The COVID-19 pandemic and global megatrends, including climate change, digitalisation, the new geography of work and demographic trends, provide momentum to scale up efforts to reuse, repurpose and decarbonise buildings in many OECD and partner countries. Many recovery packages offer dedicated funding from different levels of government, and specific incentives to drive that transition as part of national governments’ commitments towards a net-zero economy. The European Commission’s Renovation Wave, for example, aims to double annual energy renovation rates by 2030, with the objective of renovating 35 million building units and creating 160 000 jobs by then.

The COVID-19 pandemic prompted cities to rethink how they provide services, how they design their space and how they can restart economic growth. In exploring paradigm shifts towards a “new normal”, cities have recognised the urgent need to accelerate the transition to a zero-carbon economy. Many cities’ recovery plans include steps towards realising a greener future, for example through measures to promote clean mobility, nature-based solutions or the circular economy, capitalising on increasing levels of environmental awareness among urban dwellers.

Accounting for nearly 40% of global carbon dioxide (CO2) emissions, and sometimes up to 70% in large cities, buildings are central to the low-carbon transition. Decarbonising buildings, especially older stock, through energy efficiency improvements and renewable energy use not only reduces carbon emissions, but also generates co-benefits in health, energy affordability and the labour market. Additionally, global megatrends and the search for a green recovery from COVID-19 provide impetus for stakeholders to take action.

This chapter sets the scene and offers a rationale for decarbonising buildings in cities and regions, and the challenges and opportunities this process presents. Buildings and construction are a central element in the transition to a low-carbon future. They account for nearly 40% of global CO2 emissions and have the potential to generate co-benefits in health, energy affordability and jobs. Decarbonisation of buildings calls for subnational policy actions beyond new construction, in particular renovating existing buildings and reducing life-cycle carbon emissions. This report draws on the findings of a dedicated survey of global cities and regions. It documents why cities and regions are important, demonstrates key roles they can play and actions they can undertake, identifies key obstacles and provides policy guidance for scaling up and accelerating the efforts to embark on this transformation.

This chapter documents why cities and regions are important for the decarbonisation of buildings, and discusses the factors that influence local variations in policy and the multiple benefits generated at the local scale. Carbon emissions and energy consumption in buildings vary across cities and regions. In addition, buildings and construction are local in nature, with unique climatic conditions, varying building stock, and differences in the speed of new construction and renovation. Cities and regions face varying issues, including housing affordability, energy poverty and lack of capacity in government and local industries. The benefits of building decarbonisation at the local level include job creation, well-being and more affordable energy.

This chapter analyses the four main roles and actions of cities and regions in decarbonising buildings: 1) regulations; 2) financing; 3) planning and co‑ordination; and 4) engagement of local actors, based on the results from the OECD Survey on Decarbonising Cities and Regions. Cities and regions are undertaking ambitious policy measures on building energy codes and public buildings, which can be scaled up. Support for financing could be further diversified to meet the needs of property owners with locally available resources. Most cities and regions surveyed have their own plans, but face challenges in implementing them, such as incomplete monitoring and evaluation. Subnational governments already promote citizen engagement and can expand private sector engagement and support for local industry.

This chapter identifies key barriers facing cities and regions as they scale up their policy actions, based on responses to the OECD Survey on Decarbonising Buildings in Cities and Regions and on the policy dialogue with national government officials in policy seminars. These barriers include insufficient government budget and resources, insufficient incentives to secure the commitment of property owners, the lack of an effective monitoring and evaluation framework and the limited resources of local industries. The chapter also discusses how cities and regions believe the impact of the COVID-19 crisis has affected their ambitions, financing and strategies on decarbonisation of buildings.

This chapter first discusses the vital role of national governments in promoting a whole-of-government and multilevel governance approach to decarbonising buildings and creating the enabling environments for subnational actors to unlock their potential. Then, it proposes a checklist for both national and subnational governments to scale up building decarbonisation in cities and regions. The checklist aims to support the key roles of subnational governments in planning, leadership and engagement to promote building decarbonisation, and provides recommendations for national governments to set a common policy framework across cities and regions. It also provides relevant policy examples from leading cities, regions and countries.

1.1. Does your region/city have dedicated plans or strategies on energy efficiency in buildings?