KNOWLEDGE NOTES Pakistan Sustainable Energy Series Achieving Energy Efficiency ACHIEVING in Buildings ENERGY EFFICIENCY IN BUILDINGS  1 2 Achieving Energy Efficiency in Buildings Why is energy efficiency in buildings relevant for Pakistan? Buildings in Pakistan account for over 43.7 percent of the country’s total energy use and represent a significant opportunity for energy efficiency and conservation.i The high energy consumption in buildings is primarily attributed to Pakistan’s predominantly sunny and hot climate, which drives high demand for cooling for most of the year—and the widespread reliance on inefficient gas and firewood appliances for heating and cooking. Driven by rapid urbanization, population growth, and increasing construction demand, energy use in buildings and greenhouse gas (GHG) emissions associated with buildings are projected to grow considerably. The buildings sector drove higher electricity demand in 2024, growing four times faster than in 2023. Global electricity consumption in buildings increased by more than 600 terawatt hours (TWh) (5 percent) in 2024.ii Globally, buildings account for 37 percent of energy and process-related carbon dioxide (CO2) emissions.iii In addition to the high overall levels of energy consumption in buildings, seasonal variation in electricity and gas load patterns also pose a problem. For instance, electricity peak demand in summer rises briefly to over 25,000 megawatts (MW) from a baseload of only 8,500 MW.iv The benefits of energy efficiency in buildings however extend beyond reduced energy consumption or peak demand management. Energy-efficient buildings provide a healthier and more supportive living and work environment by improving indoor air quality and enhancing overall occupant comfort. In addition, demand for new construction materials and techniques in the building industry generates livelihood opportunities. Key findings from the World  Bank’s comprehensive assessment on Buildings Energy Efficiency in Pakistan, conducted in 2022 and 2023, are presented below; details on the assessment’s approach, data collection, and methodology are provided in annex 1. 2 What provisions are in place to improve building energy efficiency in Pakistan? Pakistan’s government modified building codes in 2023 to incorporate prescriptive, statutory provisions for sustainability and energy efficiency in building design and construction. The Energy Conservation Building Codes (ECBC 2023) have already been notified, while the Green Building Code of Pakistan (GBCP 2023) is in the final stages of notification. Adapted from the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) standard 90.1, the energy provisions incorporated into the Energy Conservation Building Codes (ECBC)1 apply to residential and commercial buildings and building clusters that meet certain criteria. These include having a total connected load of 50 kilowatts (kW) or greater, a contract demand of 75 kilovolt amperes (kVA) or greater, a conditioned area of 200 square meters (m2) or greater, or unconditioned areas with a covered area of 300  square meters (m2) or more. (For further details please see annex 1). The Green Building Code of Pakistan (GBCP) is developed in alignment with the 2021 International Green Construction Code (IgCC-2021), aiming to integrate environmentally responsible and resource-efficient practices throughout the lifecycle of green buildings. Key areas of focus include energy efficiency, water conservation, waste minimization, and the utilization of sustainable materials. By contextualizing international standards to address local challenges in Pakistan, the GBCP establishes baseline requirements designed to work in conjunction with existing regulatory frameworks adopted by Development Authorities (DAs) or Authorities Having Jurisdictions (AHJs). Despite the presence of policies and regulations, progress in implementing building energy efficiency has been slow, hindered by institutional and financial limitations. For example, the thermal transmittance (Watts per meter squared Kelvin (W/m2·K), or U-values) of standard wall and roof sections in residential and other buildings in Pakistan are approximately 1.89 W/m2·K and 2.74 W/m2·K respectively, significantly higher than the specifications outlined in the ECBC.2 Given that Pakistan’s housing stock is expanding by roughly  3  percent every year, instituting energy efficiency through passive building design elements represents a considerable energy conservation opportunity.v 1 Also known as the Energy Conservation Building Codes (ECBC), the energy provisions were integrated into the country’s pre-existing building codes through statutory notifications in 2013. The ECBC is adapted from the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) standard 90.1. 2 The ECBC-2023 specifies that the overall U-values of external walls and roofs shall not exceed the following limits: Wall: U-value = 0.57 W/m2.K; Roof: U-value = 0.44 W/m2.K. Achieving Energy Efficiency in Buildings 3 What are the most accessible energy efficiency and conservation opportunities in new building construction? Building orientation, improvements in building envelope and external shading can conserve a considerable amount of energy in new buildings by lowering the need for mechanical cooling.3 In Pakistan’s context, three relatively simple building design modifications can achieve this (see box 1).4 BOX 1: Practical Building Design Modifications Modification Description Optimized building Proper building orientation can minimize unwanted heat gain from direct sunlight orientation while maximizing the use of natural daylight. North- or south-facing windows minimize glare and reduce cooling loads in hot climates. Improvements to the The thermal transmittance properties of the building envelope can be improved building envelope by additional layers of insulation in walls and roof sections, and by using double‑glazed instead of single‑glazed windows. Addition of external External shading systems, such as awnings, shades, or louvers, can be shading strategically placed to block or diffuse direct sunlight and reduce solar heat gain, particularly with single‑glazed windows. Energy conserved through building orientation varies based on the design of the building and local climatic conditions. Average annual energy savings achievable through optimal building orientation (average for Karachi, Lahore and Islamabad) range from 0.8 percent for a 5-Marla middle- income house, to 3.6  percent for a 5-room public school.5 However, maximum energy savings from building orientations can vary widely for the same types of buildings located in different cities, including Karachi, Lahore, and Islamabad. Energy savings from building orientation can range from approximately 0.25 percent (a 5-Marla middle-income house in Lahore) to 4.5 percent (a 5-room public school in Islamabad). In addition, for similar buildings, an optimally oriented building in Islamabad provides higher energy savings compared to buildings in Karachi and Lahore (see annex 3, figure 3A.1 and table 3A.1).6 3 Ventilators that use natural air pressure differences to circulate fresh air—without the need for mechanical fans or blowers— can be also an effective passive design element in buildings. Passive ventilation systems provide several advantages including a lower cost of installation, operation and maintenance compared to mechanical systems, lower energy consumption in the building and more design flexibility. However, ventilators also have limitations; they require building occupant involvement to open windows and can allow in noise and outdoor air pollution. 4 Appliance energy efficiency standards are also a popular tool for improving building energy efficiency; however, the energy efficiency potential of appliances used in buildings is not covered in this Knowledge Note. 5 One Marla is 225 square feet; therefore, a building plot of five Marla is 1,125 square feet (nearly 105 square meters). 6 The simulation of building orientation impact on energy savings did not consider any site location constraints or existing site elements. Each building model was freely rotated at 0°, 90°, 180°, and 270° (except for small commercial buildings, typically constructed in rows). 4 Pakistan Energy Efficiency - Knowledge Notes Improving the thermal performance of the building envelope has the largest impact on energy efficiency gains in new buildings. Practical, low-cost improvements to the building envelope with locally available building materials and reduction of air infiltration can significantly improve the thermal performance of a new building, reducing the need for mechanical heating and cooling, reducing heat losses, while maximizing access to natural light. For instance, changing the wall construction from a single layer of brick with external and internal plaster to a double layer of brick with 3-inch extruded polystyrene (XPS) insulation along with external and internal plaster can improve the U-value from 1.89  W/m2·K to 0.30  W/m2·K .7 Similarly, additional insulation in a roof can be embedded in the false ceilings to improve its U-value from 2.74 W/m2·K to 0.32 W/m2·K. Incorporating various types of building envelope improvements can yield between 18  percent to 37  percent energy savings in different geographic settings across Pakistan. Cumulative savings from building envelope improvement to different types of buildings are illustrated in annex 3, figure 3A.2 and table 3A.2. External shading systems are less effective in conserving energy but useful where changes to building orientation are not feasible. Strategically placed window shades can reduce heat gains from windows and cooling loads as a result, especially in locations where changes to building orientation are not feasible. Fixed overhang shading over double-glazed windows provides less than 0.5 percent energy savings while external shading over clear glass windows can achieve from 1 to 5 percent savings in energy consumption of a building (see annex 3, figure 3A.3 and table 3A.3). Investment in building envelope improvements provide high-energy savings against a relatively short investment payback period. In the structures modeled for this analysis, the incremental cost of energy efficiency improvements to the building envelope ranges from a 176 percent increase in construction cost (for double-glazing) to as little as a 14  percent rise (for additional insulation added to the roof). Incorporating insulation with additional layers of brick wall and double-glazing to a building envelope can increase the construction cost of different types of buildings by between 20 and 30 percent for a 10-room basic health unit, or BHU, and a 5-Marla middle-income house, respectively. Nevertheless, the investments in all three energy improvements can be recouped in 2.7 years for a 5-Marla affordable housing unit to 4.8 years for a 4-Marla small commercial building).8 See annex 3, table 3A.4, for annual energy savings and payback time for energy efficient construction by building type in Pakistan. Furthermore, the use of alternative building materials, advanced insulation types, and radiant barriers can enhance thermal efficiency without necessitating additional layers of brick walls and may also prove to be more cost-effective. 7 See footnote 5 above. 8 Incremental cost estimates are based on bills of quantities of construction materials for actual building construction projects in Islamabad, Lahore, and Karachi. The costs of building foundations, electrical, mechanical and sanitary systems are not included. The total incremental investment for each building model includes labor costs and the costs of additional construction materials to improve the thermal performance of the building envelope. Achieving Energy Efficiency in Buildings 5 How can the energy efficiency of existing buildings improve?9 Insulation in false ceilings, external overhang shading above clear glass windows and application of white paint on roofs are the most feasible energy efficiency retrofits for existing buildings. Additional insulation above a false ceiling on the top floor is the most feasible retrofit option for existing, small commercial buildings. This simple retrofit in commercial buildings, where false ceilings are commonly installed, can reduce the thermal transmittance of existing roof sections in commercial buildings from 2.74 W/m2·K to 0.34 W/m2·K, improving the thermal efficiency of the roof by approximately 90 percent. External overhang shading is increasingly uncommon even though shades reduce heat transmitted through windows and doors. Depending on the design and climatic conditions, each square meter of fixed, external shading installed on residential and nonresidential buildings can lead to annual energy savings of 25.8 kWh/m² to 95.8 kWh/m² of built area. External shading over clear glass windows can conserve from 1 to 3 percent of a building’s annual energy consumption. Investments in roof insulation conserve a considerable amount of energy and can be recovered in as little as two years. In contrast to the very short payback period for roof insulation in commercial buildings, installing fixed overhang shading in housing units, BHUs and public schools may have a relatively longer payback of six years. White paint applied to roofs of buildings is also an effective, low-cost method for reducing the cooling load of buildings.10 White paint on roofs can conserve significant amounts of energy by reducing the amount of heat absorbed from the sun. While the exact amount of energy saved depends on various factors such as the climate, roof type, and quality of the roof treatment, studies in other hot climates have shown that white roofsvi On a typical summer afternoon, a clean white roof surface that reflects 80 percent of sunlight will stay about 31°C cooler than a grey roof that reflects only 20 percent of sunlightvii Similarly, a cool roof initiative in India showed painting roofs with solar reflective paint helped keep indoor temperatures lower by 2 – 5°C , compared to traditional roofs.viii How large is the market for energy‑efficient construction in Pakistan? Investments in energy-efficient building construction could amount to an estimated 177  billion Pakistan rupee (PRs) each year with annual energy savings of 1,607 GWh, while the market for energy efficiency retrofits in existing buildings is approximately PRs 350 billion, with annual energy savings of 2,188 gigawatt hours (GWh). Annex 4, tables 4A.1 and 4A.2, provide an overview of the estimated annual construction demand, potential annual energy savings and market size of energy‑efficient construction material and services for new buildings and retrofits to existing structures. 9 Appliance energy efficiency is also a popular tool for improving energy efficiency in buildings; however, this note focuses on efficiency interventions related to building design (appliance efficiency will be addressed separately). 10 Although discussed here in the context of existing buildings, white paint on roofs is an equally effective method to reduce energy use in new buildings. 6 Pakistan Energy Efficiency - Knowledge Notes What are the main barriers to improving the energy efficiency of buildings in Pakistan? Challenges to implementing the energy provisions in the national building codes and recommendations for addressing the most relevant barriers are summarized in table 2.1 below. Table 2.1:  Key Barriers and Potential Mitigation Measures with Relevant International Examples to Implementing Energy Efficiency (EE) by Building Type in Pakistan Lack of awareness and knowledge regarding EE building designs. The typical design and construction of the building envelope commonly used in Pakistan, such as basic walls and roofs built with masonry and concrete slabs and single-glazed windows with aluminum frames, perform relatively poorly in thermal insulation. The energy conservation impact and long-term financial benefits of energy-efficient building design have not been recognized by building owners, developers, or designers. Type of Building/ Specific Challenges Project and Barriers Potential Mitigation Actions Relevant International Experience New Low-Cost • At present, the different home • Low-cost housing projects provide an • Technical assistance in EE building designs: Housing Projects design options for government- opportunity to integrate EE features into Japan, Singapore, Thailand, and the United (Government- or funded low-cost housing projects practical construction considerations States have implemented schemes providing Donor-Funded make limited mention of EE features. free technical assistance for building • For example, there is an opportunity to Projects) practitioners and owners interested in • Pakistan’s government does not revise project designs to develop EE building integrating EE designs into their projects. For consider EE or passive features in design templates for these homes, integrating instance, the City of New York launched the its mandatory standards for low-cost relevant EE features at all stages of project NYC Accelerator, offering building owners, housing projects. implementation: design, project documents, property managers, and developers free, procurement requirements, monitoring of • There are misconceptions about one-on-one support for EE, clean energy implementation, and third-party validation of the relevance of sustainability in upgrades, and compliance with local laws. energy savings after construction. affordable housing projects, coupled Additionally, several donor-funded programs, with lack of data on economic • Government ministries, housing authorities, or such as the Program for Energy Efficiency in impact of such measures. donor agencies should actively advocate for Buildings (PEEB) funded by Agence Française the adoption of EE standards with relevant data de Développement (AFD) [write out acronym], on their economic and environmental impact offer free technical assistance to building across all other government housing projects. stakeholders for the design and construction of EE buildings. Achieving Energy Efficiency in Buildings 7 Lack of awareness and knowledge regarding EE building designs. The typical design and construction of the building envelope commonly used in Pakistan, such as basic walls and roofs built with masonry and concrete slabs and single-glazed windows with aluminum frames, perform relatively poorly in thermal insulation. The energy conservation impact and long-term financial benefits of energy-efficient building design have not been recognized by building owners, developers, or designers. Type of Building/ Specific Challenges Project and Barriers Potential Mitigation Actions Relevant International Experience New Low‑Cost • There is no organization in • If the public sector projects set a good • Voluntary building certification and award Housing Projects Pakistan that adequately provides precedent for the planned construction, the programs for EE buildings: Many voluntary (Private Sector both appropriate EE designs and private sector can take advantage of the programs have been initiated to encourage Projects) technical support. Although the practical experience in EE designs and follow the acknowledgment of EE building designs. Heritage Foundation of Karachi has the same approach. For example, Association of Southeast Asian published a manual for construction Nation (ASEAN) member states introduced • Financial and non-financial incentives can of EE buildings, its recommendations over 10 certification programs for EE and green be implemented in programs like PAHP to have not been widely adopted. buildings. These certification programs often encourage the integration of green affordable • Most developers prioritize financial coincide with award initiatives to stimulate housing within private sector projects. outcomes and are unlikely to adopt interest and engagement among building green building practices without designers and owners. In Singapore, being adequate incentives. prequalified under its building certification program is a prerequisite for eligibility under the Retrofitted Public • Existing designs of primary schools • Planning-, Education-, and Health- related government’s financial support program. Sector Building and BHUs do not have EE building departments can jointly conduct a study to Projects features, and government repair upgrade standards for schools in urban and • The International Finance Corporation (IFC)’s and renovation projects do not rural areas, and for BHUs and other health EDGE Green Building Certification is growing take EE building improvements into centers. in developing markets like Columbia where consideration. over 20 percent of all new projects are • Planning, Housing, Communication and Works EDGE‑certified. • Solarization projects in public (C&W), EE and Physical Planning Departments buildings have solely focused on can look into integrating building EE into • Including prescriptive EE measures: Affordable installation of PVs, lacking focus on all aspects of project implementation: housing projects such as the PMAY in India improving EE. design, project documents, procurement incorporates various prescriptive green building requirements, monitoring of implementation guidelines to ensure affordable housing under and third-party validation of energy savings the program meets EE standards. after construction. • The government could introduce pilots to assess different green building measures with EE elements. 8 Pakistan Energy Efficiency - Knowledge Notes Lack of awareness and knowledge regarding EE building designs. The typical design and construction of the building envelope commonly used in Pakistan, such as basic walls and roofs built with masonry and concrete slabs and single-glazed windows with aluminum frames, perform relatively poorly in thermal insulation. The energy conservation impact and long-term financial benefits of energy-efficient building design have not been recognized by building owners, developers, or designers. Type of Building/ Specific Challenges Project and Barriers Potential Mitigation Actions Relevant International Experience New Commercial • In Pakistan, most commercial • Enhanced awareness of the benefits of EE • Building Energy Labeling and Energy Buildings building designs have floor areas (such as lower energy bills) among building Performance Certificate: Denmark has of roughly 1,000 square feet (sq. owners and tenants could encourage uptake implemented a building energy labeling ft) to 2,000 sq.ft. These buildings of EE in commercial building design. This scheme since 1998. The energy labeling scale are rented out by the owners, and could be achieved through pilot demonstration runs from A to G, where A denotes low-energy tenants pay for operating energy projects such as voluntary building energy buildings, while G-labeled buildings consume costs. The benefits of EE commercial audits in collaboration with EE building owners/ the most energy. The building energy ratings buildings—lower operating costs developers. are determined through energy modeling. and better thermal comfort—are not • In the United Kingdom (UK), the Energy well communicated to tenants. This Performance Certification (EPC) requires leaves no incentive for the owner of minimum ‘C’ level energy rating for new the building to cover the extra cost buildings and existing buildings that are sold, of EE features. rented, or transferred. New Home • Homeowners and developers • Enhance awareness of the long-term benefits • ENERGY STAR for New Homes: The Construction Projects typically aim to minimize capital of EE home designs among homeowners ENERGY STAR for New Homes program costs and may overlook the and the general public. The Government of was first offered in 1995 by the United long-term benefits of reduced Pakistan can take the initiative in collaboration States Environmental Protection Agency operating expenses and increased with private sector. (EPA). The goal of the program is to help thermal comfort offered by EE homebuyers easily identify homes that are • Promote green building materials in local home designs. This often leads to significantly more energy-efficient than markets incentivizing their production, ensuring reluctance to cover the incremental standard construction in the marketplace. The their affordability, raising awareness among capital costs associated with EE program requirements have been upgraded stakeholders, and fostering partnerships with features. By contrast, they frequently periodically to ensure that ENERGY STAR manufacturers to enhance availability and prioritize spending on aesthetic homes continue to represent meaningful quality. features. improvements over non-labeled homes. According to the ENERGY STAR website, more than 2.3 million energy‑efficient new homes and apartments have been certified to date. Achieving Energy Efficiency in Buildings 9 Ineffective enforcement of EE standards for building design and construction. The enforcement of the current building energy codes in Pakistan (ECBC-2023) by local development authorities (DAs) nationwide has been ineffective. Various issues, including the integration of the energy efficiency requirements into local regulations, and the limited knowledge and capacity of DAs for reviewing, approving, and monitoring compliance, have been hampering the progress of enforcement. This inadequate enforcement allows for the continued construction of noncompliant, inefficient buildings. The ECBC 2023 covers a conditioned area of 200 m2 or greater, or unconditioned buildings with a covered area of 300 m2 or more. As a result, many smaller residential and nonresidential buildings fall outside the scope of this code. Type of Building/ Project Specific Challenges and Barriers Potential Mitigation Actions Relevant International Experience New and • Compliance with the ECBC-2023 has • Public sector buildings should be used as an As of November 2021, 80 countries had Retrofitted Public not yet been specified as a requisite entry point for the government to promote the mandatory or voluntary building energy Sector Buildings for securing technical and financial enforcement of EE building standards, building codes at the national or subnational level; approvals for new and retrofitted public capacity among local building practitioners and 43 of these countries had mandatory codes sector building projects. contractors, and to set an example for the private at the national level for both residential sector and society to follow. and nonresidential buildings (UNEP 2021).ix New and • Typical designs of small-scale • When revising building codes, the relevant Some relevant international experience in Retrofitted commercial buildings in Pakistan have authorities should consider the typical design of enhancing effectiveness of the building Commercial floor areas of roughly 1,000 sq.ft. to commercial buildings, which have smaller floor energy code includes: Buildings 2,000 sq.ft., and these are not covered areas than the current thresholds specified. • Training for building energy code by the ECBC- 2023. regulators: Many countries have • Localization and implementation of the National implemented robust awareness, training, • Local construction regulations have not Building Energy Code should be spearheaded and capacity-building programs targeting yet incorporated the EE requirements by NEECA and Provincial designated agencies, both national and local authorities on outlined in the ECBC-2023. DAs Pakistan Engineering Council, and authorities certification and compliance with building responsible for construction permit having jurisdiction, supplemented by nationwide energy codes. These programs extend approvals lack the capacity and tools training and capacity-building programs as well to code inspectors or building officials necessary for compliance checks. as the development of necessary guidelines and responsible for compliance inspections. tools for compliance checks. • Alternative compliance procedures for • The government could establish technical center/ building energy code: Hong Kong SAR, cells under NEECA, Provincial EE designated China and Thailand have included the agencies and PEC to support development whole building performance approach authorities and building owners/developers during as an alternative to the prescriptive the interim period. approach, as currently stipulated in the ECBC‑2023. 10 Pakistan Energy Efficiency - Knowledge Notes Ineffective enforcement of EE standards for building design and construction. The enforcement of the current building energy codes in Pakistan (ECBC-2023) by local development authorities (DAs) nationwide has been ineffective. Various issues, including the integration of the energy efficiency requirements into local regulations, and the limited knowledge and capacity of DAs for reviewing, approving, and monitoring compliance, have been hampering the progress of enforcement. This inadequate enforcement allows for the continued construction of noncompliant, inefficient buildings. The ECBC 2023 covers a conditioned area of 200 m2 or greater, or unconditioned buildings with a covered area of 300 m2 or more. As a result, many smaller residential and nonresidential buildings fall outside the scope of this code. Type of Building/ Project Specific Challenges and Barriers Potential Mitigation Actions Relevant International Experience New and • Smaller residential buildings in • A dedicated Building Energy Code for • Development of policies/tools to assist Retrofitted Pakistan are not covered by the residential buildings could be developed for compliance: Clearly defined policies Residential ECBC-2023, while GBCP-2023 Pakistan, alongside a comprehensive training and tools for demonstrating code Buildings excludes all single-family dwellings. and capacity-building program as well as compliance are essential. Canada, However, bylaws issued by some guidelines and tools to assist the compliance Singapore, and the United States have DAs have broadly stipulated EE check process. developed software and modeling requirements for residential buildings tools to demonstrate compliance with • Energy efficiency parameters could be more without specifying the compliance building energy codes. China has effectively integrated into the existing bylaws of guidelines and checklists. This makes a separate guiding document that development authorities. compliance with the byelaws more provides detailed requirements for challenging for both homeowners/ • Tailored incentive programs and concessional both new and existing buildings. developers and DAs. finance options should be introduced to • Site inspection during construction: meet the distinct needs of both real estate • A major constraint affecting the Additional site inspections during developers and families undertaking self-built existing EE building codes is the construction are essential for checking housing projects. disconnect the codes, which were the quality of installation and ensuring developed by NEECA and the the accuracy of following through on Pakistan Engineering Council, and design details crucial for efficiency and building plan approvals, which are meeting code requirements. issued by various local governments. Achieving Energy Efficiency in Buildings 11 Availability of certified EE appliances and equipment. Only six products—electric fans, domestic refrigerators, wall-mounted air conditioners, LED lamps, electric motors, and storage gas water heaters—have been included in the Minimum Energy Performance Standards (MEPS) and energy star rating scheme in Pakistan to date. However, only the MEPS labeling requirements for electric fans are mandatory, and the remaining products are still implemented as voluntary programs. Building practitioners and consumers lack proper benchmarks and guidance to make informed decisions when purchasing building appliances and equipment. This situation also has limited EE options for building designers, contractors, and owners, who thereby generally adhere to local availability and practices. Large-scale conversion and market transformation toward more energy-efficient technologies in residential, commercial, and public sector buildings are unlikely to occur unless the issue of product availability is resolved. Type of Building/ Project Specific Challenges and Barriers Potential Mitigation Actions Relevant International Experience New and • There are no standard public • The relevant authorities should develop an EE • Mandatory MEPS and labeling Retrofitted Public procurement guidelines that stipulate EE procurement guideline specifying certified products programs for building appliances and Sector Buildings appliances and equipment, certified by under the MEPS and labeling scheme in Pakistan equipment: More than 100 countries the national MEPS and labeling scheme in as the minimum requirements. This EE procurement worldwide have implemented Pakistan, as the minimum requirement for guideline could be part of the national sustainable mandatory Minimum Energy new and retrofitted building projects. This procurement scheme, adopted by federal, provincial Performance Standards (MEPS) and/ leaves different federal, provincial and and government agencies in Pakistan. or energy labels for common building local government units considering EE appliances, such as air conditioners, requirements as they refrigerators/freezers, and lighting. see fit. Pakistan has already begun the New and • Delayed enforcement of the MEPS • NEECA and PSQCA, as the national implementing voluntary implementation of MEPS Retrofitted and the labeling scheme in Pakistan agencies for the energy labeling scheme and MEPS and labeling requirements for these Commercial has restricted the market availability of in Pakistan respectively, need to fast-track the appliances, but the transition from and Residential certified EE appliances and equipment. MEPS and labeling implementation and develop voluntary to mandatory implementation Buildings As a result, consumers are unable to other necessary mechanisms (such as a product should be fast-tracked. make well-informed decisions when registration system) to ensure compliance and • In mid-2006, India’s Bureau of Energy purchasing appliances and equipment integrity of the scheme, as well as the formation of Efficiency launched a MEPS and for new installations or replacements. the Energy Conservation Tribunal. labeling program that now covers 28 • Products that comply with PSQCA MEPS, verified appliances and equipment and saves through validated test reports, should be included in around 50 terawatt hours (TWh) of the Market Rate System (MRS) list of the provinces. electricity annually. Additionally, any product awarded a high star rating by NEECA must adhere to the overall PSQCA standard parameters. 12 Pakistan Energy Efficiency - Knowledge Notes Absence of financial mechanisms and tools to enhance EE adoption. Fear of incremental costs associated with EE features in construction of new buildings and retrofitting of existing buildings often deter investment, particularly for owners with limited financial resources. Limited access to financing options or incentives for EE upgrades further compounds this issue. Financial institutions often fail to distinguish between EE building projects and conventional ones. Consequently, the financial advantages of EE projects are not factored into the risk assessments, making them less competitive due to higher investment costs. Without policy interventions from the government of Pakistan to encourage financial institutions to offer tailored financial products and mechanisms aimed at promoting EE buildings, these projects are unlikely to attract interest from building owners and developers. Type of Building/ Specific Challenges and Project Barriers Potential Mitigation Actions Relevant International Experience New Public Sector • No specific funding • Pakistan could enhance its Energy Conservation • Concessional/preferential loans for EE buildings: Building Projects windows for EE investments Fund (ECF) to support EE investment in public- Many countries offer concessional loans for EE in new and retrofitted sector buildings. buildings. In Germany, the climate‑friendly new public-sector buildings. build program (KFN) was launched in March New Low‑Cost • Lack of attractive financing • Private-sector initiatives should be contacted and 2023, offering subsidized loans with an interest Housing Projects for private-sector housing assisted in both technical and financial aspects. A rate of about 2 percent. The program aims to (Private-Sector- schemes. While various number of opportunities exist such as IFC funding and support builders committed to constructing Funded Projects) global climate finance Karandaz Pakistan funding. energy efficient and sustainable homes. As schemes are available, the of December 2023, KFN had funded over • Green Mortgages and incentive programs should be 47,000 new climate‑friendly homes, attracting private low-cost housing introduced for EE and green housing projects. House investments totaling around 17.4 billion Euros. initiatives have not been Building Finance Corporation (HBFC) could provide able to take advantage of Thailand, through the Energy Efficiency lower markup loans for building EE increments. any of these to scale up Revolving Fund (EERF), also offers low- aspects of EE building. interest loans (up to 4 percent) for EE retrofits New and • Lack of awareness on Some financial incentives could be made available in commercial buildings. As of 2016, 45 Retrofitted newly constructed EE for building owners to integrate EE building features. large commercial buildings, primarily hotels Commercial buildings, which may only These include: and private hospitals, utilized EERF for EE and Residential have a minor incremental • The Karandaz Pakistan or similar financing investments in their building facilities. Buildings cost of construction. scheme for building EE improvements, such as operationalization of Green Real Estate Investment • Lack of availability of Trust (Green REIT),x which is specifically designed financial incentives to to encourage small investors to contribute to reduce the burden on sustainable real estate projects. building owners in covering the incremental cost of • Financial incentives provided by multilateral, building for EE features bilateral, and other donor agencies to kickstart the and/or the entire EE adoption of EE features, with the expectation that building project. the private sector will eventually take over. Achieving Energy Efficiency in Buildings 13 Absence of financial mechanisms and tools to enhance EE adoption. Fear of incremental costs associated with EE features in construction of new buildings and retrofitting of existing buildings often deter investment, particularly for owners with limited financial resources. Limited access to financing options or incentives for EE upgrades further compounds this issue. Financial institutions often fail to distinguish between EE building projects and conventional ones. Consequently, the financial advantages of EE projects are not factored into the risk assessments, making them less competitive due to higher investment costs. Without policy interventions from the government of Pakistan to encourage financial institutions to offer tailored financial products and mechanisms aimed at promoting EE buildings, these projects are unlikely to attract interest from building owners and developers. Type of Building/ Specific Challenges and Project Barriers Potential Mitigation Actions Relevant International Experience • Similarly, incentives for EE materials and • Energy performance contract for EE building appliances and their manufacturers could be retrofits: In Singapore, the Building Retrofit provided could be provided through climate Energy Efficiency Financing (BREEF) scheme financing projects to increase market availability offers financing to support the upfront costs and affordability. of retrofits through an Energy Performance Contract (EPC) where the Building and Construction Authority of Singapore shares 40 percent of the risk of any loan default with the participating financial institutions. • Incentive programs for EE buildings: Grants and subsidies are also common tools used by many European countries and the United States to enhance EE adoption in buildings. Most grants and subsidies are designed to encourage beneficiaries to surpass the minimum requirements specified in the building energy code. • EE public budgets: Studies from countries including Germany, Mexico and United States demonstrate the benefits and costs to public budgets of EE policy. EE improvements can significantly impact the budgetary position of national and subnational government entities. An important impact on public budget is on reduced fuel costs for heating, cooling and lighting, a budget line that is expected to increase over time as energy prices rise.xi 14 Pakistan Energy Efficiency - Knowledge Notes What near‑term interventions can the government implement to improve the energy efficiency of buildings? Energy efficiency interventions in buildings can deliver significant energy savings, reduce circular debt, reduce consumer energy expenditures, and lower peak consumption on the electricity grid. To address the most urgent barriers to implementing energy‑efficient buildings, the government can consider the following recommended interventions: • Establish Green Building Cells in the designated energy efficiency agencies and respective development authorities to strengthen energy efficiency and green investments in new and existing buildings. The Green Building Cell will provide technical assistance and guidance on existing green building approaches and standards, including EDGE, LEED etc. for energy efficiency and green building design, validate the energy efficiency of green building, and monitor and evaluate building construction projects • Undertake capacity building of Green Building and EE code regulators in compliance procedures for effective enforcement of building energy efficiency standards. Use public-sector buildings as an entry point to promote enforcement of energy efficiency standards,11 build capacity among local practitioners and set an example for the private sector. • Develop energy efficiency protocols for low-cost housing initiatives by revising project designs for approved and planned, public-sector low-cost housing projects.12 Establish prescriptive measures for passive design and incentives for adoption of EE homes for private-sector projects • Enhance awareness of energy efficiency benefits and implement building energy labeling and performance certification programs such as EDGE Certification and develop energy efficiency procurement guidelines. Green building certifications can serve as a powerful catalyst for accelerating energy efficiency investments by providing both financial incentives and market differentiation while providing verifiable data on resource efficiency and carbon savings. • Upgrade the codes to provide policies and tools for compliance, conduct site inspections during construction for new and retrofitted buildings, and extend the code to all types of buildings. • Fast-track MEPS and labeling programs implement mandatory MEPS and labeling for certified energy-efficient appliances and equipment, while strengthening compliance. • Establish a designated Energy Consumer Scheme for mandatory energy audits in Pakistan by developing a ‘large-building consumer’ database and establishing an energy audit training, certification, and registration program. Use this scheme to notify designated building consumers on their obligations and energy saving potential. 11 The government can demonstrate its leadership in utilizing the Green Building Cell to improve EE performance of public schools and basic health units through EE passive building designs and retrofits. The estimated incremental investment costs for EE building envelope for new public schools and public health facilities is about PRs 6 billion (~US$ 20 million) and the cost of fixed external shading for existing public school and health facilities is about PRs 16 billion (~US$ 57 million). 12 The Energy Efficiency for Low-Cost Housing Initiative could initially target 10,000 3-Marla affordable housing units, and the total estimated project cost for integration of desirable EE and green elements into these affordable housing units will be around PRs 4.5 billion (~US$16 million). Achieving Energy Efficiency in Buildings 15 • Enhance the Energy Conservation Fund and green financing schemes with the principles of the forthcoming Green Taxonomy to offer attractive financing for private-sector housing and provide targeted financial incentives to building owners for integrating energy efficiency features that meet or exceed taxonomy-aligned criteria. • Establish a Green Building Award program with the aim to recognize existing best practices, promote awareness on energy efficiency and conservation in buildings and encourage greater voluntary implementation of energy‑efficient best practices beyond the mandatory minimum requirements. 16 Pakistan Energy Efficiency - Knowledge Notes Annex 1 APPROACH AND METHODOLOGY The identification of potential EE investments in the building sector in Pakistan was conducted through desk research, walk-through energy audits, and discussions with stakeholders in the country’s building sector. These approaches facilitated the discovery of typical construction practices, choices of building materials and end-use equipment/appliances for various building topologies, and commercially available and affordable EE alternatives in the country. The analysis of EE potential, considering building orientation and the use of EE building materials, was conducted using the Hourly Analysis Program (HAP), a tool commonly employed in Pakistan by architects and engineers for certifying EE and green buildings. The potential EE market size at the national level was estimated based on the EE investment required for each type of building and then extrapolated nationally. In the case of new buildings, the potential EE market size considers the incremental investment costs of incorporating EE features. For existing buildings, the full investment costs of EE retrofit projects are taken into account when estimating the potential EE market size. Identification and recommendation of feasible and practical EE financing initiatives to facilitate EE investments in new and existing buildings were undertaken through a comprehensive review of past and ongoing energy financing initiatives in Pakistan. The recommended EE financing initiatives also considered the capacities of partnered institutions to ensure that, in the short term, existing institutional capacities are adequate to facilitate the detailed design and operationalization phases of the recommendations. Achieving Energy Efficiency in Buildings 17 Annex 2: DETAILS ON THE ENERGY CONSERVATION BUILDING CODE (ECBC), 2023. Table 2A.1:  Scope, Application, and Limitations Scope Load and area Buildings Building systems Exemptions Limitations Applicable to buildings Applicable to: Applicable Exempted buildings: In case of any and building clusters • New buildings and building systems: • Buildings that do conflicts, relevant that have: their systems • Building not use electricity provisions of the • Total connected envelope or fossil fuels safety, health • Extensions to load of 50kW or and environment existing buildings • Mechanical • Government higher codes will and their systems systems and notified prevail. • Contract demand if connected load equipment historically of 75kVA or higher exceeds the limits including significant HVAC and heritage • Conditioned area • Retrofitting buildings of 200 m2 or projects • Service water greater heating • Portion or • Increase in equipment of • Unconditioned electricity load • Lighting buildings systems buildings with beyond the limits • Electric power, that use energy covered area of motors and for manufacturing 300 m2 or greater equipment process Table 2A.2:  Systems Included in Mandatory Minimum Requirements Building HVAC Service water Electric power, motors Envelope system heating Lighting and equipment • External walls • Temperature • Piping • Lighting • Transformers and roof control insulation controls • Energy efficiency • Windows and • Mechanical • Equipment • Exit signs motors doors ventilation efficiency • Exterior • Power factor • Insulation, air • Piping and • Swimming building and correction leakages and ducting work pools ground lighting • Check metering infiltration • Air system • Landscape • Power distribution balance lighting systems • Voluntary • Interior and • Monitoring devices adoptions exterior lighting (natural power • Geothermal and ventilation, renewable energy alternative • Energy management energy) system • Charging provisions for electric vehicles 18 Pakistan Energy Efficiency - Knowledge Notes Annex 3 ANALYSIS AND RESULTS Figure 3A.1:  Major Cities’ Annual Energy Savings through Building Orientation Table 3A.1:  Annual Energy Savings through Building Orientation No. Type of Building Average Annual Energy Savings (%) 1 5‑ma Affordable Housing Unit 1.2 2 5‑Marla Middle‑Income Housing Unit 0.8 3 10‑Marla Middle‑Income Housing Unit 2.8 4 5‑Room Public School 3.6 5 10‑Room Basic Health Unit (BHU) 1.6 Figure 3A.2:  Major Cities’ Annual Energy Savings by Incorporating EE Elements in a Building Envelope Note: Savings estimated for modifications to the building envelope only (insulation in external walls and roof, and use of double‑glazed windows). The thermal transmittance properties of typical wall and roof sections are improved by adding insulation. Achieving Energy Efficiency in Buildings 19 Table 3A.2:  Annual Energy Savings by Incorporating EE Elements in a Building Envelope No. Type of Building Average Annual Energy Savings (%) 1 4-Marla Small Commercial Building 28 2 10-Marla Small Commercial Building 31 3 5-Marla Affordable Housing Unit* 35 4 5-Marla Middle‑Income Housing Unit 30 5 10-Marla Middle‑Income Housing Unit 29 6 5-Room Public School 27 7 10-Room Basic Health Unit (BHU) 20 *Assumes conditioned area of 575 sq.ft. Figure 3A.3:  Annual Energy Savings by Adding External Shading to Windows Table 3A.3:  Annual Energy Savings by Adding External Shading to Windows Shading over Shading over Double‑Glazed Window Clear Glass Window No. Type of Building Average Annual Energy Savings (%) 1 5-Marla Affordable Housing Unit 0.3 1.1 2 5-Marla Middle‑Income Housing Unit 0.4 0.8 3 10-Marla Middle‑Income Housing Unit 0.3 3.0 4 5-Room Public School 0.1 2.6 5 10-Room Basic Health Unit (BHU) 0.1 0 20 Pakistan Energy Efficiency - Knowledge Notes Table 3A.4:  Benefits of EE Building Envelope in Typical Building Typologies in Pakistan Typical Design Investment EE Design Incremental Average Payback Cost (Pakistan Investment Investment Annual Energy Period No. Building Model Rupees (PRs)) Cost (PRs) Cost (%) Savings (%) (Years) 1 4-Marla Small 2,944,300 5,438,100 85 28 4.8 Commercial Building 2 10-Marla Small 4,062,850 7,371,500 81 31 4.5 Commercial Building 3 5-Marla Affordable 1,319,400 1,975,900 50 35 2.7 Housing Unit* 4 5-Marla Middle‑Income 2,089,400 3,451,850 65 30 3.7 Housing Unit 5 10-Marla Middle‑Income 2,539,150 4,273,100 68 29 4.1 Housing Unit 6 5-Room Public School 5,312,750 8,172,250 54 27 4.2 7 10-Room Basic Health 3,194,450 4,580,350 43 20 3.5 Unit (BHU) *Assumes conditioned area of 575 sq.ft. Achieving Energy Efficiency in Buildings 21 Annex 4: MARKET POTENTIAL Table 4A.1:  Annual Energy Savings and Market Potential for New Energy Efficient Construction in Pakistan Estimated Annual Potential Annual Annual EE Market Construction Demand Energy Savings Potential Type of New Building (Unit) (GWh) (PRs, millions) Small commercial building (targeting 1,200 – 1,500 28 4,467 middle‑income populations) Low‑cost housing unit (targeting low 150,000 – 160,000 1,083 101,758 and lower‑middle income population) Middle‑income housing unit 35,000 – 40,000 452 65,023 Public school (for children under the 1,600 – 1,700 32 4,718 age of 10) Basic health unit (BHU) 1,000 – 1,100 12 1,455 Total 1,607 177,421 Table 4A.2:  Estimated EE Market and Energy Savings Potential from Insulation and Shading Measures on Existing Buildings Potential Energy Savings EE Market Potential No. EE Retrofitting Measure 13 (GWh per year) (PRs, millions) 1 Installation of 3‑inch insulation above 194 10,560 gypsum board false ceiling on the top floor of commercial building. 2 Installation of fixed overhang shading 1,994 339,552 over single‑glazed, clear glass windows in affordable housing units, middle‑income housing units and public schools. 13 Gross roof area for 4‑Marla Small Commercial Building = 574 sq.ft. and 10‑Marla Small Commercial Building = 880 sq.ft. Fixed overhang shading area for 5‑Marla Affordable House = 58 sq.ft.; 5‑Marla Middle‑Income House = 122 sq.ft.; 10‑Marla Middle‑Income House = 143 sq.ft.; 5‑Room Public School = 294 sq.ft.; and 10‑Room Basic Health Unit = 55 sq.ft. 22 Pakistan Energy Efficiency - Knowledge Notes Endnotes i International Energy Agency (IEA). 2024. Pakistan: Energy Efficiency and Demand. Paris: IEA. ii International Energy Agency (IEA). 2025. Global Energy Review 2025: Electricity. Paris: IEA. iii World Bank. 2023. Building Code Checklist for Green Buildings. Washington, DC: World Bank. iv  Lahore University of Management Sciences. (2023, December). Enhancing residential sustainability: The impact of energy‑efficient housing in Pakistan. v  Pakistan Bureau of Statistics. 2023. Announcement of Results of 7th Population and Housing Census 2023: The Digital Census. Islamabad: Pakistan Bureau of Statistics. vi International Finance Corporation (IFC). 2024. EDGE User Guide: Part 3 – Energy Measures (Rev 1). Washington, DC: IFC. vii Lawrence Berkeley National Laboratory (LBNL). 2025. Cool Roofs. Berkeley, CA: LBNL Heat Island Group. viii Srinivasan, R. S., and Tabares-Velasco, P. C. 2015. “Assessment of the Impact of Cool Roofs in Rural Buildings in India.” Energy and Buildings (June). ix United Nations Environment Programme (UNEP). 2021. 2021 Global Status Report for Buildings and Construction.: UNEP. x International Energy Agency (IEA). 2019. Multiple Benefits of Energy Efficiency 2019. Paris: IEA. xi Dawn.com. 2025. Karandaaz Pakistan: Driving Climate Action through Green Financing. February 13. Achieving Energy Efficiency in Buildings 23