WBCSD EEB PROJECT Challenges Towards Achieving a Zero Net Energy Building Sector William Sisson, UTC, WBCSD EEB Co-chair Lafarge Briefing November, 2008

WBCSD EEB Project 2 Energy efficiency first From the business voice Launch and lead sector transformation “Sustainable” buildings (TBL) Communicate openly with markets A world where buildings consume zero net energy

Challenge % Amount of energy wasted from source to useful work?

Challenge % Amount of energy reduction needed in new buildings to maintain 2002 current carbon levels?

Challenge % Amount of energy reduction needed in all buildings to maintain 2002 current carbon levels?

6 EEB’s Three Levers

7 CEO Expectations The goal is the first quantitative look ever at what may be accomplished economically to reduce energy demand and CO 2 … We expect a persuasive result.

Global Scenarios

Stakeholders & Behavior Diverse Participants Know-how & Commitment

10 Policy and Sector Complexities Source: McKinsey, Dec. 2007; Reducing US Greenhouse Gas Emissions: How much and at what cost? $ / ton CO 2 Potential Gigatons C0 2 Residential Electronics Residential Lighting Commercial CHP Residential Hot Water Commercial Building Controls Residential Envelope Retrofits Industry CHP Biofuels Residential Envelope New Construction Commercial CFL Lighting Commercial LED Lighting Commercial Electronics Commercial Envelope New Construction Net Negative Cost Abatement Options Will they be adopted? At what cost? Over what time horizon? How do they interact? Resulting impact? How to incentivize?

11 We Need a Model! That gives us the ability to assess … What solutions will key stakeholders (i.e. decision makers) adopt? What is the submarket energy and emission impact of adopted technologies? How will various policy actions affect stakeholder selections? How will potential scenarios and exogenous factors affect stakeholder decisions? The WBCSD model evaluates energy and CO2 emissions in the context of adoption characteristics and building system interactions

12 Model Characteristics INPUTOUTPUTCALCULATION Decision, Diffusion And Stock Model eQuest/DOE2 (Energy Balance) CO2 Generation Stock Energy Usage Cost to Owners Cost to Gov’t Construction Options User Behaviors Decision Variables Exogenous Variables Strategies (Policies) Data on energy usage and decision criteria, combined with policy actions that may affect stakeholder decisions Calculations determine preferred options and how they would be adopted Output allows comparison of overall impact and cost incurred by critical stakeholders from 2005 to 2050 time horizon

Policies and Submarkets 13 Homes, Europe, Cold, Low CO 2 Grid Homes, US, Warm, High CO 2 Grid Office, Japan, Warm, Modest CO 2 Grid Low GrowthHigh GrowthNo Growth Coming soon: Developing markets, retail sectors, … Heating Lighting Cooking Hot Water Appliances Plug Loads Cooling Ventilation

Initial Findings … Increased Policy/Technology Aggressiveness Low Cost, Marginal or Negative Impact High Cost, High Impact INCREASING COSTS  Per building CO2 Reduction from 2005 baseline 14 Ref: Residential Home, Cold climate in low carbon grid (EU) Policy Strategy and Technology Interactions

Policies and Time Horizons Don’t bring about market adoption of more effective options Heating Lighting Cooking Hot Water Appliances Plug Loads No incentives Unaided adoption < 5yr payback horizon Incentives < 5yr payback horizon CO 2 15 Ref: Residential, Cold climate in low carbon grid (FR)

Financial Considerations 5 year investment horizon4x Energy Price Heating Lighting Cooking Hot Water Appliances Plug Loads CO 2 Segment Energy Consumption, kWh/yr Segment CO2 emissions, tCO2/yr Ref: Residential, Cold climate in low carbon grid (FR) 16

Labeling, Fees, and Incentives 17 Heating Cooling Cooking Hot Water Appliances Plug Loads CO 2 Ventilation Lighting Utility Rate “Carbon” Fees Could Offset Incentive Costs Effect of incentives on A & B and disincentives on E-G Adoption Policies Label Based Policies

WBCSD EEB Project 18 Stakeholder perceptions Differing scenarios playing out Submarket decision modeling – more action is needed Is the good news real? Manifesto coming A world where buildings consume zero net energy

Project Timeline Formally Announce Project (Beijing) 2009 “Setting Direction” Report “Facts & Trends” Report Assurance Group Manifesto Final Report (Action Plan) Qualitative & Quantitative Assessments Recommendations to Transform Building Sector Setting Direction 19

Public comment until November 10!