UN: Building Decarbonisation Stalls Despite Efficiency Gains

The global buildings and construction sector accounts for more than 10% of global GDP and employs nearly one in 10 people, according to the UN Environment Programme.

However, it is also responsible for more than a third of global carbon emissions and almost half of material use. More than a decade after the Paris Agreement, the sector remains off track to achieve full decarbonisation by 2050.

According to the UN’s Global Buildings Climate Tracker, which measures decarbonisation progress in the construction industry, sector-wide decarbonisation has stalled since 2020.

The index increased to 3 decarbonisation points in 2023 but declined to 2.8 in 2024, leaving a 49.3-point gap to the net zero target.

This stagnation is due to a 1% rise in operational emissions, which reached a record 9.9 gigatonnes of CO₂ in 2024. Achieving net-zero goals requires a 56% reduction in operational emissions by 2030.

“The transformation of the building sector is no longer optional. It is a systemic necessity and a collective opportunity,” says Pascal Eveillard, Deputy VP of Sustainable Development & Group Director for Sustainable Construction at Saint-Gobain, a French multinational corporation that designs, manufactures and distributes materials and services for the construction and industrial markets.

Decoupling growth from demand

The sector has shown progress in decoupling growth from energy demand.

From 2015 to 2024, global building floorspace grew by 20% to 273 billion square metres, while final energy demand increased by only 11%.

This indicates that efficiency measures have effectively limited energy demand growth. Without these interventions, energy consumption would have doubled.

However, these improvements are offset by population growth, rapid urbanisation, and increased demand for energy services.

While grid electricity is becoming cleaner, on-site renewable generation has stagnated at about 5% over the past decade due to high upfront costs and regulatory barriers.

Demand for fossil fuels in buildings has also remained steady, slowing the reduction of direct operational emissions.

“Decarbonisation sits alongside housing affordability, resilience and adaptation, health, resource pressures, and long-term performance,” says Fabienne Robert, Director of the Sustainable Construction Observatory and International External Relations, also at Saint-Gobain.

“The question is not which issue should be prioritised, but how to avoid solving one challenge while creating pressure somewhere else.

“Perhaps part of the challenge now is to better connect the different forms of value that sustainable construction already creates. In other words, scaling may depend not only on proving that solutions work, but also on making the different dimensions of value easier to recognise and assess together within decision frameworks.”

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Investment gap

Addressing this stagnation requires a significant and immediate increase in global investment. From 2015 to 2024, cumulative investment in building energy efficiency reached US$2.3tn.

Although annual investment grew by 3% to US$275bn in 2024, this is less than two-thirds of the required amount.

By 2024, investments were US$1.3tn short of the target. To meet the 2050 net zero pathway, cumulative investments must reach US$5.9tn by 2030, requiring an additional US$3.6tn or about US$592bn per year.

This investment gap is due to structural barriers, including reduced public support, high upfront costs, and policy uncertainty.

To mobilise capital at scale, the financial sector is introducing asset-linked mechanisms, such as Property-Linked Finance.

According to the frameworks, repayment obligations are assigned to the property rather than to the owner, enabling long-term financing to transfer automatically when the asset is sold. This approach removes a key financial barrier to deep energy retrofits.

At the same time, international development banks are increasing institutional capital flows. The European Investment Bank has launched a housing action plan, allocating €10bn (US$11.6bn) over the next two years.

Green Building Councils are also developing unified green building taxonomies worldwide to clearly define which projects qualify for institutional investors.

Without coordinated regulatory and financial action, the gap between the sector’s current trajectory and its net zero goals will continue to widen.