Retrofit revolution

Emissions from energy use in existing buildings account for 28% of the global annual total, contributing significantly to climate change, and threatening to disrupt our long-term stability and prosperity. Social challenges posed by high energy costs are resulting in fuel poverty, while poor ventilation in many buildings is causing life-altering health issues like asthma for millions. The old paradigms of mainstream building are no longer up to the task of maintaining and improving living standards in the medium to long term. Retrofitting most of our built environment is therefore one of the most important and pressing measures required to solve this systemic problem. In this report we outline the case for a “retrofit revolution.”

Global retrofitting rates need to almost triple

Over 90% of our existing buildings need to be overhauled, equating to an annual retrofit rate of around 3%; currently it languishes at 1%. All countries need to increase retrofitting rates, but action in developed countries, where most of the 2050 building stock is already built, is the most pressing.

This should be one of the easier transition arguments to make. Where some areas of sustainability struggle to gain public support because they demand self-restraint—flying less, eating less meat, throwing less away—retrofitting is an area where environmental needs are aligned with public wants—better thermal comfort, lower energy bills, smarter buildings.

So, what’s holding retrofits back?

Retrofitting costs are significant and, in the case of transformative deep retrofits, entail long payback periods of 20–30 years or more. Estimated annual investments of around USD 500bn will be required globally. Accelerating retrofitting rates will require coordinated efforts up and down the value chain to incentivize and cajole building owners into conducting deep retrofits, facilitate the supply chain expansion needed to accommodate those demands, and unlock the financing required to fund the works.

It’s not just about emissions

Retrofitting is not just about emissions, but also about reducing the strain on grid infrastructure as we electrify, achieving social aims like reducing fuel poverty, improving health outcomes, and adapting buildings to changing weather patterns.

Shallow retrofitting is worthwhile; deep is better

Where shallow retrofits can result in energy savings of 10–15% in commercial buildings and up to 30% in residential ones, only deep retrofits can achieve transformational energy savings of 40–60% in commercial and 60–90% in residential buildings.

Coordination between stakeholders is critical

Lack of coordination between stakeholders in the retrofit value chain results in fewer, lower quality, more-difficult-to-finance retrofits than need be the case. Grouping individual retrofit projects into single, large propositions, which can then attract institutional finance, forge local retrofit ecosystems, eliminate upfront costs for building owners, achieve co-benefits for the area, and reduce execution times, are a potentially important vector for accelerating retrofitting rates.

A degree of caution is required

A badly thought-out or poorly executed retrofit can be worse than no retrofit at all, resulting in potential overheating, poor air quality, or carbon lock-in. Similarly, a retrofit on a poorly maintained, damp building may fail, expending money and embodied carbon for little return. An emphasis on planning, sequencing, and proper maintenance from the start of the retrofitting process, facilitated by centralized repositories (building passports), can help minimize these risks.

Seven essential steps

There are no neat solutions, but the seven steps we have outlined in this report (such as, aligning incentives, improving data quality, unlocking financing, and refocusing regulation) are designed to target individual, and in some cases multiple phases in the retrofit process, and facilitate best practices by relevant stakeholders.