Efficiency First: Reducing the Footprint of Building Operations
State-of-the art buildings use energy-efficient windows, air sealing, and weatherstripping to maintain comfortable indoor temperatures year-round. Solar panels provide renewable, locally generated power, while smart thermostats reduce energy use by aligning with occupants’ schedules and lowering peak demand. Tankless water heaters work on demand to avoid standby energy loss. Finally, Energy Star-certified appliances use less electricity and water without sacrificing performance.
Comfort has a carbon footprint. Heating, cooling, lighting, and appliances — the systems that make the buildings we inhabit comfortable and productive — account for nearly a third of global energy use and more than a fifth of greenhouse gas emissions. And demand is rising fast. Cities are expanding, and billions of people are buying their first air conditioners, refrigerators, and electronics. So, despite decades of progress on efficiency, operational emissions continue to climb. Solutions exist, but they’re scaling too slowly — constrained by upfront costs, industry inertia, and persistent policy gaps. The opportunity: innovating new approaches that minimize friction and make implementation easy and advantageous for everyone involved.
Using IPCC and GCAM data, Energy Innovation projected future “greenhouse gas emissions at stake” in 2050, assuming current policies remain in place. The resulting estimates overlap because different technologies may reduce the same emissions pool.
The Path We’re On
The everyday energy drain we don’t notice — but can’t ignore.
They’re so much a part of modern life that we barely notice them: the appliances, electronics and systems that make life easier, healthier, more comfortable, and more convenient. The heating and cooling systems maintaining a pleasant ambient temperature in every season; the refrigerators running day and night to preserve our food; the lights, screens, and devices powering our personal and professional lives.
The background hum of the buildings we live and work in adds up to a climate roar. And as cities grow and living standards rise, the demand for comfort, convenience, and connectivity is only increasing. Despite advances in energy efficiency, emissions from building operations — including both on-site combustion and emissions from electricity use — reached a record high of CO₂ in 2022 — with demand for air conditioning, heating, and appliances continuing to surge.
Energy demand for space cooling has more than tripled since 1990; without significant change, it’s expected to triple again by 2050. About 2 billion air conditioning units are in use, driving peak electricity and straining grids. As the planet warms, air conditioners are set to become one of the top drivers of global electricity demand.
Then there’s heating. Space and water heating together account for almost half of global energy consumption in buildings — and nearly two thirds of heating today still relies on fossil fuels. Energy consumption from appliances continues to grow too, despite improvements in efficiency, particularly in emerging economies where ownership rates are rising quickly.
The challenge — and opportunity — is clear: decarbonizing the operational energy that underpins daily life is one of the most urgent and impactful steps we can take toward a net-zero future. Meanwhile, the energy-efficient building market is projected to nearly double by 2034.
But the pace of improvement is far too slow: to align with net-zero pathways, building energy use per square meter must decline nearly five times faster than it has over the past decade. Even as demand for cooling and appliance access grows, meeting that demand with more efficient, electrified systems is essential. Without deeper retrofits and faster adoption of low-carbon heating and cooling, efficiency gains will be outpaced by rising floor space — and climate targets will slip further out of reach.
Changing Course
Decarbonizing the everyday
To turn the tide on rising operational emissions, innovation must focus where energy meets everyday life. Buildings are no longer static shells, but dynamic systems capable of generating, storing, and managing energy intelligently. The next wave of progress lies in making that potential practical: technologies and designs that electrify everything, optimize performance, and make efficiency effortless. The following imperatives and moonshots reimagine how buildings operate — transforming them from passive energy consumers into active players in a clean, flexible, and resilient grid.
Innovation Imperatives
Develop next-generation electrified heating, cooling, and water systems
Space and water heating together represent the largest share of direct building emissions, with most systems still powered by fossil fuels. Electrifying these loads — particularly through high-performance air- and ground-source heat pumps and advanced heat pump water heaters — is the most consequential step in decarbonizing building operations. Cooling improvements remain important as well. Scaling these high-efficiency electric systems is critical to replacing legacy equipment, reducing peak electricity demand, and ensuring that buildings remain comfortable and resilient as global temperatures rise.
Increase the rate of retrofitting electrified appliances by expanding range, appeal, and usability of smart devices
Widespread electrification of household and commercial appliances is essential to decarbonize building operations, but adoption remains slow. Smart electric appliances — efficient, easy to install, and designed to fit into existing spaces — can accelerate retrofits at scale. By combining high performance with user-friendly design and integration into smart energy systems, these appliances can rapidly displace fossil-fueled equipment and reduce emissions from heating, cooking, and daily energy use.
Transform buildings into flexible, distributed grid infrastructure
As electrification accelerates — from EV charging to electric heating — peak demand is rising faster than generation and transmission capacity can expand. Buildings represent the largest source of flexible load on the grid. By integrating on-site storage, thermal mass, smart controls, and bi-directional connections across HVAC systems, water heaters, appliances, and EVs, buildings can shift demand in real time, absorb excess renewable generation, and reduce the need for costly grid expansion. At scale, grid-interactive buildings function as a distributed power plant — stabilizing frequency, shaving peaks, and enabling deeper penetration of clean electricity. Scalable, low-cost storage and control solutions would turn buildings into active participants in grid capacity while cutting operational emissions and energy costs.
Create heating and cooling systems as integrated as the electric grid
Heating and cooling remain fragmented, building by building and city by city. City-wide district heating grids would connect neighborhoods and districts through shared thermal networks — storing, moving, and balancing heat and cold as flexibly as electricity flows today. Powered by renewables, waste-heat recovery, or seasonal storage, these systems could dramatically reduce emissions, optimize efficiency, and provide affordable climate control at scale.
Moonshots
Recycle indoor air with CO₂ scrubbers and ultra-efficient filtration
Today’s HVAC systems move massive volumes of air to maintain indoor temperatures, wasting energy in the process. Advanced air management envisions buildings equipped with ultra-efficient filtration, CO₂ scrubbers, and air quality systems that recycle indoor air instead of constantly replacing it. By sharply reducing ventilation loads while still maintaining healthy air, this approach could slash building energy demand and unlock a new level of efficiency.
Pioneer ultra-low emissions, high-efficiency, novel refrigerants
Cooling is one of the fastest-growing drivers of building energy demand. Conventional refrigerants are potent greenhouse gases, with most of the climate impacts of cooling systems coming from refrigerant leakage. Replacing high-GWP gases with ultra-low-GWP alternatives could dramatically reduce direct emissions from cooling. To be viable, breakthrough refrigerants must maintain or improve system performance, safety, and compatibility as they eliminate leakage impact.
Implement high-efficiency, low-voltage (DC) building electrical systems that integrate into the existing AC grid
Most modern appliances, lighting, and electronics already run on direct current (DC), but our buildings still rely on alternating current (AC), wasting energy through constant conversions. DC building systems could eliminate this inefficiency, enabling more seamless integration with rooftop solar, battery storage, and EVs. If connected smartly into the existing AC grid, DC systems could unlock major efficiency gains and set the stage for a next-generation architecture for building energy.
The most viable solutions will:
- Because of the incentive misalignment between who pays (builders/developers) and who benefits (building occupants), new solutions need to be cheaper — or at least not significantly more expensive — upfront. Innovators should consider this general rule of thumb, used by Energy Service Companies (ESCOs): if a solution has a three-year payback on additional upfront cost, it’ll be an easy sell. If the payback takes less than eight years, it’s a harder sell, but still doable. Beyond that, builders are unlikely to buy in unless required by code or policy.
- Because building upgrades are often capital-intensive and involve multiple stakeholders, solutions must work within real-world financing constraints. Most residential owners lack the liquidity for major retrofits, and in tenant-occupied commercial buildings, split incentives frequently stall investment. Technologies that reduce first costs, deliver measurable and predictable savings, and integrate smoothly with mechanisms like performance contracting, on-bill financing, green leases, or third-party ownership will scale far more quickly than those dependent on discretionary capital spending.
- The building industry is fragmented, time-constrained, and risk-averse, with little tolerance for complexity. Technologies that require specialized expertise, bespoke designs, or significant changes to established practices face steep barriers to adoption. By contrast, solutions that are modular, standardized, and easy to specify, install, and maintain can spread quickly across both new construction and the vast existing building stock.
