From July 23rd to 35th, the “2025 International Zero Carbon Cities, Villages, and Zero Carbon Buildings Conference and Technology and Equipment Expo” (hereinafter referred to as the “International Zero Carbon Conference”), hosted by the China Building Energy Conservation Association, concluded successfully in Beijing. Over 20,000 people, including more than 50 urban and rural construction leaders, over 300 senior experts in the construction field, and over 1,300 representatives from construction companies, gathered to discuss the low-carbon, green transformation and development of urban and rural construction.
Roxana Slavcheva, Global Head of Built Environment at the WRI Ross Center for Sustainable Cities, was invited to deliver a keynote speech and was interviewed by 21st Century Business Herald. Latest News has learned that she pointed out that affordability remains a bottleneck faced by both developed and emerging economies. To accelerate the progress of green and low-carbon governance, measures such as policy frameworks, incentive mechanisms, market scale, and technological innovation can be simultaneously advanced.
Less Than 1% of Global Buildings Are Zero-Carbon
Global Status of Green Building Promotion
Globally, less than 1% of the building stock is zero-carbon. This percentage is even lower if the embodied carbon emissions from building materials and construction are included. Over the past five to ten years, approximately 5% of new buildings have been zero-carbon, but we need to increase this percentage to 100% by 2030. To close this gap, we must accelerate action on both operational and embodied carbon emissions, providing countries, local governments, the private sector, and industry with the right tools and incentives to mainstream building stock decarbonization. While regulatory challenges vary from region to region, key common challenges include the high upfront costs of retrofitting and building net-zero carbon and resilient buildings, as well as high investment risks and long payback periods.
It is important to clarify that, by definition, a “net-zero carbon building” is one that is highly energy-efficient, powered entirely by carbon-free renewable energy for all operational energy needs, and covers carbon emissions throughout its lifecycle, including decommissioning and disposal. When we talk about “building resilience”, we mean that buildings can foresee, prepare for and effectively respond to the shocks and impacts caused by different climatic conditions and the intensifying climate crisis during the site selection, planning, design, construction and operation stages, while ensuring continuous optimization throughout the entire process, self-monitoring and recovery, and resistance to various hazards to achieve their intended functions.
Variation Across Major Markets
A major challenge facing many emerging markets is data. First, a baseline for existing building emissions levels is needed before conducting full-lifecycle building assessments and accounting. The entire industry supply chain, from developers to decision-makers, is fragmented. Therefore, providing appropriate regulatory incentives for emerging markets presents significant challenges. However, as mentioned earlier, high upfront costs remain a common challenge across all regions, undoubtedly placing a heavy burden on communities unable to afford low-carbon building investments. Affordability is also a common concern in more mature developed markets. Furthermore, gaps exist in capacity building, knowledge, and skills, necessitating training in green building practices for local governments and construction workers.
With accelerating urbanization, rising living standards, and population growth in emerging economies, demand for buildings continues to rise. Promoting net-zero carbon and resilient buildings is urgent, yet presents greater challenges. By contrast, developed markets have relatively mature regulatory frameworks, but still face challenges in standardizing standards and raising public awareness.
Building Energy Efficiency Improvement Must Accelerate
Tensions Among Decarbonization, Resilience, and Equity
Speaking of resilience, investing in flood protection, insulation, and thermal adaptation measures for buildings is both reasonable and crucial. However, these additional protective or support measures can place an increased burden on tenants or owners, placing significant pressure on local governments to find ways to increase the affordability of existing technologies (such as installation and flood protection measures) and to engage the private sector in sharing investment risks. France’s building energy-saving renovation subsidy program is noteworthy. This program targets low- and middle-income groups and provides subsidies of up to 90% of the total cost for upgrades such as insulation, heating, and ventilation. Over one million households will benefit in 2022 alone, demonstrating the role of targeted policies in balancing cost and affordability.
Key Pathways and Strategies for Emission Reduction
There are multiple avenues for emission reduction. Within the operational sector, we will continue to promote renewable energy utilization and energy efficiency improvements. To achieve the International Energy Agency (IEA) 2050 net-zero target, the global building sector needs to increase energy efficiency by two to three times. However, this is not enough to achieve the goal; we must also focus on other measures, particularly embodied carbon emissions, not just energy consumption during the use and maintenance phases of buildings.
This means increasing attention to reducing emissions in material procurement and construction, driving low-carbon transformation at the source. For example, accelerating the adoption of low-carbon concrete and alternative building materials. The cutting-edge research and prototype development discussed in this conference must be rapidly scaled up. At the same time, we are exploring how to design effective market incentives to ensure the necessary deployment of these low-carbon technologies and accelerate the transformation of the entire industry.
75% of global carbon emissions are concentrated in cities, which contribute to 80% of economic activity. The United Nations predicts that the global urban population will increase by another 2.5 billion by 2050. Furthermore, the building sector accounts for over one-third of global energy demand and nearly 40% of carbon emissions, making it crucial for achieving carbon peak and carbon neutrality goals.
This requires not only long-term innovation, technological development, and the production of low-carbon products, but also the deployment of existing technologies that could achieve over 80% of the projected emissions reductions by 2030. Therefore, we should focus on existing technologies and not overlook passive cooling solutions, approaches not purely driven by technology (such as smart home management systems), and other alternatives. We can also return to traditional architectural styles or adopt natural ventilation, which can significantly save energy.
Low ROI Challenges Zero-Carbon Buildings
Core Challenges and Innovative Financing Models
The primary pain point is investor perception of risk. Whether it’s the renovation or new construction of zero-carbon buildings, investors don’t see adequate returns. This is a market failure, and we are exploring ways to address this gap through hybrid financing and de-risking mechanisms. However, regulatory and policy challenges remain barriers to scale, requiring joint efforts from both the public and private sectors. The public sector needs to provide frameworks, guidance, clear investment directions, and innovative financial tools—some of which, while already in place, haven’t yet been directly applied to the building sector. For example, to reduce consumer costs and address incentive misalignment, a combination of tools is needed, combining green bonds with incentives, reducing investor risk, or providing guarantees. While some investments have long payback periods, guarantees can ensure returns.
Achieving global net-zero carbon and resilient building targets requires increasing investment from $1.1 trillion in 2022 to $1.7 trillion by 2030. This cannot be achieved through public investment alone; private sector participation is crucial. Notably, every $1 invested in building energy efficiency saves an average of $2, with significant economic spillover effects.
In the case of Mexico, subsidies are targeted only at the most vulnerable groups or those unable to afford renovations and zero-carbon technology investments, requiring additional government support to build bridges with the private sector. Some regions, particularly Europe, offer direct subsidies: for example, the European Bank for Reconstruction and Development’s Green Finance Facility (GEFF) provides green building loans and supporting technical support to local banks. It has also developed a standardized green building rating system and technology selection platform, which has been promoted in over 25 countries in Europe and Central Asia. The Netherlands’ green mortgage program provides low-interest incentives for high-efficiency buildings. Europe widely adopts energy performance contracts (EPCs) and energy efficiency financing models, leveraging over €3 billion in new investment annually.
Future Drivers and Strategic Outlook for Green Buildings
Technologically, building passports and smart home systems are attracting significant attention as effective ways to track energy consumption and incentivize behavioral change. However, we also need to supplement existing, less cutting-edge technologies and promote their large-scale application. For example, low-carbon concrete needs to become mainstream, with market incentives ensuring demand and, in turn, driving supply scale. Passive cooling technologies, which do not require mechanical cooling energy, can significantly mitigate the impact of extreme heat when combined with mechanical systems: this is crucial in a future characterized by more frequent and prolonged heat waves.
Financially, innovative tools such as green mortgages, energy-efficiency asset securitization, and energy performance contracts will play a key role. The “three pillars” driving large-scale investment—institutional environment, financing mechanisms, and profitable business models—will remain the core drivers.
WRI focuses on promoting energy-efficient building renovation in China, focusing on urban renewal. On one hand, it is conducting regional energy-saving renovation technology recommendations and cost-effectiveness studies, taking into account China’s diverse climate zones. On the other hand, it is promoting exchanges between the financial sector and urban construction departments to explore replicable financial support models, encouraging more cities to incorporate green and low-carbon elements into urban renewal, making it a new driver of green growth. Globally, WRI is committed to promoting the integration of the three pillars of policy, technology, and business models, and promoting collaboration among the policy, industry, financial, and society as a whole, so that decarbonization in the construction sector becomes the new global norm.
