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It is well-documented that the built environment and construction sector is a major contributor to rising global temperatures. As of 2021, the construction sector was responsible for 50 percent of climatic change and 40 percent of drinking water pollution,1 while the World Green Building COUNCIL (WorldGBC) estimates buildings in energy and construction are responsible for 39 percent of global energy related carbon emissions (28 percent from operational emissions and 11 percent from materials and construction).2
Not only do the statistics paint a stark picture for the sector, but they also underscore the present challenge to limiting the global temperature increase to 1.5 C (35 F) above pre-industrial levels. A recent McKinsey extrapolation predicted global temperatures could exceed 5 C (41 F) above pre-industrial levels if action is not taken.3 Without cross-border cooperation between governments, major corporates and industry organizations, the environmental repercussions could be severe, leading to irreversible global impacts, including local species extinctions and even loss of human lives due to increased heat stress.
Retrofitting as a solution
A critical lever to limiting global temperature rise, or at least in the built environment, which is a major emissions contributor, is upgrading or retrofitting hundreds of millions of buildings across the world. Retrofitting is the process of updating existing buildings to make them more energy-efficient and sustainable. This involves making necessary improvements to the building’s insulation and broader envelope, methods of which include adaptive reuse, renovation, extension, and restoration.
Retrofitting is a more economically efficient and less carbon-intensive means of upgrading outdated buildings than demolition and rebuilding. Since 80 percent of the building stock that will be standing in 20504 has already been built, it is essential to update existing buildings in the most energy efficient way possible.
With help from Tubular Daylighting Devices (TDDs), this old Midland Bank building transformed into a tropical oasis that is now The Hotel Emery in Minneapolis. The TDDs capture sunlight on the roof of the building and transfer natural light deep into the hotel lobby to support its biophilic design. Photo courtesy Solatube International
Global Retrofit Index
Despite the importance of retrofitting as a lever to reduce greenhouse gas (GHG) emissions, there has been limited literature or research assessing the current state of the built environment and the implementation of retrofitting on a global scale.
To bridge this gap, Kingspan and 3Keel launched the first Global Retrofit Index in 2022,5 which produced scorecards assessing publicly available data to benchmark G20 countries against one another based on how they meet the retrofit challenge and their progress towards achieving net zero emissions in the buildings sector. Though there was some evidence of progress and bold retrofitting policies, the overriding conclusion of the inaugural report was that countries are largely failing to take the steps required to eliminate emissions from existing buildings.
Not only did the report lay bare the worrying inertia by G20 countries in retrofitting inefficient and outdated buildings, but it also showed the U.S. significantly trails the majority of its European counterparts, both in terms of the current energy performance of its buildings and the retrofit policies in place to reduce building emissions in the future. Overall, the report found that the U.S. ranked bottom of the G7, falling well behind the likes of Germany and France, and sat 12th of the G20 in the global retrofit rankings.
Nevertheless, even the top performers were deemed to be underperforming in their emissions reductions and, in turn, failing to remain on track to achieve net zero by 2050 per the Paris Agreement. To delve deeper into the data and context underlying the performance of higher-scoring, major countries in the first Global Retrofit Index, in November 2023, launched the second Global Retrofit Index.6
Last year’s report built on the 2022 edition, assessing data from the likes of the Environmental Protection Agency (EPA) in the U.S. and the equivalent bodies across the U.K., Germany, France, Ireland, and the Netherlands. The report was able to trace the historical trend for each country and project forward a “retrofitting implementation gap” for each country relative to their net zero scenario. Further, with access to the national inventory of GHG emissions data for each of these major economies, the report was able to normalize the data of the six countries studied for the past 10 years.
As one might expect, given the proximity to the 2022 report, the findings in the second report were similarly concerning. Though there were some green shoots for optimism on an individual country basis, such as the gradual fall in emissions in France and the Netherlands, and some uplift in Energy Performance Certificate (EPC) data in the U.K., Ireland, and France, the collective sum of progress is again a negative one. Across all six countries studied, rates of retrofitting lagged the required rate to meet net-zero targets.
Retrofitting in America
The U.S. has been a poor performer across both editions of the Global Retrofit Index. In 2022, of the G20 countries measured with data available, only Turkey, Saudi Arabia, and China performed worse when considering their existing stock, performance, and policy. While in 2023, the U.S. was the only country studied where emissions from the built environment increased by 3 percent in the last decade. Though the other countries measured were off track on their building emissions reductions, those other countries at least made reductions.
The underperformance of the U.S. market is partially rooted in a country (literally) built on being energy-intensive, consequently resulting in high emissions. However, this intense use of energy is compounded by the U.S.’s widespread lack of home insulation and outdated building codes. Complemented by a disparate array of federal retrofit policies across different states, the outlook makes for chaotic national reading, which has contributed to buildings being responsible for nearly one-third of U.S emissions.7
From a policy perspective, the outlook is not much better. Delving into the detail, unlike the directives seen in the European Union, to date, there has been no limited state-wide laws on energy efficiency or building renovation to incentivize retrofitting programs. There has also been inadequate public funding and policies to establish Energy Performance Certificate (EPC) programs, minimum energy performance standards, and phasing out fossil fuel heating and cooling methods are currently restricted to a few states in the U.S.
However, the 2023 edition of the report acknowledges the Biden-Harris administration deserves some credibility having at least recognized the importance of retrofitting the U.S.’s building stock with the Inflation Reduction Act (IRA). The administration also announced numerous programs to invest in retrofitting, including almost $9 billion of funding for home energy efficiency and electrification projections, and sought collaboration with states to address the issue. Though in principle it is a move in the right direction, the levels of funding do not appear to be sufficient to meet the size of the challenge.
Insulated metal panels (IMPs) helped retrofit this 5,000-seat arena from a sports hall to a performance hall. The retrofit of Contact Pévèle Arena included renovation of the roof for compliance. Photos courtesy Kingspan Insulated Panels
A framework for the future
As the reports demonstrate, the U.S. is one of the worst offenders in retrofitting league tables, but insufficient progress against the targets set by countries against net zero pathways is a global issue. Current retrofitting rates amongst even the higher performing G20 countries are well-below what is needed to align with national climate targets to reach net zero by 2050. What is needed is cross-border, cross-company collaboration with ambitious and innovative ideas on how to replicate best practice policies and solutions at scale.
The 2023 Global Retrofit Index did not only highlight the gravity of the problem but also posited a helpful framework for how to think about a global retrofit framework going forward. Recognizing the barriers to decarbonization, the report identifies five key elements central to retrofitting at scale:
Setting net zero building performance standards
Developing a national retrofit plan
Providing financial incentives and support
Upskilling the workforce and scaling
the supply chainPromoting best practice and data transparency
Each of these elements is crucial to enabling effective, affordable retrofitting of national building stocks. With cooperation and implementation across key global economies, retrofitting building stocks also offers significant opportunities and benefits beyond meeting climate targets, including job creation, reductions in social inequality, and improved health and quality of living.
To convert a vacant 1970s era shopping mall into a thriving Austin Community College facility, strategically placed translucent panel skylights were used. These skylights not only fill the space with natural daylight but also offer excellent light and solar heat gain control.
Best practice examples
No country has effectively implemented a framework of this kind before and as previously noted, without imperative action the ramifications of further inaction could be catastrophic. However, it is not all doom and gloom and it is important to remember there are best practice retrofit policies and solutions being implemented that incorporate elements of this framework. The following are several of the case studies highlighted by the latest edition of the Global Retrofit Index:
France’s MaPrimeRénov
In October 2020, the French government introduced a large-scale scheme to support residential retrofitting called MaPrimeRénov. The initiative, run by France’s National Housing Agency, provides households with financial assistance and a “one-stop shop” to support renovation projects which improve energy efficiency. It exemplifies a coordinated and holistic government approach to stimulating retrofitting by encompassing both financial and practical support elements.
Ireland’s One Stop Shop Services
Through its National Retrofit Plan, the Irish government made an ambitious commitment to retrofit 500,000 homes—or close to 30 percent of Ireland’s housing stock—to an EPC of B2 to meet its target of a 40 percent reduction in residential building emissions by 2030.8 In February 2022, as part of this plan, the Irish “One Stop Shop” scheme was launched with the aim of accelerating the rate of residential retrofitting across the nation. This system provides an interesting example of efforts to reduce points of friction along the customer journey.
EU BIM-SPEED Project
The BIM-SPEED project, also known as the Harmonised Building Information Speedway for Energy Efficient Renovation, was funded as part of the EU’s Horizon 2020 scheme. A four-year project, it was designed to support greater digitization in the construction sector by enabling the use of building information modeling (BIM) when conducting residential building retrofits. It is a good example of how existing tools and new technological solutions can be adapted and combined to support retrofitting.
EEFIG DEEP Platform
The Energy Efficiency Financial Institutions Group (EEFIG) was set up in 2013 by the European Commission and United Nations Environment Programme Finance Initiative with the aim of accelerating private sector investment in energy efficiency. The De-risking Energy Efficiency Platform (DEEP) represents one of the tools EEFIG has developed to support this goal. It is an example of an innovative approach by a governmental body to enable the financing of retrofits through improved access to information which strengthens the business case for investment in retrofitting.
Barriers to retrofitting and future outlook
Despite ambitious government targets and various funding programs for building upgrades, a few of which are outlined above, the pace of retrofitting progress remains sluggish. Ultimately, significant obstacles to retrofitting remain.
As 2023’s Global Retrofit Index identifies, these include systemic hurdles such as landlords and tenants, as well as shortages in the skilled workforce required to carry out retrofitting effectively. The upfront financial cost to homeowners is also a common deterrent to residential retrofits and has been exacerbated by recent increases in inflation across the countries analyzed. Confusion amongst homeowners regarding grant eligibility, as well as friction costs stemming from the need to liaise with numerous providers are also barriers to the rapid rollout of deep residential retrofits.
Real-world examples provide hope for tackling the retrofitting implementation gap identified by the Global Retrofit Index. However, in practice, the isolated nature of their implementation means they are insufficient to tackle the stagnation of emissions reductions identified in both reports, particularly given recent rollbacks on environmental legislations in a number of territories. Nonetheless, these examples should provide reassurance that there are solutions available which, if implemented at scale, could make a real difference in retrofitting our outdated, inefficient global building stock.
Retrofitting the built environment across the world is critical to mitigate climate change. Beyond emissions reductions, retrofitting offers additional benefits such as longer building lifespans, improved comfort, health advantages, and increased asset value. To achieve this, both public and private investments must significantly increase. Short-term financing for technologies such as heat pumps can enhance efficiency and affordability, and governments of high-emission countries with old building stocks, with support from major corporates operating in the built environment sector, must urgently implement ambitious retrofit policies to avoid the potentially catastrophic consequences of rising global temperatures.
