Climate change is no longer a distant threat—it's a present-day reality. From wildfires in California to devastating floods in South Asia and Europe, the impacts are undeniable. Reducing greenhouse gas emissions is critical to avoiding the worst effects and buildings and construction are central to this challenge, accounting for nearly 40% of global carbon emissions. This includes both the energy used to operate buildings and the emissions embedded in their construction. Tackling emissions in the built environment is crucial to meeting climate goals and offers the most immediate opportunity for impactful change.
In the United States, the Inflation Reduction Act (IRA) offers a pivotal opportunity to accelerate sustainable change, offering targeted financial incentives designed to make sustainable building practices both widespread and financially viable across the country. However, in conversations with clients and colleagues, a recurring sentiment is that the European Union (EU) is perceived to be ahead of the U.S. in energy transition, decarbonization projects and the policies supporting them. So how does the U.S. compare to European nations in terms of policies, progress, and outcomes when it comes to leveraging the built environment to tackle climate change? And more specifically how can the IRA support the U.S. in transitioning to net-zero buildings and infrastructure? Let's explore these questions in more detail.
The U.S. versus Europe: progress and challenges
In the U.S., buildings account for nearly 40% of total carbon emissions, with about 70% of those emissions due to energy use. Globally, this proportion is similar, but the specifics of how emissions are managed and reduced vary greatly between countries. Both the EU and the U.S. are advancing in sustainable policy and construction, however each region’s approach to sustainability differs significantly. Europe’s approach to sustainable construction emphasizes regulatory compliance and environmental sustainability supported by EU-wide regulations and a robust policy framework via the European Green Deal. The region's progress is also more unified thanks to EU-wide regulations and a robust policy framework via the European Green Deal. Many European countries have also adopted strict monitoring and reporting regulations as well as financial incentives to curb emissions from the built environment.
In contrast, the U.S. tends to prioritize market forces over regulation and environmental concerns. With a fragmented regulatory landscape, the U.S. exhibits a more varied approach to decarbonization compared to Europe’s unified strategy. While some states, like California and New York, have made substantial progress through stringent energy codes and benchmarking requirements, the U.S. lacks the comprehensive, federal-level building standards seen in Europe. This patchwork of policies makes it harder to achieve consistent, nationwide progress toward net-zero emissions.
-
Read more
One positive development is the Department of Energy’s publication of a National Definition for Zero Emissions Buildings in April 2024, which defines these buildings as highly efficient, emitting no on-site emissions from energy use, and operating solely on clean energy. However, since this definition is not legally mandated, its adoption and enforcement remain voluntary, which diminishes its impact in driving nationwide change.
The introduction of the IRA marked a significant shift in the U.S.'s approach to climate policy. With targeted incentives and tax breaks ($370 billion), the IRA facilitates energy-efficient upgrades, offering a clear framework for reducing emissions in the built environment. By fostering the development of a domestic manufacturing ecosystem for low-carbon technologies, the IRA is positioning the U.S. to catch up with global leaders in sustainability. The legislation has already sparked growth in clean technology investments and the creation of new manufacturing jobs, providing a promising foundation for a more sustainable future.
To accelerate decarbonization, the U.S. could adopt successful EU strategies, such as a unified national regulatory framework like the European Green Deal, ensuring consistent sustainability standards across states. California’s Title 24 energy efficiency standards could serve as a model for national building efficiency policies. Expanding financial incentives for sustainable construction and scaling successful state programs, like California’s Solar Initiative and Massachusetts’ Mass Save to a national level is also key. Establishing long-term sustainability targets, like the EU’s Climate Law, would further guide decarbonization efforts. By building on these strategies, the U.S. can leverage a national approach, laying the foundation for a sustainable, net-zero built environment that drives long-term climate progress and intentional impact.
The future of the IRA
Since the IRA’s implementation, clean energy spending has surged, with billions flowing into technologies such as energy storage, battery manufacturing, solar, and sustainable aviation fuel. However, the impact of the newly elected administration on the law remains uncertain. At present, states governed by both Republicans and Democrats are benefiting from the IRA's investment in wind, solar, and battery production. Leaders across the political spectrum have recognized the economic potential and job-creating capacity of clean energy technologies.
While we cannot yet predict how specific recommendations for decarbonization will be incorporated in the future, we are closely monitoring developments and look forward to the continued evolution of these strategies and the opportunity to support our clients in leveraging them for long-term sustainability. By accessing available funding and incentives, our clients can make meaningful investments in sustainability, enhancing asset value and advancing toward a more environmentally friendly future. For a deeper understanding, I recommend exploring Arcadis' 2024 Built Asset Insights Report and connecting with our technical advisory services team to learn how best to utilize the IRA’s benefits. Together, we can harness the full potential of these opportunities and work towards cultivating a sustainable urban future that benefits both our communities and the planet.
