Decarbonizing the urban built environment: Ten trends to consider

Full roof-integrated Wind & Solar energy system at Haasjeover in Eindhoven by our portfolio company IBIS Power / Photo: IBIS Power

Why are buildings crucial in the fight against climate change

Our view

Trends to consider

  1. Expected economic gains in the face of the current high energy prices will be the leading driver for the decarbonization of buildings in the near future. Local policy and building code and ESG compliance for commercial tenants will come in second.
  2. The technologies needed for zero carbon buildings already exist but further innovation can come from individualized bundling of different technologies at a building level or for particular geographies.
  3. Scalability and modularity of decarbonization technologies, optimizing building surfaces for solar installations, and inclusion of battery technologies become relevant in the context of rising energy prices.
  4. From energy efficiency to energy independence. Energy efficiency defined as the reduction in primary energy consumption in buildings via energy-saving technologies offers large carbon and economic savings but cannot by itself lead to carbon neutrality. Linking renewable energy production and energy efficiency is the way forward and is now required in some local building codes.
  5. The fragmented ownership of buildings is the major hurdle to scaling decarbonization efforts in cities. Working with real estate market participants who aggregate bigger asset portfolios is an interesting business model allowing for simpler decision-making and permitting process.
  6. Building neutrality becomes more achievable when the definition is expanded beyond the individual building to allow consideration across a portfolio of real estate assets or the so-called energy-independent districts or communities. This approach overcomes potential limits on energy production or efficiency in an individual building, compensating them with the use of off-site clean energy.
  7. Retrofitting is key in the developed world, especially in Europe — Even if all the buildings being currently built in Europe were100% CO2 neutral that would still account for less than 50% of the building stock decades from now. Decarbonization efforts need to be primarily focused on changing the existing building stock.
  8. Fast-moving disruptors with track records in digital tech might dominate the city utility in as little as a decade. The continuing trend of cutting dependence on the grid or going off the grid entirely, the technologies allowing buildings to sell back energy to the grid, and the ongoing digitalization will create possibilities for new players to emerge in the market and challenge the city’s legacy distribution companies.
  9. The embodied carbon is the new frontier — If climate neutrality is to be met by 2050, the construction industry will have to significantly reduce emissions from the production and transport of building materials. These include emissions released during the production, transport, installation, and later demolition, and decomposition of buildings and construction materials. Emissions from embodied carbon account for as much as 11% of global emissions according to the World Green Building Council (WorldGBC). Embodied carbon remains one of the most challenging aspects of climate change mitigation and an area where deep-tech innovations will be needed.
  10. Aesthetics matter — to preserve the uniqueness and visual appeal of our cities energy generating features need to be sensibly incorporated into historical buildings or turned into architectural features.
  1. United Nations Environment Programme (2021). 2021 Global Status Report for Buildings and Construction: Towards a Zero‑emission, Efficient and Resilient Buildings and Construction Sector. Nairobi
  3. REN 21 (2021). Renewables in Cities, 2021 Global Status Report.



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