Energy waste is happening all around us, and it’s contributing to climate change. Yet fighting this invisible foe is near impossible – unless we make the invisible visible. Digital innovation, combined with a shift to more electrification, holds the key to tackling climate change, unlocking the ability to see and measure our impact, so we can recognise and reduce it.
Ironically, digital adoption is also one of the biggest barriers to action. Confusion around what to invest in has caused many to delay decisions and wait for a ‘miracle cure’. This paralysis is part of the problem.
The solutions already exist. Reducing perceived risk and uncertainty will create frameworks in which businesses and consumers can adopt digital solutions early. This starts with raising our standards and working to ensure the solutions we deploy are open, interoperable, and future proof. Only at this point will we really be able to turn a corner in the battle against climate change.
If we truly want to tackle climate change, it makes sense to turn our attention to the biggest contributors. Buildings account for almost a third of the world’s CO2 emissions by source, a number that rises to almost 40% when factoring in construction. In the developing world, residential homes are shortly set to become the largest single source of greenhouse gas emissions.
The solution is to build new buildings better from the outset, and to retrofit existing ones so they consume less energy. We know that today, 82% of the potential means to reduce energy waste in buildings alone remains untapped. But how do we know what ‘good’ looks like? Positive change won’t be possible without raising some of the existing standards, accelerating their adoption, raising the bar.
Faster adoption of standards for new buildings
The low-hanging fruit is to ensure any new buildings are brought into this world are green by design. Modern architectural marvels, they can become the beacons of hope for the planet and offer proof that net-zero, people-centric buildings can be good for both business and society as a whole.
While we are seeing more developers building energy-efficient buildings, progress remains slow.
Thankfully, tighter regulations are being adopted in many parts of the world. In Europe, the Energy Performance of Buildings Directive (EPBD) requires all new buildings from 2021 to be nearly zero-energy (NZEB). Hong Kong aims to reduce its absolute carbon emissions in 2030 by between 26% and 36%, relative to 2005 levels. Singapore aims to have at least 80% of commercial and public buildings Green Mark certified by 2030. In the US, 23 states have committed to greenhouse gas (GHG) reduction targets via legislation or executive order.
Better energy efficiency and heating in existing buildings
What about buildings that haven’t been created ‘smart’ from the outset? 85-95% buildings that exist in the EU today will still be standing in 2050. Globally, that proportion is an estimated at two-thirds.
Today, software and connected smart technologies – the brain and the nervous system of the building – can control the building’s ‘shell’ and ultimately determine how sustainable it will be. And they can be deployed not just in new-builds, but also in buildings that are centuries old.
Retrofits are also a win in terms of Return on Investment (ROI). We estimate that the average payback on digital retrofits is 1-3 years, and 10 years on physical modifications like insulation. We typically see a 30% reduction in energy usage, and similar reduction in operational costs, as a direct result of smart building technologies. The main purpose of retrofits is to improve energy efficiency, stamp out energy waste and enable buildings to generate their own energy through solar and microgrids and use it to power critical operations.
Encouragingly, several countries have included building-renovation subsidies into their pandemic-related stimulus packages.
Energy efficiency is the cheapest and easiest way to reduce energy demand and CO2 emissions. By 2035, the IEA estimates that US$550 billion will be invested per year in energy efficiency solutions. To date, European governments have pledged US$57 billion to energy efficiency measures (or 86% of global stimulus announcements for efficiency), with the remaining 14% split between Asia Pacific and North America, according to the IEA. We must make the most of this investment and ensure the benefits of energy efficiency become abundantly clear to consumers and companies alike.
Greener energy mix in homes and buildings
Alongside retrofits, the decarbonisation of heat through electrification will play a major role in reducing our impact on the planet, driven by standards for new buildings. Choosing proven, safe and cost-effective technologies such as electric heat pumps, that are already widely available, can be powered by 100% renewable energy sources and deployed today are the best (and only realistic) choice for decarbonising domestic heating systems currently heavily reliant on fossil fuels.
Our modelling, leveraging BloombergNEF’s Heating Unit Economics Calculator, suggests that in commercial buildings, there is a strong business case for installing electric systems, over gas or oil-based systems, based on current circumstances. Despite this, only around 5% of heating in buildings is currently electrified. This number will have to increase to 80-90% by 2050 to successfully mitigate the worst effects of climate change. What’s more, demand for green buildings from corporate and private tenants is on the rise, so it’s an investment worth making.
Better technology standards
Whilst building standards and incentives require governments to legislate for change, when it comes to creating an environment to encourage the wider adoption of sustainable smart home and building technology, business is at the fore. Sustainability will be the clear winner only when all IoT-connected smart technologies in a building – from Heating, Ventilation, and Air Conditioning (HVAC) to smart plugs to security systems – can be controlled by cutting-edge digital solutions and software, powered by green electricity. This is when buildings will be able to attain superior levels of energy efficiency, the ability to power their own needs through renewable energy generation on-site and decarbonise their heating and cooling systems – while allowing tenants to charge their EVs – all in a sustainable and environmentally responsible way.
This is why we welcome the new open-source, unified connectivity protocol, Matter, previously named CHIP (Connected Home over IP), for smart home and building solutions. Matter tackles the problem of smart device interoperability head-on, delivering improved cybersecurity, native cloud connectivity and device interoperability. More importantly, sustainability gains will be the longer-term benefit of this vendor-agnostic standard, enabling native integration of smart building, smart energy management and EV charging – which currently tend to be distinctive, self-contained systems. The standard will ensure that homeowners aren’t locked in to one particular vendor of smart devices, and systems don’t have to be ripped out and replaced wholesale as new solutions come onto the market.
With the help of AI-enabled and software-driven smart energy management solutions, consumers, building owners and tenants will be in the driving seat of how energy in the home is produced, stored, distributed and consumed. Add the ability to produce renewable energy through solar and microgrids and store it for future use will then makes it possible for the smart building system to prioritise green energy power, ensuring power-hungry appliances and devices, including EVs, consume most of their energy from decarbonised energy sources, ultimately benefitting the planet.
Clarity of mission and vision
We are the first generation to really know about climate change, and perhaps the last to be able to make a difference. Armed with knowledge and technology, we have to act fast to avoid future catastrophe. The first step is to become more efficient in how we consume energy and remove fossil fuels from places where they don’t have to be – our homes and offices, and then, gradually, our cities. Raising standards for urban environments and technology will mean better standards of life for people. And guarantee better outcomes for the planet. Digital solutions and clean electricity will be the key to ensuring global warming is capped and biodiversity wins.
 Schneider Electric Research. The efficiency of heat pumps specifically is typically called ‘coefficient of performance’ (COP).