Buildings are not only what they seem.
They aren't just inert structures to live and work in.
They're connected to the energy system.
And this makes buildings an essential element
of the efforts to decarbonize our world.
Today, I want to talk about changing our thinking
around the role of buildings in the energy system
and how they can transform to bring us closer to our climate targets.
But first, I want to take you to where I grew up,
in this building in a mid-sized city in Russia.
To me, it looked [like] just a great concrete box,
like many others.
There are indeed numerous buildings like this across Europe and Central Asia,
inherited from Soviet times.
They were built quickly to house as many people as possible,
without much consideration for their design,
comfort and energy usage.
This is true of many, many buildings across the world.
Nondescript housing and office boxes,
built fast and cheap, and all connected to the energy system.
I live in Paris now,
and though buildings there look much nicer,
from the perspective of energy, issues are similar.
High energy consumption,
reliance on fossil fuels
and high energy costs,
driven even higher by the current energy crisis.
In Paris, I work with International Energy Agency,
and we advise governments across the world on various energy issues.
And for that, we look at data a lot.
And our data shows that at the global scale,
buildings are responsible for about one third of total energy consumption
and energy- and process-related carbon dioxide emissions.
In Europe, for example, 90 percent of buildings that exist today
will still be standing and in use by 2050.
We are also building more new buildings.
Our data shows that the global floor area
is expected to increase by 75 percent by mid-century.
This is equivalent to adding an area the size of Paris every week
for the next 30 years.
If this happens with energy consumption patterns of today,
this alone will make it very difficult to achieve our climate targets.
Fortunately, we do have solutions available
to reduce direct emissions from buildings
by more than 95 percent by 2050.
And for this, we need three things:
efficiency,
electrification and decarbonization.
Energy efficiency must come first.
And in buildings, it should be improved in two ways.
First, through improving energy efficiency of the building envelope
with better materials, design solutions,
insulation of walls, roofs, basements,
energy-efficient windows.
Second, through improving energy efficiency
of all appliances and equipment used in building --
for space heating and cooling, water heating,
lighting, cooking, working and entertainment.
However, energy efficiency, as they say, takes a village.
Many forces and interests interact
during construction and renovation of a building.
The developers, the owners, the regulators, the architects,
the suppliers of technologies,
the market itself exerting price pressure.
All these need to be aligned.
And it all starts with the governments mandating
minimum energy efficiency requirements through their regulation,
putting the right incentives in place and providing clear information tools.
Building energy codes,
standards and labeling for appliances and equipment, as well as buildings,
are among the most effective instruments at our disposal --
if they're enforced well and together with other supporting mechanisms.
Energy efficiency in buildings also depends on us as consumers,
the choices we make,
buildings we decide to live in,
appliances and devices we buy
and the way we use them at home or our workplaces.
So what is the result of improving energy efficiency?
Significant energy savings,
reduced CO2 emissions,
lower energy bills
and improved comfort, productivity
and health of people living in them.
The second thing we need is a massive shift towards electricity.
And of course I mean clean, decarbonized electricity
produced from solar, wind and other low-carbon sources.
If we look at Europe, for instance,
more than 40 percent of households
rely on natural gas for space heating and cooking.
To complicate matters,
40 percent of all gas consumed in Europe last year was imported from Russia.
So there is a climate imperative,
but also a strong geopolitical and energy security imperative
to electrify and decarbonize our buildings
and make them as efficient as possible.
This doesn't only mean replacing energy supply from a gas pipeline
with energy supply from an electric line.
And here I reach back to my opening point.
We need to look at buildings differently.
Not only as great concrete boxes, as I used to do,
but as potential active players in the energy system.
So how can we make buildings active?
Through installing efficient and low-carbon technologies
such as solar panels,
heat pumps, energy storage,
making use of smart and digital tools.
All technologies we already have,
and in many cases their costs are decreasing.
Let me introduce a word we don’t often hear:
“prosumer.”
Think of a building not only as a consumer of energy,
but as prosumer,
both consuming and producing.
Most buildings can produce at least part of the energy they need.
In many cases, they can produce more.
Such buildings already exist in many parts of the world.
In Switzerland, for example,
there is even a single family house
that produces 800 percent of the energy it needs.
But still, we have a long way to go to make them a common practice.
Besides challenges with improving energy efficiency
and installing low-carbon technologies,
another obstacle is that our electricity networks,
or grids, as we call them,
were designed to operate
with large centralized sources of generation, like power plants.
And their design hasn't changed much over the past century.
So increasing decentralized
or distributed, smaller-scale generation,
especially from variable renewable sources like solar and wind,
can really put pressure on existing electricity grids
and challenge their stability.
So we also need to rethink the way our entire electricity system is designed.
Smart grids can communicate to a building
through software algorithms and smart controls,
and, for example, send a signal to a connected device,
such as your heating system,
to temporarily stop or reduce energy use,
or, if possible, shift it to the time
when electricity is more available, cleaner or cheaper.
This can really improve the robustness of the electricity network
and help to avoid, for example, rolling blackouts,
which are becoming more common,
while consumers can get paid for it.
If you have an electric car
and you keep it plugged in for a prolonged period of time,
a smart charger can help to find the best time to charge it,
depending on the information from the grid.
This can help save you money and support the electricity system.
It gets even more interesting.
Electric cars are essentially batteries on wheels,
so they can also be used as energy storage
and dispatch electricity to the home or to the grid
at the time of need.
A building itself can be used to store energy for some time,
but you need to make it energy-efficient first.
Potentially you can also get paid
for making your energy storage available
for electricity system to store renewable electricity
when there is too much of it,
for example, when there is a lot of sunshine or wind,
but demand is not high enough to use it all.
It's almost like renting your spare bedroom on Airbnb,
just for hosting electricity.
Now imagine a future with many, many buildings,
solar panels, electric cars,
energy storage, other distributed devices,
drawing electricity from the grid and supplying electricity back to it.
Obviously we would need a way to manage all this data efficiently
and in real time,
make sure that devices interact well with each other
and are able to communicate to the grid
and optimize electricity demand and supply for the entire system.
Virtual power plants,
digital and intelligent platforms can do just that.
They can aggregate electricity consumption and production
from many distributed resources,
make use of local storage
and manage complex interactions.
Virtual power plants can also facilitate
peer-to-peer renewable electricity trading.
Imagine that electricity that your building produced,
for example, from solar panels,
but you don't need at the moment,
you can sell directly to another building that needs it
via an online platform.
A project like this has been running already for several years
in one of the districts in Bangkok
and is showing benefits to the consumers, the grid and the planet.
There are other pilot projects like this in different countries,
but for them to scale,
our policy frameworks and electricity market design
need to undergo substantial changes.
Our buildings need to become more efficient
and grids need to evolve into smarter managers
of distributed energy resources.
It's a dramatic shift.
It's like going from all-television world with a single broadcaster
to a new, connected world
where everyone can generate and share their own content.
Remember that building I grew up in?
You might be surprised,
but during winter, it would often get too hot inside the apartment,
even if it was -30 outside.
It was because of highly inefficient central heating system,
which we couldn't control or do anything about.
So we did this.
Yes. We had to open the windows to get some fresh air and more comfort.
Now I want to take you to my current flat in Paris,
where I have tiny but very smart boxes attached to my electric heaters,
which can automatically turn them on and off,
maintaining comfortable temperatures,
lowering my energy bills and providing flexibility to the grid.
And I can control all that on my smartphone.
The technologies -- that we have.
Now we need the policies, the investments, the will --
and a new way to look at buildings not just passive users of energy,
but as active players in the energy system.
Buildings that can consume and produce energy efficiently,
interact with a smart grid and respond to its signals,
providing flexibility and bringing us closer to our climate targets.
Thank you.
(Applause)