Renovation of near 20% of existing building stock to zero-carbon-ready by 2030 is ambitious but necessary

Part of Technology and innovation pathways for zero-carbon-ready buildings by 2030

About this report

This analysis is part of a series from our new report, Technology and innovation pathways for zero-carbon-ready buildings by 2030, and provides the strategic vision of experts from the IEA Technology Collaboration Programmes (TCPs) on how to help achieve some of the most impactful short-term milestones for the buildings sector outlined in the IEA’s Net Zero by 2050 Roadmap; each report’s title reflects one of these milestones. Learn more about the report and explore the TCPs.


Renovating the existing building stock to a zero-carbon-ready level is a key priority for achieving the sector's decarbonisation targets for 2030 and 2050. However, the retrofitting of buildings is a significant challenge since at least 40% of buildings floor area in developed economies was built before 1980, when the first thermal regulations came into force. Retrofitting 20% of the existing building stock to a zero-carbon-ready level by 2030 is an ambitious but necessary milestone toward the Net Zero Emissions by 2050 Scenario (NZE Scenario). To achieve this goal, an annual deep renovation rate of over 2% is needed from now to 2030 and beyond.

Taking advantage of new technology opportunities and construction practices, cost-effective renovation solutions that combine energy efficiency and renewable sources are being explored at the building, and cluster and district levels. In addition to meeting climate resilience, building energy renovation is increasingly relevant to ease energy security concerns and as a means to create jobs. However, for this to happen swiftly and effectively, a strong political will is required, and policy, legal, regulatory, and administrative support frameworks need to be developed.


In buildings, energy is used for a wide array of applications, including heating, ventilation and air conditioning systems (HVAC), domestic hot water (DHW), lighting, household appliances, and electronics. Older, existing buildings are on average inefficient compared to newer buildings. While appliances can be replaced with ones that have greater energy efficiency due to their shorter lifespans, the building envelope (walls, roof, and windows), as well as technical and mechanical equipment systems, are rarely upgraded since they are high-cost and done on an as-needed basis. These components also have a longer shelf life at 40-plus years for building envelopes and 15-plus years for technical systems. Nonetheless, these are the building elements whose performance improvement can bring the most significant benefits in reducing CO2 emissions, especially in regions with very cold or hot climates.

Improving the performance of older buildings that have not integrated energy efficiency requirements since their construction is a critical priority. As a first step, it is necessary to implement passive measures to the building envelope to enhance its thermal performance to at least the minimum levels defined by the building energy codes to reduce the energy service demand for heating and cooling. High-efficiency HVAC and DHW equipment would complement the building renovation, further reducing the energy use that renewable or other clean energy sources would ultimately supply.

Building renovation brings several additional benefits, such as providing a better-quality indoor environment by reducing building envelope anomalies (e.g. mould and others related to condensation and humidity), increasing thermal comfort, improving overall health conditions and productivity. Energy bills would also be lower for household and commercial building operations. 

Current state

Retrofitting rates for existing buildings are currently around 1%, with most of these shallow renovations. However, awareness of the importance of deep building renovation is rising quickly. Efforts to support these changes are starting to emerge, from policy programmes and building regulations to fiscal incentives and training. At the end of 2021, the European Union (EU) proposed a major recast to its key Energy Performance of Buildings Directive (EPBD). The recast EPBD aims to accelerate building renovation rates, promote the uptake of renewable energy in buildings, introduce a new EU definition of a ‘zero emissions building’, which would be applicable to all new buildings from 2027 and to all renovated buildings from 2030. The recast EPBD would also accelerate energy-efficient renovations in the worst performing 15% of EU buildings, and set minimum energy performance standards. An updated version of the EPBD will be released in the second half of 2022. Initiatives such as the Renovation Wave for Europe and the Fit for 55 Programme aim to double the building renovation rates by 2030, prioritising the worst performing buildings. Retrofitting residential buildings by decarbonising heating and cooling systems will also tackle energy poverty.

Successful examples of new building renovation strategies can already be found at both the building and district levels, where decisions were taken based on technical and economic criteria limiting the impact on consumers to the extent possible. 

Successful low-carbon building renovation combining energy efficiency measures with renewable energy integration

Successful Low Carbon Building Renovation Combining Energy Efficiency Measures With Renewable Energy Integration

Source: AEE INTEC, in IEA EBC Annex 56 – Evaluation of the Impact and Relevance of Different Energy-Related Renovation Measures on Selected Case Studies (Kapfenberg, Austria, 2012-2014).


Finding the optimal cost-effective combinations of building envelope renovation solutions with high-efficiency technical systems using renewable and low-emissions energy sources is the main challenge and the focus of numerous research projects. One of the most significant factors influencing the decision-making process is the initial investment required, which can be very high and often with long payback periods.

The availability of easy-to-use and reliable tools for building designers to increase energy efficiency is still limited. The same applies to technical guidance and support for the entire chain of professionals in the building sector, including owners, managers and local administration staff, who are not yet familiar with deep energy renovation projects.

Another challenge is the scarce availability of transparent and easy-to-access building performance data, which are indispensable for cultivating the market for renovations and providing a higher level of energy efficiency planning.

The fact that buildings are unique to one another is a common issue for renovation challenges, including the acceleration of retrofitting rates for existing buildings.

Shifting the scale of renovation from individual buildings to a building cluster or district level can enable energy retrofitting at a quicker pace and reduce overall cost. Upscaling energy building renovation to the district level involves advanced technical aspects and is also associated with critical social and economic factors, creating greater complexity linked to local planning. However, a massive multi-building renovation offers an opportunity to address transversal issues such as housing affordability, energy grid integration, and urban planning (mobility, accessibility, culture and leisure, green and blue spaces, infrastructure, etc.). It also amplifies another challenge already present in multi-family buildings, which is to converge different views and interests of the most diverse actors involved in the planning process. 

Innovation themes covered by the IEA TCPs
  • Develop tools to identify and define cost-effective combinations of energy efficiency, renewable and low-emissions supply, as well as flexibility strategies and the integration of storage systems (modelling, flexible sector coupling, smart design and control, large thermal energy storage, EV chargers) at the building and the cluster or district level. Enlarge the knowledge base on how such solutions behave in different archetypes and climates to ease the standardisation of renovation options.
  • Advance research into integrating renewable energy systems at the building level and in the urban environment, even targeting positive energy districts and energy communities, when possible.
  • Investigate the integration of energy-efficient strategies with architecture plans, aiming for a high-quality design that adds value to the building and preserves the local cultural heritage when renovating historic buildings.
  • Analyse and enhance the technical understanding of retrofitting coupled with the transition to low-temperature district energy systems and the improvement of distribution grids.
  • Investigate further the use of heat pumps as a building technology to achieve ZCRB.
  • Study additional energy-efficient and cost-effective cooling strategies, taking into consideration hot climates and climate change scenarios, and how to integrate space cooling efficiency metrics into building energy codes for renovated buildings.
  • Test new financial and policy instruments and business models that create the basis for a massive renovation of buildings in their different typologies and climates, minimising the impact on the consumer and reflecting the increase in the market value.

Policy recommendations


Policy recommendations

Market creation and standards


Develop and deploy zero‑carbon‑ready building (ZCRB) codes for building renovation by 2030

Building codes. Set clear standards and targets, ensuring that zero-carbon-ready level standards are implemented when buildings are renovated.

Update legal frameworks to foster energy renovations

Regulations. Adapt national and local laws and regulations to stimulate building energy renovation by combining the ZCRB metrics at the individual, building complex or district levels.

Develop ZCRB building certificates

Certificates. Create ZCRB certificates for the building, cluster and district levels.

Mandate distributed renewable energy integration when conditions allow

Regulations. Ensure the implementation of renewable energy sources (RES) are mandatory whenever a heating system or district grid is replaced, and that there are adequate conditions for renewables integration.

Set up a single point of contact to support experts

Resource support. Offer a single point of contact catering to all the project needs to achieve a large-scale renovation and also on a collective or district level.

Planning instruments


Integrate energy renovation plans and local planning

Local planning and zoning. Take advantage of renovations related to maintaining the functionality of building elements as an opportunity to improve the energy performance of the building envelope.

Promote a holistic approach linking building renovation to local plans and municipalities’ design. Include socio-economic criteria as an opportunity to overcome resistance to change and enable exploitation of the co-benefits of social issues.

Enforce data collection campaigns and define data protocols

Energy code enforcement. Strengthen building inspections, improve audits, and implement mandatory energy certificates. Promote smart meters and the growing availability of dynamic and big-data analysis.

Economic and financial instruments


Deploy financial instruments to reduce ZCRB upfront cost

Financial schemes for ZCRB renovation. Develop and deploy financial measures and business models to promote zero-carbon-ready renovations, including funding for energy retrofitting at the district level.

Provide financial schemes for different target groups, especially low-income households, which should be supported and unburdened of the upfront cost.

Ensure the final performance of the renovation by making financial resources available for the entire renovation process

Financial guarantees.  Funds must be available not only for individual measures but for the entire renovation process, guaranteeing the final performance of the renovation project.

Provide financial instruments to encourage the installation of low-emissions and renewables technologies and storage

Financial incentives. Deploy incentives to make low-emissions and renewable technologies as well as energy storage systems more accessible. Provide funding to facilitate the implementation of local renewable energy grids.

Cooperation-based instruments


Provide open-source platforms and tools


National open-source simulation tools. Work with stakeholders to provide quality in the design and execution ensured by easy-to-use tools, which can also be utilised for delivering renovation compliance certificates, and ultimately add value to the buildings.

National open-source information databases. Work with stakeholders to create an online database and guidelines for different target groups, particularly to help residents in a step-by-step home energy renovation.

Local open-source information databases. Develop online energy grid maps to enable awareness of opportunities to connect to current or future renewable energy grids or district heating/cooling networks.

Organise participative workshops

Stakeholders' engagement. Support engagement between municipalities and local residents, especially tenants, in the whole district-scale renovation decision-making process (communication, project management, process guidance, co-creation initiatives, strengthening mandatory building inspections and energy audits). 

Support engagement of management at multi-family buildings with local residents and tenants in the whole building and district-scale renovation decision-making process. 

Public support to R&D


R&D for building simulation tools

Allocate funding. Provide financing for the development of easy-to-use but representative simulation tools to support practitioners in identifying cost-effective renovation measures.

R&D for building renovation demonstrations

Allocate funding. Support development and test innovations related to renovation measures for demonstrations (e.g. thinner insulation materials) with public funds.

R&D for developing data-sharing platforms

Allocate funding. Provide financial resources to develop, test and regularly update platforms for data-sharing at the national and local levels.

Education and training


Capacity building for all stakeholders

Capacity building. Support deep energy renovation for the whole chain of the building sector professionals, owners and local administration staff.

Local energy desks

Capacity building. Create local energy desk resources for promoting awareness raising and offering consultancy to citizens.

Awareness campaigns

Awareness raising. Support transparent, fact-oriented, and empathetic communication at all process levels.

Explore digital media and use demonstration cases to create homeowner awareness in target areas.