Building resilience
to climate change
Moving towards
low carbon societies
Reducing Emissions
from Deforestation
and forest Degradation
New finance models
for the green economy

Boosting the 'Green House' Effect - CDM Reform Key to Climate - Friendly Building and Construction Sector
06/ 12/ 2008

Boosting the 'Green House' Effect - CDM Reform Key to Climate - Friendly Building and Construction SectorCost Effective Carbon Savings Possible from Built Environment Says UNEP-Backed Report
Poznan/Nairobi, 6 December 2008 - The huge potential of the building and construction sector for combating climate change remains virtually untapped, a new report by the United Nations Environment Programme (UNEP) has found.
As of October 2008, only ten out of an estimated 4,000 projects in the pipeline of the Clean Development Mechanism (CDM) - the main international carbon market scheme under the Kyoto Protocol - seek to reduce energy use in buildings which account for one-third of greenhouse gas (GHG) emissions worldwide.
This is despite the sector's largest potential for cutting GHG emissions responsible for global warming. Up to 30 percent cut in baseline emissions from residential and commercial buildings can be achieved by 2030 at a net negative cost, according to the results of over 80 surveys worldwide quoted in the new report.
"Report after report is now underlining the huge, cost-effective savings possible from addressing emissions from existing buildings alongside designing new ones that include passive and active solar up to low energy heating and cooling systems and energy efficient appliances. Indeed the built environment is at the nexus of green growth and a global Green Economy in terms of green jobs, innovation, a more resource efficient world and the chance for citizens and communities to live a low, even zero emission life-style," said UN Under-Secretary-General and UNEP Executive Director Achim Steiner.

"The Clean Development Mechanism of the Kyoto Protocol has been one creative answer to the climate change challenge, kick-starting renewable energy projects while triggering ones to harvest fuels like methane from landfills and gas flaring. But the CDM could evolve into an even more creative mechanism, able to spark climate friendly buildings and construction alongside transportation and low carbon city-wide schemes. The UN climate convention meeting in Poznan offers a golden opportunity to look forward to how the CDM might evolve over the coming years including how best to streamline the way it operates," he added.
Greening the construction boom
Greenhouse gas emissions from buildings worldwide are set to increase sharply over the next two decades, mainly due to construction booms in Asia, the Middle East and Latin America.
Estimated at 8.6 billion tonnes in 2004, building-related GHG emissions could almost double by 2030 to reach 15.6 billion tonnes under the high-growth scenario, according to the Intergovernmental Panel on Climate Change (IPCC).
At the same time, today's commercially available technologies make it possible to halve energy consumption in both new and old buildings without significant investment, says the UNEP report "The Kyoto Protocol, The Clean Development Mechanism, and the Building and Construction Sector".
Simple measures such as improved ventilation and insulation, increased use of natural lighting, the use of energy efficiency appliances and lighting alongside the use of solar and other natural heat sources, can save energy and costs.
Up to 90 percent of the energy a building uses during its entire life cycle is consumed for heating, cooling, lighting and other appliances. The remaining 10 percent is consumed during the construction, material manufacturing and demolition phases.
Building on shaky foundations
Six years after the inception of the CDM, only a handful of building projects have managed to enter the CDM pipeline, and nearly half of them were rejected during the registration phase.
As a result, the CDM's contribution to reducing GHG emissions in the building sector is almost non-existent, and the vast energy-saving potential of the sector remains virtually untapped, says the report.
Building sector energy efficiency projects currently implemented under the CDM have generated only approximately 2,000 carbon credit units to date, which is the lowest among all project categories.
Among the barriers for successful CDM implementation the report cites high administrative and transaction costs, weak financial incentives, reporting difficulties, and the dispersed nature of the sector with many buildings bringing small individual savings.
For instance, eight projects proposed by Pão de Açúcar supermarket chain in Brazil were rejected during CDM registration because of the difficulties they faced in accounting for the projected 19, 275 tonnes of annual carbon savings.
The estimated carbon revenue, however, would have been merely US$3,000 per store, less than the basic operating costs for managing and monitoring the projects, let alone repay for the energy efficiency equipment.
Kuyasa retrofit project in Cape Town, South Africa is the first CDM-registered project to improve the thermal efficiency of low-income housing. The project aims to install solar water heaters, insulated ceilings and compact fluorescent lights in over 2,000 residential homes for low-income families, resulting in 6,580 tonnes of CO2 equivalent every year.
However, despite successful registration, the project has yet to take off the ground except for the 10 demonstration homes, illustrating the challenge of using CDM to finance such projects.
On the other end of real estate market, the five-star ITC Sonar Hotel in Kolkata, India was the first registered commercial energy efficiency improvement project. The hotel implemented a wide range of measures targeting water heating, air conditioning and waste disposal. After the first year, however, certified carbon credits of 1,886 tonnes were significantly less than the total of 2,987 tonnes of CO2 reduced through the retrofit due to stringent verification procedures under the CDM.
Setting firm ground through CDM reform
The report puts forward a number of recommendations to reinforce the CDM and other mechanisms under the Kyoto Protocol aimed at boosting the role of the building and construction sector in combating climate change.
The recommendations include:

developing national regulations and standards for building energy efficiency and/or sustainable building;
developing common baselines and building benchmarks for the CDM;
developing evaluation tools for building energy efficiency and CDM projects;
engaging the financial sector; and
showcasing the potential through case studies and demonstration projects.

More specifically, the report calls for:

the use of performance based indicators, such as energy use per square metre for projects validation, monitoring and verification;
replacing direct and constant monitoring with sampling;
developing common performance based baselines for different types of buildings;
encouraging CDM projects aimed at providing sufficient energy to meet the basic needs of the poor, for instance by issuing carbon credits for "avoided emissions";
allowing generation of carbon credits in projects which aim to meet national standards for energy efficiency in buildings; and
raising awareness about the CDM through Designated National Authorities.

Notes to Editors:
The full report "The Kyoto Protocol, The Clean Development Mechanism, and the Building and Construction Sector" is available online at: or 
The report was commissioned by UNEP's Sustainable Buildings and Construction Initiative (SBCI), a UNEP-led partnership between the UN and public and private stakeholders in the building and construction sector. SBCI aims to promote sustainable building practices globally.
The study was conducted by UNEP's Risøe Centre on Energy, Climate and Sustainable Development, which is a UNEP centre of expertise in the area of energy and the Kyoto Protocol's mechanisms.
The study focused on 14 CDM projects qualified as building sector projects. This number included eight projects from Brazil which were rejected during the course of the study. Four representative projects were selected for in-depth investigation: Kuyasa, Cape Town, South Africa; ITC Sonar Hotel, Kolkata, India; Technolopolis IT Building, Kolkata, India; and Pão de Açúcar supermarkets, Brazil.
For More Information Please Contact
Nick Nuttall, UNEP Spokesperson and Head of Media, on Tel: +254 20 7623084, Mobile: +254 733 632755, or when traveling: +41 795965737, or e-mail:
Or: Anne-France White,Associate Information Officer, on Tel: +254 20 762 3088,Mobile:+254(0)728 600 494,e-mail:
Or: Xenya Cherny Scanlon, Information Officer, on Tel: +254 20 762 4387, Mobile: +254 721 847 563,

Further Resources
The full report "The Kyoto Protocol, The Clean Development Mechanism, and the Building and Construct
Climate Action website
UNEP SBCI - Sustainable Building & Construction Initiative