Executive summary

Improving efficiency in buildings is critical for global emissions reduction and energy affordability. Buildings currently account for approximately 30% of total final energy consumption, half of global electricity consumption, and 2.8 Gt of direct CO2 emissions. This report, developed at the request of Türkiye for COP31, explores a pathway to reduce global buildings’ energy intensity by at least 25% by 2035. Achieving this target requires the annual rate of efficiency progress to more than double from the 1% recorded so far this decade. The pathway relies on four main levers: strengthening equipment efficiency (40% of reductions), improving building envelopes (20%), electrifying end uses (15%), and expanding access to clean cooking (25%).

Introduction

The proposed 25% energy intensity improvement target aligns with broader COP28 goals to double the global average annual rate of energy efficiency improvements and the COP31 Presidency’s goal to increase electricity’s share in total final consumption to 35% by 2035. Currently, more than 120 million households in advanced economies spend over 10% of their income on energy. Improved efficiency can lower bills, enhance energy security, and mitigate health risks such as heat-related mortality. Traditional biomass use for cooking accounts for 14% of global buildings’ energy consumption and contributes to 2.5 million premature deaths annually due to air pollution.

Current trends and policy landscape

The buildings sector consumes 131 EJ per year, with fossil fuels providing 35% and electricity 39%. While 102 countries have mandatory building energy codes, enforcement gaps mean only 60% of new buildings comply. In the equipment sector, 118 countries have minimum energy performance standards (MEPS) for air conditioners, yet stringency varies widely; some markets allow units half as efficient as those in leading markets. Lighting has seen a fivefold increase in efficiency over two decades due to LED uptake, supported by the phase-out of incandescent bulbs in 50 countries. However, nearly 2 billion people still lack clean cooking access, with sub-Saharan Africa seeing a rise in the number of people without access by 14 million in 2024.

Improving buildings’ energy intensity

The pathway to the 2035 target necessitates a rapid transition to Zero-Carbon-Ready Buildings (ZCRB), which must account for the majority of new construction by 2030. ZCRBs utilise optimised orientation, glazing, and high-performance envelopes to keep heating intensity below 50 kWh/m2 per year, even in harsh climates. Electrification is a key driver, with heat pump capacity needing to triple to over 3,000 GW by 2035. For cooking, induction stoves provide 80-85% efficiency compared to 50% for gas stoves. Universal clean cooking access could be reached by 2040 if historical best-in-class progress is replicated, requiring an investment of USD 4 billion annually. Nature-based solutions, such as green roofs and urban parks, can reduce ambient temperatures by as much as 5°C, mitigating the urban heat island effect.

Financing the gap

Global investment in buildings efficiency and electrification reached USD 370 billion in 2025, but annual investment must rise to nearly USD 1.2 trillion by 2035. Households are the primary investors in the sector, but high upfront costs remain a barrier for lower-income groups. Commercial capital provides the majority of funding via mortgage lending and consumer loans. The global energy service company (ESCO) market reached a record USD 42 billion in 2024, with buildings accounting for 58% of projects. Public funding remains essential for de-risking investments and supporting vulnerable households, particularly for deep retrofits and clean cooking transitions in emerging markets.

Key policy options

Governments are advised to implement integrated policy packages combining regulation, information, and incentives. Key recommendations include strengthening and regularly updating building energy codes, expanding the use of energy performance certificates, and linking financial support to measurable performance outcomes. To accelerate electrification, policies should improve the competitiveness of electricity relative to fossil fuels and expand installer training to address workforce constraints. Strengthening MEPS for major appliances and supporting bulk procurement schemes can reduce costs through economies of scale. For clean cooking, national strategies must be translated into funded implementation plans with resilient supply chains and targeted fiscal measures like VAT reductions.