lack of regular updating of building codes (requirements of many policies are often close to common practices, despite the fact that CO2-neutral construction without major financial sacrifices is already possible) and appliance standards and labelling; 3) inadequate funding; 4) insufficient enforcement. In developing countries and economies in transition, implementation of energy-efficiency policies is compromised by a lack of concrete implementation combined with poor or non-existent enforcement mechanisms. Another challenge is to promote GHG-abatement measures for the building shell of existing buildings due to the long time periods between regular building retrofits and the slow turnover of buildings in developed countries (high agreement, much evidence) [6.8].