Decarbonising residential buildings: A multi-stakeholder journey

Following the adoption of the Paris Agreement, the reduction of greenhouse gas (GHG) emissions has become a top priority for nations, businesses, and regions, including the European Union. One sector that is currently falling short of its net-zero objectives is real estate. Decarbonising this sector is crucial, as it accounts for 34% of European energy-related GHG emissions. The journey to decarbonise real estate, especially the residential building sector, is complex and requires the collaboration of multiple stakeholders.

To address this challenge, ING partnered with Guidehouse to commission research into the dynamics of the residential building sector. The white paper, Decarbonising residential buildings: A multi-stakeholder journey, explores a potential pathway for this sector, outlining the necessary measures to get back on track to net-zero. The paper highlights how a multi-stakeholder approach can drive change, focusing on the roles of governments, commercial banks, and homeowners, among others.

This white paper examines the current state of residential building decarbonisation in five European markets—Belgium, Germany, the Netherlands, Poland, and Spain—and assesses their future decarbonisation pathways for the building stock with the help of the Built Environment Analysis Model. Three approaches are used to quantify the emissions gaps: Business-as-usual, a model based on current national policy commitments, and a potential net-zero pathway. Key insights from the white paper include:

• The real estate sector is currently off track and falling short of its net-zero scenarios. 
• Closing the emission gap can be achieved via a combination of four technical measures: 1) greening the energy supply by decarbonising the electricity grid and district heating networks, increasing biofuel use, and phasing out natural gas; 2) deeper building envelope renovations; 3) upgrading heating systems and adopting heat pumps; 4) and enforcing higher insulation standards and constructing high-performance new buildings.
• A holistic ecosystem approach is essential to align the goals, resources, and expertise of key stakeholders in order to accelerate these measures. 
• Centralised platforms for residential building decarbonisation at the national level could be established (or strengthened where bodies already exist), which could help foster collaboration, innovation, and actionable progress by uniting key stakeholders.
• Within such an ecosystem approach, it is essential that governments fully take on their responsibility assigned by the revised Energy Performance of Buildings Directive to design a policy framework that delivers and involves all relevant stakeholders.
• At the same time, commercial banks should play an active role in financing the required transition and engaging with other stakeholders to facilitate easier renovations for homeowners.  

Read the full white paper