Key Takeaways
- Municipal policies are critical in driving energy-efficient building retrofits, according to a report by Economist Impact and JLL.
- 63% of surveyed executives are aware of their cities’ retrofitting policies; stricter codes and better incentives are seen as ways to accelerate progress.
- Mandatory performance standards and financial incentives are key to boosting both commercial and residential retrofits.
Growing Momentum for Retrofitting
A new report from Economist Impact and JLL emphasizes the significant role municipal policies play in promoting energy-efficient building upgrades, which are essential for accelerating the pace of retrofitting. The report is based on a survey of 1,000 senior executives from the built environment across 12 global cities.
The survey reveals that 63% of executives are aware of retrofitting policies in their cities. More notably, 55% believe that stricter building codes would spur retrofitting efforts within the next five years, while 52% think that enhanced incentives could also drive progress. “Momentum is growing for demand-driven retrofitting, but adoption is far from where it needs to be,” states Cynthia Kantor, CEO of Project and Development Services at JLL.
The Importance of Retrofitting
The report highlights that retrofitting buildings to reduce energy consumption is crucial for lowering emissions, improving energy efficiency, and enhancing public safety. Alongside environmental benefits, retrofits offer attractive premiums for developers and investors and result in better living and working spaces. Almost half of the respondents, 47%, believe that retrofitting is more effective than new construction for addressing urban space needs.
The changing expectations of how individuals occupy buildings further complicate the retrofit landscape. Kantor notes that the demand for sustainable spaces is increasing, but financial constraints for investors slow progress. To overcome these challenges, regulatory incentives must align with a broader return on investment perspective.
Policy and Financial Incentives
The survey indicated that mandatory building performance standards, along with public financial incentives, significantly boost both commercial and residential retrofitting initiatives. Cities that combine these standards with proactive public sector leadership and strategic incentives are better positioned to bridge the retrofit gap.
Innovative financing mechanisms such as green bonds, energy performance contracts, and shared savings agreements are pivotal in attracting private capital to these projects. However, the report warns that inadequate policy frameworks in many regions pose barriers to effective retrofitting. Approximately 43% of respondents cited unclear regulations and standards as major obstacles.
Kantor emphasizes that a building’s location significantly impacts its value, suggesting that revitalizing entire urban sections may be necessary to make retrofitting financially viable. The trend of integrating living, working, and recreational spaces is increasingly crucial. City leaders who recognize this overarching challenge and collaborate with local partners will be better equipped to succeed in future urban planning and retrofitting efforts.
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