I. Policy Momentum: Energy Efficiency Retrofitting of Existing Buildings—A Key Lever for Achieving “Dual Carbon” Goals

Energy-efficient renovation of existing buildings, as a core area for carbon reduction in the construction industry, has now established a policy framework featuring both national mandatory requirements and targeted local measures, driving the industry’s transformation from “incremental construction” to “renewing the existing stock.”

At the national level, the “Implementation Plan for Peaking Carbon Emissions in Urban and Rural Construction” specifies that by 2025, the area of existing buildings undergoing energy-saving renovations will exceed 350 million square meters, and by 2030, energy-saving renovations of residential buildings in urban areas of northern heating regions will be fully completed. The “14th Five-Year Plan for Energy Conservation in Buildings and Green Building Development” proposes “promoting green renovations of existing buildings, with a particular focus on energy-saving renovations of old residential communities and public buildings,” and includes renovation rates as part of local performance evaluation indicators.

Local Implementation: Beijing provides subsidies of 200 to 300 yuan per square meter for energy-saving renovations of public buildings, with a plan to complete renovations covering 5 million square meters in 2024. Shanghai is promoting a combined approach of “photovoltaic systems + energy-saving renovations,” mandating the installation of energy-efficient doors and windows as well as exterior wall insulation during the renovation of older residential communities. Shandong offers rewards of up to 10 million yuan for projects that achieve an energy consumption reduction of more than 30% after renovation; in 2023, the province had already completed renovations covering 120 million square meters.

Special Support: The central government allocates over 20 billion yuan annually in special funds to support energy-saving renovations of old residential communities. The National Development and Reform Commission will include these renovation projects within the scope of local government special bonds, thereby reducing financing costs.

II. Market Expansion: The Existing Base Spurs Trillion-Dollar Renovation Demand

China has a massive stock of existing buildings, and the energy-saving renovation market is entering a phase of large-scale growth, fostering a collaborative development pattern across the entire industry chain.

Scale Data: According to statistics from the Ministry of Housing and Urban-Rural Development, the total area of existing buildings in China exceeds 60 billion square meters, with nearly 90% classified as high-energy-consumption buildings, presenting enormous potential for energy-saving renovations. In 2023, the market size for energy-saving renovations of existing buildings in China reached 830 billion yuan, representing a year-on-year increase of 38%. It is projected that by 2025, this market will surpass 1.5 trillion yuan, and by 2030, its size could reach 3 trillion yuan, with an annual compound growth rate exceeding 30%.

Industrial chain layout:

Upstream: Enterprises such as North New Materials and Oriental Rainbow provide energy-efficient doors and windows, exterior wall insulation materials, and new types of waterproofing materials. The thermal conductivity of these energy-efficient doors and windows is reduced by more than 60% compared to traditional products.

Midstream: Enterprises such as Beijing Construction Engineering, Shanghai Construction Engineering, and China State Construction Engineering are leading the renovation and construction efforts. Beijing Construction Engineering has cumulatively completed over 2,000 renovation projects, with a total renovated area exceeding 80 million square meters, and its construction efficiency has improved by 30% compared to traditional methods.

Downstream: The government is leading the renovation of older residential communities (with 53,000 communities nationwide starting renovation projects in 2023). There is strong demand for self-initiated renovations of commercial buildings—such as office towers, hotels, and hospitals. Commercial clusters like Beijing’s China World Trade Center and Shanghai’s Lujiazui Financial City have achieved a 40% reduction in energy consumption through renovation efforts. At the residential level, willingness to undertake renovations continues to rise, and energy-efficient air-conditioning upgrades have become a new hotspot, particularly in southern regions characterized by hot summers and cold winters.

III. Core Values: Dual Empowerment—Energy Conservation, Carbon Reduction, and Quality Enhancement

Energy-saving renovations of existing buildings achieve the integration of ecological, social, and economic values through technological upgrades and functional optimization.

1. Significant achievements in carbon reduction: After retrofitting existing buildings, energy consumption per square meter can be reduced by 30% to 50%. A retrofitting project covering 100 million square meters could annually reduce carbon dioxide emissions by approximately 8 million tons—equivalent to cutting standard coal consumption by 3.2 million tons. This represents a “low-cost, high-return” pathway for carbon reduction in the construction industry.

2. Comprehensive upgrade of living quality: Replacing windows and doors with energy-efficient models, adding exterior wall insulation, and optimizing heating/cooling systems can reduce indoor temperature fluctuations by more than 5℃, cut noise pollution by 20-30 decibels, increase residents’ comfort ratings by 40%, and boost the premium for secondhand homes in older residential areas by 10%-15% after renovation.

3. Sustained economic benefits: After commercial building renovations, annual operating costs are reduced by 15% to 25%, with a payback period of approximately 6 to 8 years. For residential renovations, average annual electricity and heating costs per household decrease by 800 to 1,500 yuan, while residents can also benefit from government subsidies and indirect revenue from green power trading.

4. Highlighted social value: The initiative will boost employment across upstream and downstream sectors, including building material production, construction and installation, and operation and maintenance services. It is projected to directly create over 2 million jobs by 2025. At the same time, the renovation of old residential communities will enhance supporting facilities such as elderly care services, parking spaces, and charging stations, thereby improving the overall level of community governance.

IV. Development Bottlenecks: A Triple Constraint of Cost, Willingness, and Technology

Despite the enormous market potential, energy-efficient renovations of existing buildings still face phased challenges that hinder the industry’s large-scale advancement.

High renovation costs: The cost per square meter for renovation ranges from approximately 200 to 800 yuan (depending on building type and depth of renovation). Residents in older residential communities show insufficient willingness to pay, placing significant financial pressure on government subsidies.

It’s difficult for residents to collaborate: In older residential communities, property rights are fragmented, making it hard for residents to reach a consensus on renovation plans and cost-sharing arrangements. As a result, some projects have been forced to halt due to opposition from homeowners, with the average project implementation period lasting as long as 12 to 18 months.

Insufficient technical adaptability: Existing building structures are complex and of considerable age, and some renovation technologies—such as integrating exterior wall insulation with the original structure—lack mature solutions, posing higher safety risks in the renovation of aging buildings.

Lack of Standards and Regulation: Renovation standards vary across different regions, and there is a lack of standardized methods for assessing energy-saving performance. Some projects exhibit “superficial renovations” and “substandard workmanship,” which have damaged the industry’s reputation.

V. Future Trends: Deep Integration of Digitalization, Marketization, and Integration

With the improvement of policies and technological innovation, energy-saving renovations of existing buildings will evolve toward “high efficiency, marketization, and intelligentization.”

1. Digital Transformation Empowerment: The widespread adoption of BIM technology and infrared thermal imaging detection technology enables a fully digitalized process—from pre-renovation energy consumption diagnosis, to precise construction during renovation, to post-renovation performance monitoring—resulting in a more than 25% increase in renovation efficiency.

2. Perfecting Market-Based Mechanisms: Promote the “Energy Performance Contracting (EPC)” model, under which energy service companies bear the renovation costs and share in energy-saving benefits, thereby reducing the upfront investment required by property owners. Explore a dual-reward mechanism combining “carbon emission reduction trading + green electricity revenue” to broaden project profit channels.

3. Technological Integration and Innovation: Photovoltaic Building Integrated Systems (BIPV), air-source heat pumps, and passive energy-saving technologies are deeply integrated with renovation projects to achieve the dual goals of “energy conservation + power generation.” The costs of new energy-saving materials—such as vacuum insulation panels and smart dimmable glass—are steadily declining, thereby enhancing the cost-effectiveness of renovation projects.

4. Expanding the scope of renovation: Moving from single-energy-saving renovations to comprehensive upgrades that integrate energy efficiency, age-friendly design, and smart technologies. In older residential communities, elevators, smart security systems, and charging stations will be installed concurrently; in commercial buildings, digital operation and maintenance systems will be added on top of existing features, thereby enhancing the overall value of the renovation projects.

5. Precise Policy Implementation: Local governments will introduce differentiated subsidy policies, with a particular focus on supporting the renovation of aging buildings and high-energy-consumption public buildings. A unified set of energy-saving renovation standards and acceptance procedures will be established, and process supervision will be strengthened to ensure the quality of renovations.

Wu Yong, President of the China Association for Energy Conservation in Buildings, stated that energy-saving renovations of existing buildings are a must-answer question for the construction industry to achieve its “dual carbon” goals, and also represent a people-oriented project that benefits the public. As market mechanisms continue to improve and technologies keep evolving and upgrading, this trillion-yuan-scale existing market will gradually unlock its full potential, driving the construction industry to shift from a focus on “construction” alone to a balanced approach that emphasizes both “construction and management.” This transformation will inject sustained momentum into the high-quality development of urban and rural construction.