Market Insights

Demand-Side Improvements Could Cut 91% of US Building Emissions

September 14, 2023 by Shannon Cuthrell

Focusing on demand-side measures, a study pinpoints strategies to cut 91% of U.S. building emissions by 2050.

A study from Lawrence Berkeley National Laboratory (Berkeley Lab) highlights several demand-side strategies to slash almost all carbon dioxide (CO2) emissions from the U.S. building sector by 2050. 



Skyscrapers. Image used courtesy of Pixabay/by cegoh


A combination of new building code standards and early retrofits to install electric heat pumps or smart control systems could eliminate 91% of CO2 emissions from peak levels recorded in 2005. The researchers also estimated these actions could save $100 billion annually in energy-related costs. 

Up to 45% of the 91% figure could come from demand-side improvements focusing on boosting the grid’s flexibility with smart thermostats and other energy-efficient technologies. 

These strategies would support the federal government’s goal to reach net-zero emissions by 2050. Today, the building sector produces about one-third of America’s greenhouse gas emissions. Building emissions hit a record high in 2005 with 2,327 megatons of CO2. That footprint has fallen about 25% since then, and projections indicate a continued decline of 41% by 2050. 

According to the Energy Information Administration (EIA), the residential and commercial sectors consume the most energy in all U.S. buildings. Both categories represented 40% of total U.S. energy consumption (including electrical system energy losses) in 2022. 


Building efficiency and flexibility measures could save $100 billion per year in power system costs by 2050.

Building efficiency and flexibility measures could save $100 billion per year in power system costs by 2050. Image used courtesy of the authors, Page 1 (Creative Commons-BY)


Solutions Center on Flexibility

The study, published in One Earth and funded by the Department of Energy (DOE), used a computational model to simulate several scenarios for future building energy consumption in the U.S. Berkeley Lab researchers found that focusing on the way power is drawn from the grid could be the key to reaching net-zero emissions by 2050. In particular, demand-side measures could include retrofits with electric heat pumps and smart thermostats

Berkeley Lab researchers discussed a combination of three demand-side approaches to cut building emissions: 

  • Optimizing energy efficiency with building performance improvements

  • Demand flexibility-targeted installations of smart thermostats, connected appliances, and behind-the-meter energy storage and generation systems

  • Overall building end-use electrification with less carbon-intensive water heating and HVAC equipment, lighting, and other appliances 


Demand-side measures could cut nearly half of building CO2 emissions by 2050.

Demand-side measures could cut nearly half of building CO2 emissions by 2050. Image used courtesy of the authors, Figure 3 (Creative Commons)


Demand-side measures contribute to nearly half of 2050-targeted CO2 reductions under moderate to aggressive scenario benchmarks for decarbonization activities, with reductions attributed to thermal end-uses. 

Under the aggressive decarbonization benchmark, emissions-cutting opportunities focused on single-family homes in areas with high populations, extensive heating and cooling demand, and higher emissions from electricity. 

The researchers acknowledged that cutting 91% of emissions would require significant and unprecedented energy consumption interventions. For example, in the aggressive benchmark, 98 million fossil fuel-based and resistance furnaces and 141 million fossil-based and resistance water heaters would be converted to heat pumps in residences between 2023 and 2050, resulting in a four- and 12-fold increase, respectively, in the deployment of residential air source heat pumps (ASHPs) and HP water heaters over the reference case. 

These findings also track with the EIA’s 2023 Annual Energy Outlook, projecting a reduction in fossil fuel use in buildings with greater heating equipment efficiency as existing households and commercial buildings receive new insulation, air sealing, and other weatherization upgrades. 

Some of this retrofit activity is already happening. The Inflation Reduction Act (signed into law in 2022) and the Bipartisan Infrastructure Law (2021) introduced incentives for energy-efficient upgrades. In 2023, the federal government offers households a $1,200 tax credit to cover the cost of insulation or efficient windows and doors, alongside a $2,000 credit for electric heat pumps. The DOE is also awarding substantial funding for energy efficiency research and development projects. Most recently, it awarded $46 million to 29 projects building advanced building technologies and retrofitting methods to reduce waste and enhance demand flexibility. 

Meanwhile, states and localities are adopting new building energy code standards as well. 

Still, the study mentioned that initial estimates for the Bipartisan Infrastructure Law and Inflation Reduction Act suggest the policies will only produce a fraction of the low-carbon building technology deployment necessary for aggressive emissions reductions by 2050. The researchers cited a few major barriers, including the novelty of low-carbon technologies among consumers and installers, installation affordability, uncertainty around performance and financial benefits, and slow retirement of outdated systems.