Report on Mitigating Emissions and Costs in China’s Residential Building Sector Through Demand-Side Solutions

Executive Summary

This report assesses the potential for demand-side solutions (DSS) to facilitate decarbonization and generate cost savings within China’s residential building sector, aligning with key Sustainable Development Goals (SDGs). An end-use technology model was developed to analyze the period from 2020 to 2060. The findings indicate that implementing an optimal, cost-effective DSS strategy can achieve significant progress toward SDG 13 (Climate Action) by reducing cumulative CO₂ emissions by 47% (42.21 Gt CO₂-eq). Simultaneously, this approach supports SDG 7 (Affordable and Clean Energy) and SDG 11 (Sustainable Cities and Communities) by realizing a 16% saving in the net present value of costs. A notable outcome is the potential for China’s rural residential buildings to achieve carbon neutrality without relying on carbon dioxide removal technologies, thereby mitigating uncertainties in national climate targets and promoting equitable sustainable development.

Introduction: Aligning Building Sector Decarbonization with Sustainable Development Goals

The building sector is a major contributor to global CO₂ emissions, accounting for nearly 40% of the total, presenting a significant challenge to achieving SDG 13 (Climate Action). The sector’s demand for materials, construction, and energy drives emissions across multiple supply chains. While supply-side efforts to reduce carbon intensity are underway, they risk being negated by rising demand, particularly in developing economies. This underscores the critical need for demand-side solutions (DSS) as a core strategy for climate mitigation.

DSS offers a pathway to reduce emissions while generating economic co-benefits, directly contributing to SDG 7 (Affordable and Clean Energy) and SDG 8 (Decent Work and Economic Growth). This study introduces a comprehensive Life Cycle Assessment-Avoid-Shift-Improve (LCA-ASI) framework to analyze DSS in China’s residential building sector. This framework extends beyond the typical focus on energy to include embodied emissions from materials and construction, providing a holistic view essential for progress on SDG 9 (Industry, Innovation, and Infrastructure) and SDG 12 (Responsible Consumption and Production).

Analysis of Demand-Side Solutions (DSS) and their Contribution to SDGs

The LCA-ASI Framework: A Tool for Sustainable Building Practices

To systematically evaluate decarbonization strategies, this study employs an LCA-ASI framework that translates residents’ functional needs into demands on upstream supply sectors. This approach integrates a life-cycle perspective, crucial for understanding the full impact on SDG 9 and SDG 12. The framework’s components are:

• Avoid: Reducing unnecessary demand for materials and energy. This includes measures like limiting building stock growth to address vacancy rates and extending building lifespans, directly promoting responsible consumption patterns under SDG 12.
• Shift: Transitioning to more sustainable technologies and materials. Examples include replacing fossil-fuel boilers with electric heat pumps and adopting lower-carbon building structures, which supports the transition to cleaner energy systems (**SDG 7**) and sustainable infrastructure (**SDG 9**).
• Improve: Enhancing the efficiency of existing technologies and processes. This involves deploying high-efficiency appliances and improving building envelope performance, a direct contribution to SDG 7.

This study analyzes 11 distinct DSS measures under this framework, assessing their heterogeneous impacts across the building life cycle.

Cost-Effectiveness and Economic Viability of DSS Scenarios

An analysis of various DSS combinations reveals that scenarios with higher decarbonization rates often correspond with greater cost savings, demonstrating a powerful synergy between SDG 13 (Climate Action) and SDG 8 (Decent Work and Economic Growth). The most optimistic cost-effectiveness (PCE) scenario projects a 47% reduction in cumulative CO₂ emissions alongside a 16% saving in net present value (NPV).

Key findings on economic viability include:

• ‘Avoid’ measures, such as limiting new construction and extending building lifespans, offer the highest cost savings by reducing demand for materials and construction.
• ‘Shift’ and ‘Improve’ measures, such as adopting advanced heat pumps or retrofitting envelopes, can incur higher upfront costs but yield long-term savings and significant emission reductions. Their cost-effectiveness depends on coordinated policy support and technological advancement, highlighting the need for innovative financing for sustainable infrastructure (**SDG 9**).
• Large-scale energy retrofitting of existing buildings (M5) was found to be less cost-effective for China, suggesting that policies should target older, less-insulated buildings to maximize the impact on SDG 7 and SDG 11.

CO₂ Emission Reduction Pathways and Climate Action (SDG 13)

In 2020, Chinese residential buildings (CRB) emitted 2.08 GtCO₂-eq. Without intervention (Base scenario), emissions are projected to peak in 2036. However, DSS implementation can drastically alter this trajectory in pursuit of SDG 13.

1. Accelerated Decarbonization: The most ambitious decarbonization scenario (PD) reduces cumulative emissions by 45.57 Gt CO₂-eq by 2060. This demonstrates that DSS can significantly lower the burden on supply-side sectors like power and heavy industry.
2. Sector-Specific Reductions: Under the PD scenario, DSS contributes to a 56% reduction in operational emissions and a 40% reduction in material production emissions, showcasing a comprehensive approach to climate action.
3. The ‘Last-Mile’ Challenge: Despite substantial cuts, a gap of 0.26 GtCO₂-eq remains in 2060, indicating that achieving full carbon neutrality requires synergistic efforts, including supply-side decarbonization and limited Carbon Dioxide Removal (CDR).
4. Rural Carbon Neutrality: A key finding is that DSS enables rural residential buildings to achieve carbon neutrality by approximately 2050 without CDR. This is due to declining populations, lower building density allowing for effective rooftop PV, and greater potential for energy retrofits, contributing to equitable outcomes under SDG 11 (Sustainable Cities and Communities).

Financial Implications and Investment in Sustainable Infrastructure (SDG 9, SDG 11)

The implementation of DSS has significant financial implications. The most optimistic NPV-saving scenario (PNS) could save over 16.5% of NPV compared to the baseline. ‘Avoid’ measures, such as limiting unnecessary building stock (M1), yield the largest cost savings by curbing expenditure on materials and construction. This frees up capital that can be redirected toward investments in more resilient and sustainable infrastructure, as envisioned in SDG 9.

Conversely, ‘Shift’ and ‘Improve’ measures require initial investment, particularly for high-efficiency appliances and building retrofits. This highlights the need for policies that support the development of sustainable, resilient, and inclusive infrastructure and facilitate access to affordable clean technologies, aligning with the targets of SDG 7 and SDG 11.

Synergies, Challenges, and Policy Implications for Achieving the SDGs

Integrating DSS for Comprehensive Climate Mitigation

This study confirms that DSS can mitigate up to 51% of cumulative CO₂ emissions from China’s residential buildings, creating a strong synergy between climate action (**SDG 13**) and economic goals (**SDG 8**). By reducing demand for energy and materials, DSS lowers the reliance on expensive and hard-to-abate technologies in sectors like cement and steel, making the overall transition more feasible and affordable. This integrated approach is essential for achieving a sustainable industrial transformation under SDG 9.

The Critical Role of ‘Avoid’ and ‘Shift’ Measures in Responsible Consumption (SDG 12)

‘Avoid’ measures deliver the highest mitigation potential, but their implementation is challenged by carbon lock-in from long-lived infrastructure. This is particularly true for high-rise buildings, which are difficult to retrofit. This challenge underscores the need for proactive urban planning and design standards that promote resource efficiency and circularity, central tenets of SDG 11 and SDG 12.

‘Shift’ measures, such as electrification, must be carefully coordinated with the decarbonization of the power grid. A premature shift to an electricity grid that is still carbon-intensive can increase emissions in the short term. This highlights the need for integrated policymaking that aligns demand-side actions with supply-side progress to effectively advance SDG 7 and SDG 13.

Broader Impacts on Well-being and Future Research Directions

The benefits of DSS extend beyond emissions and costs. For instance, building electrification and improved airtightness can enhance indoor air quality, contributing to SDG 3 (Good Health and Well-being). Future research should aim to quantify these co-benefits and establish explicit links between DSS measures and a broader range of the 17 SDGs. This includes analyzing impacts on social equity, health, and overall quality of life to ensure that the transition to a low-carbon building sector is both sustainable and just.

Methodological Approach

End-Use Technology Model

The analysis is based on an end-use technology model that integrates stock-driven-flow (SDF) modeling of physical units like buildings and appliances. The model dynamically links demand for products and services across the building’s entire life cycle—from material production and construction to operation and end-of-life. It calculates CO₂ emissions and costs across five segments: building operation, material production, construction, transportation, and carbon sinks (from cement carbonization). This comprehensive, life-cycle approach ensures a robust assessment of the systemic impacts of different DSS measures.

Scenario Development and Data

The study models six distinct cases, covering urban and rural buildings across three climate zones in China, to capture regional heterogeneity. The base year is 2020, with projections extending to 2060. Data were sourced from official statistics (e.g., China Statistical Yearbook), industry reports, academic literature, and e-commerce platforms. Scenarios were developed based on low, medium, and high implementation levels for 11 DSS measures. The model also incorporates Monte Carlo simulations to assess how uncertainties in supply-sector decarbonization affect the probability of achieving carbon neutrality targets.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 7: Affordable and Clean Energy

• The article directly addresses SDG 7 by focusing on energy consumption in the residential building sector. It analyzes measures like “green energy utilization behaviors,” “Utilization of building PV,” and improving the efficiency of household appliances. The discussion revolves around shifting to cleaner energy sources (electrification, heat pumps) and reducing overall energy demand, which are central to ensuring access to affordable, reliable, sustainable, and modern energy.

SDG 9: Industry, Innovation, and Infrastructure

• The study is fundamentally about building resilient infrastructure (residential buildings) and promoting sustainable industrialization. It discusses innovations in building materials (“lightweight building structural designs,” “adopting wood structures over concrete-steel”), construction processes, and technology (“end-use technology model”). The goal of retrofitting existing buildings and upgrading new constructions with more efficient and sustainable technologies aligns perfectly with building resilient and sustainable infrastructure.

SDG 11: Sustainable Cities and Communities

• The article’s focus on China’s urban and rural residential buildings connects directly to making cities and human settlements inclusive, safe, resilient, and sustainable. It addresses the environmental impact of buildings, which constitute a major part of cities. Issues like building vacancy rates, extending building lifespans, energy retrofitting, and the specific challenges of urban high-rises versus rural dwellings are all components of sustainable urban development.

SDG 12: Responsible Consumption and Production

• This SDG is addressed through the article’s life-cycle perspective on buildings. The “Avoid-Shift-Improve” framework is a model for promoting sustainable consumption and production patterns. The study analyzes reducing material demand by extending building lifespans, shifting to more sustainable materials, and improving resource efficiency. It also touches upon recycling (“recycled steel covers only 31.07% of steel demand”), which is a key aspect of achieving sustainable management and efficient use of natural resources.

SDG 13: Climate Action

• The entire article is framed around climate action. Its primary objective is to “assess the decarbonization and cost-saving potential of demand-side solutions for China’s residential building sector” to mitigate climate change. It quantifies CO₂ emission reductions, analyzes pathways to carbon neutrality, and discusses integrating climate change measures into the building sector’s policies and practices. The study provides a clear strategy for taking urgent action to combat climate change and its impacts.

2. What specific targets under those SDGs can be identified based on the article’s content?

SDG 7: Affordable and Clean Energy

• Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix. This is identified through the discussion of “Utilization of building PV” and promoting “rooftop photovoltaic (PV)” as a demand-side solution to generate clean energy directly at the point of consumption.
• Target 7.3: By 2030, double the global rate of improvement in energy efficiency. This target is central to the article’s “Improve” measures, such as “Improving efficiency of household appliances” and improving the “envelope performance of new buildings.” The article quantifies energy savings from China’s Building Energy Efficiency Standards (BEES) as “nearly 30% energy savings,” directly reflecting progress on this target.

SDG 9: Industry, Innovation, and Infrastructure

• Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes. The article’s focus on “energy retrofitting for existing buildings,” promoting “light building structure,” shifting to “low-carbon appliances,” and developing an “end-use technology model” to assess these changes directly supports this target.

SDG 11: Sustainable Cities and Communities

• Target 11.6: By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management. The study aims to reduce the carbon footprint of residential buildings, which is a major contributor to the environmental impact of cities. The analysis of CO₂ emissions from building operations, material production, and construction directly relates to this target.
• Target 11.b: By 2020, substantially increase the number of cities and human settlements adopting and implementing integrated policies and plans towards inclusion, resource efficiency, mitigation and adaptation to climate change, and resilience to disasters. The proposed “LCA-ASI” framework is an example of such an integrated policy plan, aiming for resource efficiency and climate change mitigation in the residential sector.

SDG 12: Responsible Consumption and Production

• Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources. This is addressed by measures to extend building lifespans, which “reduces the need for new buildings, thereby decreasing demand for raw materials.” The use of lightweight structures and alternative materials also contributes to more efficient resource use.
• Target 12.5: By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse. The article discusses extending building lifespans to prevent demolition waste and analyzes the role of “recycled steel from building demolition” in meeting new material demand, directly aligning with this target.

SDG 13: Climate Action

• Target 13.2: Integrate climate change measures into national policies, strategies and planning. The study provides a detailed analysis and a framework (LCA-ASI) that can be integrated into national and sectoral planning for the building industry in China to achieve its carbon neutrality goals. It models different policy scenarios (“Base”, “PCE”, “PD”) to inform such strategic planning.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Indicators for SDG 7, 11, and 13

• CO₂ Emissions and Decarbonization Rate: The article provides explicit figures, such as a potential to “reduce cumulative CO₂ emissions by 47% (42.21 Gt CO₂-eq)” and tracks annual emissions in “GtCO₂-eq.” This is a direct indicator for measuring climate action (SDG 13) and the environmental impact of cities (SDG 11.6).
• Energy Efficiency: The article mentions improving the efficiency of appliances and building envelopes. It references “high-energy-label household appliances” and notes that China’s latest Building Energy Efficiency Standards (BEES) “achieve nearly 30% energy savings.” The energy efficiency of appliances (e.g., COP for heat pumps) and buildings (energy consumption per square meter) are implied indicators for SDG 7.3.
• Share of Renewable Energy: The measure “Utilization of building PV” implies an indicator related to the installed capacity of rooftop solar PV or the share of electricity generated from PV in the building’s total energy consumption, which measures progress towards SDG 7.2.

Indicators for SDG 9 and 12

• Material Efficiency and Consumption: The article discusses “Light building structure” and “optimal building structure,” implying indicators like material intensity (kg of steel or cement per square meter of building area). It also tracks “material demand” and “embodied emission intensity of new buildings.” These are indicators for resource efficiency under SDG 9.4 and SDG 12.2.
• Building Lifespan and Retrofit Rate: The measures “improving lifespan of new buildings” and “energy retrofitting for existing buildings” suggest that the average lifespan of buildings and the percentage of building stock retrofitted annually are key indicators. These relate to sustainable infrastructure (SDG 9.4) and waste reduction (SDG 12.5).
• Recycling Rate: The article explicitly mentions the recycling of materials, stating that under one scenario, “recycled steel covers only 31.07% of steel demand by 2060.” The utilization rate of recycled materials is a direct indicator for SDG 12.5.

Economic Indicators

• Cost-Effectiveness and Investment Savings: The article quantifies the economic benefits of its proposed solutions, such as achieving “a 16% saving in the net present value of costs” and reducing “annual investment by 3.72 trillion CNY by 2060.” The Net Present Value (NPV) saving rate and total investment costs are used as indicators to assess the economic viability of sustainable practices.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article.

Source: nature.com