Definitions

The report defines key terms such as net zero carbon buildings, policy instruments, financial instruments, market readiness, and just transition. Net zero carbon buildings include whole-life emissions across materials, construction, operation, and demolition, as well as climate-resilient design. Policy instruments cover non-financial measures improving enabling conditions, while financial instruments include mechanisms for funding low-carbon building solutions.

Introduction

Urban areas produce 75% of global greenhouse gas emissions, and buildings account for 37% of global energy-related emissions. Demand for new construction is expected to rise due to population growth and urbanisation. Scaling net zero buildings can reduce operational and embodied emissions, improve air quality, and reduce energy costs.

Cities play a central role as regulators, owners of building stock, and actors engaging with local businesses. Many cities already use policy experimentation, demonstration projects, and efficiency standards, though implementation gaps persist.

Network analysis is used to map 75 policy and finance instruments and 22 barriers. This method identifies interdependencies, showing how instruments influence each other and how barriers reinforce or mitigate one another. The analysis explores which barriers to prioritise, which instruments to roll out in sequence, and which pathways cities might follow.

Barriers To A Net Zero Carbon, Resilient Building Future

Twenty-two barriers are grouped into four categories: financial, investment risk/opportunity, market readiness, and regulatory. Financial barriers are perceived as highest priority, including lack of affordable finance, lack of awareness of funding options, and inability to pay upfront costs. These constraints are acute for low-income households and are worsened by landlord–tenant split incentives.

Investment risk/opportunity barriers include high upfront costs for low-carbon technologies, insufficient project scale, fluctuating energy prices, long payback periods, and limited performance data. These factors reduce investor confidence and hinder adoption.

Market readiness barriers relate to limited technical experience, low expertise, and constrained supply of low-carbon products. These slow adoption and affect perceptions of technical reliability.

Regulatory barriers arise from insufficient or unclear building standards, limited information and technology standards, and slow permitting processes.

Network analysis shows market readiness barriers have the highest influence over others. Financial barriers are significantly affected by regulatory and market readiness gaps, indicating that addressing systemic barriers enables more effective financial solutions.

Toolkit Of Solutions: Policies And Financial Instruments

The study maps 31 policy instruments and 44 financial instruments. Policy instruments fall under capacity development, incentives, and mandates. Financial instruments span grants, fiscal incentives, debt, equity, guarantees, asset-finance models, structured finance strategies, and business models.

Capacity development and fiscal instruments are foundational, enabling mandates and incentives. Mandates—such as building codes, performance standards, and disclosure requirements—are highly interconnected in the network and essential for unlocking financial instruments.

Debt instruments, risk mitigation tools, and business models depend on the existence of strong mandates, clear standards, and adequate workforce capacity.

The Role Of Cities In Net Zero Carbon Buildings

Cities cannot deliver the transition alone but can accelerate progress through high-impact pathways. They can phase out fossil-fuel-based appliances by implementing minimum energy performance standards, developing benchmarking and labelling systems, enforcing compliance, and supporting workforce training.

Cities can also strengthen energy efficiency building codes and performance standards, using building-level energy data to develop benchmarks and update codes. Enforcement and financial penalties support compliance.

For cooling, results-based grants and business models such as pay-as-you-save (PAYS) can reduce upfront cost barriers, supported by metering infrastructure and equipment labels.

For embodied carbon, cities can use lifecycle carbon calculation and reporting, develop workforce capacity, and introduce embodied carbon building codes supported by enforcement mechanisms.

For adaptation, hazard-specific building code amendments can be implemented, supported by open publication of risk data, risk-informed spatial planning, and disclosure requirements.

For a just transition, subsidies, concessional finance, and information on affordable design practices are essential to support low-income households and social housing providers.

Conclusions

Financial barriers appear most significant but depend on mitigation of market readiness and regulatory challenges. Mandates and capacity-building instruments underpin effective financial mechanisms. Cities can prioritise pathways that focus on fossil fuel phase-outs, energy efficiency codes, cooling solutions, embodied carbon standards, adaptation measures, and equitable support for vulnerable households. The report recommends further research on just transition considerations, national coordination on barriers, and the development of a web tool to help cities identify appropriate instruments.