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Building efficiency

Germany and Mexico have already improved the energy efficiency of millions of buildings. A scale-up of their achievements internationally would reduce emissions by more than the Netherlands produces every year while cutting heating costs and improving energy security.


Climate impact

Between 2006 and 2014, nearly four million German homes were either given energy efficiency retrofits or were built to new more exacting efficiency standards, cutting emissions by 0.7 Mt. Meanwhile in Mexico, a green mortgage programme has delivered emissions savings of 0.3 Mt.

Scaling up the German model to other cold high-income countries would reduce emissions of 77 Mt by 2030. Scaling up the Mexican programme to countries with a similar climate would reduce annual emissions by a further 129 Mt.

Success factors

The German state-owned bank Kreditanstalt für Wiederaufbau (KfW) promotes energy efficiency in residential buildings through low-interest loans and grants. Various programmes target refurbishments of old buildings and construction of new buildings.

Mexico’s green mortgage programme provides loans and subsidies for members of the National Workers’ Housing Fund (Infonavit). Technologies eligible for support include solar water heaters, compact fluorescent lamps, water-saving taps and thermal insulation.

Other measures have been effective in improving energy efficiency in buildings in other countries. These include energy-efficiency standards in building codes, tax incentives and energy-efficiency labelling.


In the German case the estimated abatement costs of energy-efficiency measures vary from saving money at −56 $/tCO2e to costing 35 $/tCO2e. The total costs of scaling up the German approach range between −$6 billion and $3 billion per year in 2030.

In the Mexican case, improving building efficiency has shown negative abatement costs of −73 to −15 $/tCO2e. Scaling up the solution would therefore save money, from −$9 billion to −$2 billion.


Improving energy efficiency in general reduces fuel imports and increases energy security. Energy efficiency also reduces heating bills, which lifts people out of energy poverty. Energy-efficient homes often have better air quality, resulting in health benefits.

The German programme has resulted in the creation or retention of over 400,000 jobs in 2013. The beneficiaries are mostly local building contractors.

Barriers and drivers

  • A large amount of funding is needed to implement programmes. This can be challenging for countries with limited public finances. Using public funding to catalyse private capital, and complementing financial incentives with other measures, can increase effectiveness.
  • Building efficiency is often a profitable investment, but upfront costs are generally high. Financial incentives encourage more people to make the investments necessary.
  • It is important to make sure homeowners are well informed about policies. In Germany, a platform was set up to help the public to get relevant, trailored information.

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