This chapter establishes the rationale for the report by explaining why addressing whole life carbon is essential for decarbonising buildings. It outlines key global initiatives aimed at reducing whole life carbon emissions, reflecting global momentum toward comprehensive carbon reduction strategies in the building sector. The chapter introduces the OECD Global Survey on Whole Life Carbon, which serves as the main data collection method for this report.
Zero-Carbon Buildings in Cities
A Whole Life-Cycle Approach
OECD Urban Studies
Abstract
Why is it essential to decarbonise buildings to achieve net-zero targets?
Buildings are responsible for 37% of energy-related CO2 emissions, making them a critical lever to reduce GHG emissions worldwide (UNEP, 2022[1]). Although the energy consumed per square meter in buildings has steadily decreased, the pace of reduction needs to accelerate significantly – nearly fivefold – over the next decade (IEA, n.d.[2]). Between 2010 and 2020, the new built-up areas across the globe consumed an area as big as Austria (OECD, 2024[3]). By 2030, global floor area is expected to increase by around 15%, meaning that every week, a new area the size of Paris is built around the globe (United Nations, 2023[4]).
Moreover, the demand for new buildings is poised to surge in the future. In Africa, where the population is forecast to rise to at least 2.4 billion by 2050 (African Development Bank, n.d.[5]), the residential building stock is projected to double to almost 50 billion m2 over the same period (IEA, 2023[6]), with 80% of new construction taking place in cities, especially slums (Muggah and Kilcullen, 2016[7]). Similarly, Asia will see a substantial rise in construction as another 65% of the current floor area is projected to be built between 2020 and 2050 (IEA, 2022[8]). Most of the growth will take place in the residential sector due to population growth and the increasing number of households, linked to increasing income (GlobalABC/IEA/UNEP, 2020[9]).
Decarbonising the urban built environment is a complex task, involving many different stakeholders and interests across multiple levels. On the one hand, buildings are inherently local infrastructure subject to different climate zones, historical contexts, and social conditions. Decarbonisation solutions should therefore be tailored to local needs. For instance, there are varying decarbonisation needs of existing buildings with respect to energy use between rural and urban areas in OECD countries (OECD, 2024[3]). On the other hand, decarbonising buildings requires global co-ordination of efforts and innovation in terms of materials, design, and energy use. By sharing research, technology, and strategies that have proven effective, countries can avoid duplication of effort, speed up the adoption of sustainable practices, and make more efficient use of resources.
In response to the multifaceted challenge of decarbonising the urban built environment, governments around the world are taking action at supranational, national and local levels. On a supranational level, for example, the European Union’s (EU) Energy Performance of Buildings Directive (EPBD), updated in 2024, sets decarbonisation milestones for member states. Nationally, many countries are setting their own standards for energy efficiency in buildings, such as Norway’s TEK17, Denmark’s BR18, and France’s RE2020. At the local level, cities such as Vancouver (Canada) and New York (US) have implemented local carbon limits for large buildings, striving for impactful measures.
Why address whole life carbon in buildings?
To mitigate climate change, emissions have to be reduced across the entire life-cycle of a building, from its construction to its demolition. As shown in Figure 1.1, whole life carbon (WLC) encompasses both operational and embodied carbon:
Operational carbon refers to the emissions produced during a building’s in-use phase, primarily from energy consumption for heating, cooling, lighting, and powering appliances. Technological advancements and increased use of renewable energy have started to reduce these emissions. In 2021, operational carbon represented 75% of emissions in the building sector. Improving energy efficiency, including by enhancing the bioclimatic performance of buildings as well as scaling up renewable energy capacity, should remain a priority, as reiterated during COP28 (COP28, 2023[10]).
Embodied carbon includes emissions from the extraction, manufacturing, transportation, and installation of building materials, as well as those arising from maintenance and end of life. As buildings become more energy-efficient, embodied carbon must also be reduced to move closer to a net-zero built environment. At the global level, addressing embodied carbon is now recognised as critical for achieving comprehensive carbon reduction in the built environment (World Green Building Council, 2019[11]). Embodied carbon currently contributes about 13% of global annual GHG emissions, stemming from materials manufacturing and construction activities (Carbon Leadership Forum, n.d.[12]).
Source: Author's elaboration based on European standard EN 15978.
Furthermore, it is essential to implement circularity principles in the built environment to reduce embodied carbon. Embracing a circular approach entails maximising resource utilisation and minimising waste across a building’s entire lifespan. A circular economy approach entails both the construction stage, by utilising recycled materials, and the demolition stage, by salvaging materials that can be used in the future.
If no action is taken, half of the carbon footprint of new buildings will stem from embodied carbon emissions by 2050 (Figure 1.2). Given the complexity of supply chains, reducing embodied carbon will be a lengthy process, emphasising the importance of initiating reductions immediately (World Green Building Council, 2019[11]).
Source: UNEP (2023), “Building Materials and the Climate: Constructing a New Future” https://wedocs.unep.org/handle/20.500.11822/43293
As the share of embodied carbon is projected to increase in the coming decades, global efforts to achieve net-zero buildings are gaining momentum.
G7 Sustainable Urban Development Ministers’ Communiqué in 2024
In November 2024, G7 Ministers came together in Rome (Italy) to hold a third Ministerial meeting on Sustainable Urban Development. The first Ministerial meeting was held under the German presidency, while the second meeting took place in Japan. Building on the 2023 G7 Sustainable Urban Development Ministers’ Communiqué, which underlines the importance of pursuing net-zero building life-cycles from design and construction through operation, management, and demolition (Ministry of Land, Infrastructure, Transport and Tourism of Japan, 2023[13]), the 2024 Communiqué highlights the use of low-carbon materials in construction and consideration of their entire life-cycle (G7, 2024[14]). This continued commitment reflects a growing international consensus on the need for enhanced co‑operation to achieve net-zero buildings.
EU climate ambitions
EU Taxonomy
The EU Taxonomy, which entered into force on 12 July 2020, is a tool to help investors, companies, issuers of financial products, and project promoters navigate the transition to a low-carbon, resilient and resource-efficient economy. The Taxonomy sets performance thresholds, referred to as “technical screening criteria”, for economic activities (EU Technical Expert Group on Sustainable Finance, 2020[15]). Established as part of the EU’s sustainable finance framework, it aims to direct financial flows toward projects and activities that support environmental objectives, such as reducing GHG emissions and promoting biodiversity. This helps align investments with the EU’s climate and environmental goals, particularly the target of achieving net-zero emissions by 2050 as outlined in the European Green Deal (European Commission, n.d.[16]).
Some of the technical screening criteria set for the building sector, closely related to WLC of buildings, are summarised in Table 1.1. In 2023, the updated Delegated Act, an integral part of the EU Taxonomy, specifies the screening criteria under which economic activities can be qualified as contributing substantially to the environmental objectives. The Act highlights the importance of a WLC approach, by encompassing life-cycle Global Warming Potential (GWP) calculations for all renovation projects. It also puts greater emphasis on the circularity of materials and building components by setting an upper limit for the proportion of primary materials used in a building. These criteria contribute to a holistic, life-cycle approach to carbon reduction, covering both construction materials and long-term energy performance (European Commission, 2021[17]; European Commission, 2023[18]).
Source: European Union (2021), “COMMISSION DELEGATED REGULATION (EU) 2021/2139” https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32021R2139 ; European Union (2023), “COMMISSION DELEGATED REGULATION (EU) 2023/248” https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L_202302486
Revision of the EU Energy Performance of Buildings Directive (EPBD)
The EU’s 2024 revision of the Energy Performance of Buildings Directive (EPBD) represents a major step forward in global efforts to reduce climate change impacts within the building sector. As part of the EU’s Green Deal, the directive aims to cut both operational and embodied carbon emissions, setting a new benchmark for sustainable construction (European Commission, 2021[19]).
The 2010 EPBD introduced Nearly Zero-Energy Buildings (NZEBs), primarily focusing on operational energy efficiency. The 2024 update significantly expands the directive’s scope to include WLC reduction, aligning with the EU’s climate neutrality goals. It requires member states to publish a roadmap detailing the introduction of limit values on total cumulative life‑cycle GWP for all new buildings by 2027 and mandates carbon assessments to be disclosed through Energy Performance Certificates (EPCs) for large buildings from 2028 onwards (Figure 1.3).
Additionally, the directive places a strong emphasis on social fairness, ensuring that vulnerable populations receive financial and technical assistance. This approach aligns with the EU’s broader commitment to social equity under the Green Deal. By addressing both operational and embodied carbon throughout a building’s entire life-cycle, the 2024 EPBD sets a new international standard for sustainable construction. It supports climate action while fostering social inclusivity, offering a forward-thinking model for other regions to emulate (European Commission, 2024[20]).
Source: EU (2024), “DIRECTIVE (EU) 2024/1275 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 24 April 2024 on the energy performance of buildings (recast)” https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32024L1275
Chaillot Declaration in 2024
In 2024, the Buildings and Climate Global Forum, led by the French government, brought together ministers and high-level representatives from over 40 organisations in an unprecedented effort to enhance the decarbonisation and resilience of the building sector. The forum included the first ever global ministerial meeting on buildings and construction, as well as thematic roundtables. During the ministerial meeting, 64 governments endorsed a framework called the Chaillot Declaration for global efforts to achieve decarbonisation and climate change resilience in the building sector through a whole life-cycle approach (Box 1.1).
The Chaillot Declaration, signed by 64 countries around the world in March 2024, includes 10 policy commitments for decarbonising buildings and enhancing climate resilience. Signatory governments committed to establishing inclusive decarbonisation and resilient pathways for buildings at all levels, with adjustments to actions based on each country’s specific context.
In particular, objective 5.2 “Construction/Retrofitting” addresses WLC of buildings. Signatory countries committed to “plan, design, build, operate and manage all-round sustainable, culturally, functionally, socially, and economically climate adapted, resource efficient, zero-emission, healthy, safe, flexible and resilient buildings through a whole life-cycle approach”. For both new construction and retrofitting, sustainability of building projects is to be achieved notably by prioritising on-site assets, recycled and end-of-life use, local, sustainable, bio/geo-sourced, low carbon, energy efficient materials. This is expected to ensure easy maintenance and repair for life extension, aligned with circular economy, eco-design, sufficiency and waste prevention principles. Moreover, carbon balance should be enhanced through storage and absorption in building materials (5.2.4).
In addition, signatories of the Declaration committed to promoting the production, development and use of low-carbon and sustainably sourced construction materials at affordable costs (6.5).
Source: Ministry of Ecological Transition and Territorial Cohesion (2024), Déclaration de Chaillot, https://www.ecologie.gouv.fr/rendez-vous/forum-mondial-batiments-climat/declaration-chaillot
Disclosure of Scope 3 emissions in sustainable finance
As mentioned above, operational carbon refers to emissions produced during a building’s use, while embodied carbon encompasses emissions from the materials and processes used in its construction. In contrast, Scope 1, 2, and 3 emissions are classified as such on the basis of ownership and control, distinguishing between direct and indirect sources.
Scope 1 covers direct emissions from sources that are owned or controlled by a company, while Scope 2 refers to indirect emissions from the purchase and use of electricity, steam, heating and cooling. In contrast, Scope 3 includes all other indirect emissions that occur in the upstream and downstream activities of an organisation. If a company or an individual acquires a real estate asset, embodied carbon will be associated with Scope 3 emissions (GHG Protocol, 2024[21]).
The financial sector is increasingly acknowledging the need to take into account Scope 3 emissions. The focus on Scope 3 is driven by new regulatory requirements and growing investor demand for comprehensive carbon reporting, particularly in countries such as the United States or New Zealand where emerging rules mandate disclosure of Scope 3 emissions (GHG Protocol, 2024[21]). Despite this shift, many companies are still unprepared tᴏ tackle the complexities ᴏf Scope 3 reporting, facing significant barriers such as data quality issues, complex value chains, and inconsistent standards.
The Investor Group ᴏn Climate Change (IGCC), a network for Australian and New Zealander investors to understand and respond to climate risks and opportunities that also functions at a global scale through various projects such as Climate Action 100+, underscores the role ᴏf Scope 3 reporting in reshaping investment strategies and emphasises the need for the financial sector tᴏ support improved carbon disclosures. This focus is further reinforced by the growing importance of WLC assessments, which take into account all emissions over a building's life-cycle, providing a more comprehensive view ᴏf their environmental impact and aligning with sustainable finance objectives (IGCC, 2024[22]). The emphasis on Scope 3 emissions and WLC assessments reflects a broader trend towards holistic carbon accounting. As the financial sector continues tᴏ evolve, robust Scope 3 reporting will be crucial for companies tᴏ maintain regulatory compliance, investor trust, and market competitiveness, reinforcing the link between sustainability and financial performance.
According to the OECD Global Monitoring of Policies for Decarbonising Buildings: A Multi-level Approach (2024), respondent countries currently focus primarily on energy-related measures, whereas WLC receives comparatively less attention. Looking ahead, respondent countries anticipated a significant shift regarding WLC policies. Embodied carbon will increase from 14% (of responding countries) in current priorities to 43% in future priorities, and the circularity of materials from 11% to 68% (OECD, 2024[23]).
Similarly, the Global Monitoring showed that while many countries have established policy measures for operational carbon, such as mandatory energy efficiency codes (89%) and mandatory Energy Performance Certificates (EPCs) (61%), only a few (21%) respondent countries have implemented regulations tackling WLC.
In light of the increasing importance of embodied carbon, the OECD has conducted a Global Survey on Whole Life Carbon of Buildings (2024) (Box 1.2). The survey has collected cutting-edge data and information across 15 countries and cities, while accounting for their varying economic sizes, geographical characteristics, and governance structures.
While methodologies and definitions differ across countries and cities, the survey has set a common framework that enables comparison. The survey has also identified best practices, allowing countries and cities to draw insights from successful approaches and identify relevant policy areas when developing WLC policies.
To gain a granular understanding of WLC policy development around the world, the OECD conducted an online survey from August to November 2024. The survey targeted countries who reported having a national methodology for WLC assessment in the OECD Global Survey on Buildings and Climate (2024), as well as cities that developed WLC initiatives. While policy makers increasingly recognise the importance of decarbonising buildings throughout their entire life-cycle, only a limited number of countries and cities have introduced WLC calculation and reduction as a policy. Consequently, the survey collected data and information not only on implemented policies, but also on policies currently being developed. The survey consisted of five sections: i) goals and strategies of WLC policies; ii) policy instruments for WLC policies; iii) enabling factors for WLC policies; iv) multi-level approaches for WLC policies; and v) challenges and countermeasures in WLC policies.
To map out the status of WLC policies, the survey was disseminated both to countries and cities that have implemented WLC policies and to those where policy development is currently underway. This interim report is based on responses received from 11 countries and 7 cities as of 29 November 2024 (Table 1.2).
Source: OECD Global Survey on Whole Life Carbon of Buildings (2024)
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