System Design and Management

The MIT Master's Program in Engineering and Management

Societal Scale Modeling: Quantifying the Technology and Policies Needed for Global Zero-Carbon-Emission Building Infrastructure

Kevin Otto
President, Robust Systems and Strategy
With William Sisson and Christian Kornevall

Buildings consume 38 percent of energy globally—far more than industry, transportation, or any other sector—and are therefore a necessary focal point for any efforts to reduce carbon emissions. Yet, unlike these other sectors, we have available today the technology to reduce building energy consumption to near net zero, thereby eliminating their net carbon contribution. Zero energy consuming buildings exist in all applications and in all climates. They work. We are not facing an unsolvable problem in creating energy-efficient building technologies. Yet, despite this promise and the societal need for global carbon reductions, to date there has been no widespread adoption of energy-efficient buildings in any country. We face a problem of creating demand for, delivering, purchasing, and operationally maintaining very energy-efficient buildings.

There are many marketplace and societal causes for the current weak demand; buildings represent a very large systems issue that the current small-world thinking of many local players has simply failed to address. The World Business Council for Sustainable Development, an organization of companies dedicated to a sustainable future, has undertaken a project to find the means to transform the building sector to become near net zero. The key questions are: What will it take to get stakeholders to want to transform their new and existing buildings into net zero energy consuming buildings? And, how long will it take?

Clearly, any solution will need a combination of efforts from government (with policies and incentives), the equipment industry (with adoption efforts), financial firms (with financing efforts), and the building industry (with learning efforts). To that end, a large-scale simulation model was constructed, to simulate the impact on the global building stock of the construction and operation decisions of individual building owners and stakeholders. The results of any scenario simulated out to 2050 were compared with levels necessary to achieve global carbon stabilization. The global building stock was divided into verticals and geographies. For each such segment, the change in building stock was modeled as a function of new and changing materials and equipment purchased over time. Such changes depend on the micro-economic and other decision factors used by building owners and stakeholders when trading off alternatives. These decisions were simulated at a building level under different macro-economic, technology, and policy scenarios. Our calculations show that, for example, all carbon pricing schemes, whether through carbon taxes or cap-and-trade, while impacting transport and industrial sectors, have little to no impact on building decisions and their carbon emissions. We also quantified that all current incentive programs used throughout Europe, the United States, and elsewhere to incentivize building owners to upgrade to more energy-efficient materials and systems have had little to no impact. Instead, we found that whole-building incentive programs and building codes are uniformly necessary. These results and the large system modeling used will be reviewed in this presentation.

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  • Sloan School of Management
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