Controlled Environment: Reducing Energy Consumption of Buildings

With the exception of those living on an exotic island or far away from populated areas, most of us dwell in an environment surrounded by buildings. Each building, regardless of if it’s residential or commercial, consumes energy daily in order to operate. The total energy consumption of a single building will vary drastically, and in some cases it can be quite limited. Yet despite this, buildings as a whole account for the largest global impact on energy consumption.

How Much do Buildings Impact Energy Consumption?

According to the UNEP, buildings are responsible for 40% of the total global energy consumption and 60% of world electricity utilization. Consistent results have been observed in the US where, according to the EIA, in 2014, 41.2 % of the total energy consumption was consumed by residential (22.6%) and commercial (18.6%) buildings combined, ahead of industry (31%) and transportation (27%) energy consumption.

In addition, the UNEP highlights that buildings are responsible for one third of the world’s greenhouse gas emissions, and that they consume about 25% of the global water supply and 40% of our global resources. Therefore, if people and companies improve their efforts to make buildings more efficient, the associated environmental benefits could be huge, as well as the savings on energy bills.


A comparison of residential energy consumption from 1993 and 2009. Image via US EIA.

Evolving Energy Consumption of Buildings

As seen, the residential sector accounts for more than half of the total energy consumption of buildings. Over time, the amount of energy that people have consumed has changed a lot. We can observe in the graph above how residential energy consumption in the US has shifted from the 1990’s until 2009.

As indicated, the impact of heating on residential energy consumption lowered, while electronics and lighting (in yellow) increased. The drivers of this change has been as a result of heating efficiency improvements achieved by US buildings, thanks to more efficient equipment, better insulation methods, and more efficient windows.

The same efficiency improvements also occurred for electronics and air conditioning systems, but despite this their consumption increased. This is likely due to the increased number of devices in homes which offsets the efficiency gains. Nevertheless, on average the EIA showed that the energy consumption per home in the US has declined over the past 30 years. Yet, at the same time the aggregate residential energy consumption in the US remained stable as the increasing number of housing units compensated it.

Obtaining Green Dividends From Buildings

Despite the aforementioned achievements in energy efficiency and environmental externalities reduction, there are a lot of differences between the impacts of newer and older buildings. This is due in great part to the fact that older buildings are not yet equipped with the best available technology and design techniques. The same discrepancies are also detectable in the commercial sector.


Tips to begin saving energy today. Image via US DOE.

Therefore it’s important to emphasize that greater results can be obtained by encouraging people, companies, and institutions to invest in renovations of older structures.

Typically government administrations encourage people to invest in green renovations by providing incentives and rebates. An example of an environmental incentive is the “green dividend” that people or firms can obtain by improving the efficiency of their buildings. A green dividend is win-win situation in which the applicant receives compensation n exchange for improvements which generate environmental benefits. In this case, the compensation is in the form of savings from energy bills. Furthermore, buildings can be used to generate clean electricity, such as the use of photovoltaic panels. This provides the building owner with a second opportunity to obtain, or to increase, a green dividend.

In order to propel these investments, it’s important to spread awareness and communicate the ROI (return on investments) of a sustainable building renovation. According to Siemens, up to 40% energy savings can be realized through intelligent building automation, which also dramatically improves the comfort in buildings and the productivity of occupants and companies.

Everyone can begin today to reduce their personal energy consumption. This doesn’t require high investments, but rather it can be achieved for free or through low-cost solutions. Some useful tips are outlined in the chart to the right. This comes from the US Department of Energy (DOE) document “Energy Saver”.  It’s up to each of us to begin earning our own green dividend.

About The Author

Adriano Pilloni
Adriano, 25 years old, is a Master Graduate in Environmental Economics and Development from Rome Three University (Italy). During his education he developed a deep knowledge on Economics and a keen interest on Economic Theory with particular regard to energy markets, sustainability, environmental and agricultural issues. He has been proactive during his university time doing many projects and being elected by the students as Advisor of the Economics Dept. of his University. With two other students he developed a project on Food Sustainability which has been selected in the top 30 of the international Barilla contest "BCFN YES! 2013". He did the 2014 European edition of Extreme Blue, IBM's premier internship program for both graduate and undergraduate students. Now he is working as Junior Power and Gas Analyst at GDF SUEZ Italy.