Decarbonizing buildings is widely agreed upon, but financing remains the main barrier. While the technologies already exist, the lack of viable business models is slowing large-scale deployment. New players are now emerging to address this challenge.
The need to decarbonize buildings is no longer up for debate. While the construction sector accounts for 40% of global energy-related CO₂ emissions, direct greenhouse gas emissions from building operations represent 15.5% in France.
Beyond reducing these emissions, decarbonization efforts help lower energy bills and improve occupants’ health, while also structuring a promising value chain. The OECD is leading a program on ‘Decarbonizing Buildings in Cities and Regions,’ and the IEA’s Toolkit on the topic clearly shows that most governments are implementing policies to set emissions standards, raise public awareness, or subsidize decarbonization efforts. Despite this broad consensus, financing remains the main obstacle to scaling up the phenomenon today
An article published in Nature outlines the socio-technical barriers to building decarbonization and notes that, among the 95 identified obstacles, economic factors are the most prominent: lack of financing, the cost of training subcontractors, additional costs linked to materials, and uncertainty around return on investment. While technical solutions already exist, Leonard and Sébastien Renault—CEO of the decarbonized energy operator Newable—take a closer look at the key levers needed to unlock the economic barrier
The cost of decarbonization
In a 2024 report entitled Sectoral Barriers and Levers to Financing the Ecological Transition, the Institute for Sustainable Finance highlighted the need to double investment in residential buildings and triple investment in the tertiary sector to meet climate targets. In France, total investment across all sectors amounted to €22 billion in 2022—roughly half of the expected level. The report also identifies three main barriers to financing. The first relates to complex administrative processes, which lead to a high rate of project abandonment. The second concerns the low economic profitability of energy renovation projects, resulting in unfavorable investment trade-offs. Finally, the third barrier lies in the difficulty of meeting financing conditions.
“The main obstacle to decarbonization is the business model: it is very expensive and brings no return for the property owner. Another challenge is the difficulty of prioritization—by trying to tick every box, from insulation to biodiversity, we fail to address the real issue, which is decarbonization. Because a carbon-intensive building today is already being devalued,” explains Sébastien Renault.
The promise of energy as a service
In this context, the search for economic viability is a key condition for the effectiveness of decarbonization policies and calls for the deployment of new models. As-a-Service solutions are currently among the most promising. Newable, for instance, aims to address the split-incentive issue between property owners and tenants, which often hinders decarbonization efforts. By positioning itself as an energy operator, responsible for operating and optimizing a building’s energy systems, the startup relieves property owners of financial risk while ensuring comfort and continuity of service for tenants.
“We strive to achieve a high level of performance. We make equipment controllable and are able to decouple the moment energy is produced from the moment it is used by the building. This technical performance enables us to make financial commitments to our clients. Our model consists in selling decarbonized heat to tenants at an attractive price, while compensating the property owner who grants us the use of the equipment,” explains Sébastien Renault.
Others, such as Accenta, combine intelligent energy management with advanced technological solutions to offer turnkey services to their clients. The company, which claims more than 10 million square meters under contract, promises energy consumption reductions of of up to 80%. To achieve this, it relies on proprietary energy management technologies as well as a mix of decarbonization solutions, including geothermal energy. In Palaiseau, within a residential complex at École Polytechnique, the company is developing a system comprising 14 geothermal probes drilled to a depth of 185 meters, coupled with two geothermal heat pumps, three air-source heat pumps, an air cooler, and two photovoltaic power plants—resulting in an estimated 60% reduction in emissions
An invitation to pragmatism
As-a-Service solutions currently focus on two major levers of decarbonization: optimizing usage (how buildings are actually used) and optimizing systems (particularly heating). As Sébastien Renault explains, “what makes a building carbon-intensive today is the way it is heated and cooled—these two factors alone can account for up to 90% of CO₂ emissions.” This observation calls for a pragmatic approach to decarbonization, one that mobilizes all available solutions while making the right economic trade-offs. This is precisely the positioning of players such as Carbon.green, which describes its approach as “asset management to green,” combining economic performance, energy diagnostics, and the prioritization of renovation works within a solution-agnostic framework.
The positioning of the German solution Ecoworks offers a clear illustration of the value of an empirical approach. While interventions on building envelopes (insulation, windows) often show a poor cost-effectiveness ratio, the company has succeeded in implementing a model tailored to its context. By combining off-site industrialization with digitalized design, Ecoworks delivers fast and economically viable energy renovations, particularly suited to the specific context of post-war German residential architecture.
Faced with financing challenges, building decarbonization must navigate strong economic constraints. Between environmental ambitions and operational realities, the key lies in moving beyond mere posturing. With technical solutions now identified, the focus today is on structuring and sustaining viable economic models.
