This post is co-written with Clay Nesler, the vice president for global energy and sustainability at Johnson Controls.
China made international news earlier this summer when it announced a new pledge to peak its emissions by 2030, in addition to other climate commitments. The country laid out 15 specific actions as part of its “intended nationally determined contribution” (INDC). One in particular—curbing emissions from the buildings sector—offers significant potential for helping China achieve its new climate goals.
Emissions from the Building Sector
In 2011, buildings in China accounted for about 28 percent of total energy consumption. Driven by rapid urbanization and growth in the national building stock, energy consumption from the country’s buildings has increased by 40 percent since 1990. This trend is expected to continue, as China’s building energy use is projected to rise by 40 percent between 2009 and 2030 to accommodate the 1.7 billion square meters of new floor space being built annually. Buildings are the largest physical element in China’s cities, occupying 50 percent or more of urban land area.
The Chinese national government is currently implementing multiple policies and programs to promote building efficiency, such as codes and standards, a green building rating system, and financial incentives and retrofit options for existing buildings. China could achieve a 14 – 22 percent reduction in energy use and CO2 emissions among buildings simply by enforcing these energy codes. Yet the country will need to take even more action in its building sector in order to achieve the goals of its INDC and curb its emissions.
Building energy consumption levels and patterns vary across China because of the country’s diverse climate zones. Buildings in northeastern cities have high heating requirements, while those in southeastern cities have moderate requirements. These regional differences have a substantial impact on technology options for building efficiency improvement. In addition to considering efficient technology options, Chinese policymakers and building owners will need new financial mechanisms to accelerate the adoption of efficient building technologies.
Driving Technological Innovation
One of the measures set out in the INDC aims to strengthen research and development, commercialization and demonstration for low-carbon technologies such as highly efficient heat pumps and energy efficient building envelopes. Doing so will help drive scientific and technological innovations that can replace inefficient building products and appliances.
China will need to cooperate with both domestic manufacturers, financial institutions and government agencies—as well as those in other countries—to support and expedite the commercialization and distribution of new efficient building technologies.
One example of bilateral cooperation is the Clean Energy Research Center (CERC). U.S.-China CERC was established in November 2009 to support the development of clean-energy technologies in the United States and China. More than 1,100 researchers supported by more than 100 U.S. and Chinese partnering universities, research institutions and business are currently working in building energy efficiency. For instance, the new Johnson Controls Asia-Pacific headquarters in Shanghai, expected to open in 2017, is proposed as a “test bed” for U.S. and China CERC partners to demonstrate advanced low-carbon technologies such as integrated sensing and control networks, renewable energy resources and advanced air filtration systems. China will need to pursue more cooperative relationships like this, and then quickly scale up these successes in order to achieve its INDC target.
Scaling Up with Innovative Financing
Utilizing new financial mechanisms is essential to accelerating building efficiency in China, especially for retrofitting existing buildings. There isn’t enough public money to make China’s buildings fully efficient—bringing in external financial institutions is essential to bridge the gap between capital and projects. The country’s INDC commits it to innovate new investment and financing mechanisms for low-carbon development through increasing financial and policy support.
For example, the Energy Performance Contracting Working Group, part of the US-China Climate Change Working Group (CCWG), focuses on performance contracting for energy efficiency. Energy Savings Performance Contracting (ESPC) is a renovation model where a building owner can work with energy services companies (ESCOs) to conduct building energy efficiency retrofits, in which the savings in energy costs cover the repayments for efficiency upgrades. The cooperation on ESPC is one of the three initial areas under the CCWG’s Energy Efficiency Initiative. There is significant room for ESCOs to expand ESPC in underserved sectors, such as public and commercial buildings in China, and industrial and commercial buildings in the United States.
Although meeting China’s target will be a challenge, leadership has demonstrated that it is becoming more ambitious in addressing climate change. Focusing on building efficiency will be a tremendous opportunity for China to achieve the goals set out in its INDC.