Industry Insights

Bill Gates: Building Industry Should Step Up on Climate Change

NM Mutual

In a recent GatesNotes post, technologist Bill Gates argues that buildings are bad for the climate. And that’s a big problem, because as he notes, global construction is booming. “By one estimate,” he writes, “the world will add 2 trillion square feet of buildings by 2060 — the equivalent of putting up another New York City every month for the next 40 years.”

This piece is far from a hot take. Gates thoughtfully outlines both well-established and lesser-known Greenhouse Gas (GHG) impacts of buildings. He also offers meaningful guidance on what we can (and should) do about it, including sourcing greener materials, using technology to reduce energy use and supporting these goals through regulatory measures.

At SageGlass, we were pleased to see Gates highlight smart glass as a potential climate game-changer. “I’m aware of some promising technologies that could help buildings use energy more efficiently,” says Gates. “I’m intrigued by windows that use so-called smart glass, which automatically turns darker when the room needs to be cooler, and lighter when it needs to be warmer.”


How Buildings Impact the Climate

Those of us in the building industry understand the role of building energy consumption in GHG emissions, but there are additional factors to consider:

  • Embodied carbon: the GHG impact of producing building products is significant, particularly for concrete and steel. These two materials account for a staggering 10% of global GHG emissions. While embodied carbon is important, Gates notes that 80-90% of GHG emissions associated with buildings still come from the use phase (i.e. the life of a building’s operation). While our smart glass dramatically reduces lifetime building energy consumption, we focus on embodied carbon too. In fact, between 2014 and 2018, SageGlass reduced the GHG impact of its product by 74%.
  • F-gases: these compounds are refrigerants used in almost all of the 1.6 billion A/C systems around the world. These molecules are often released during system operation and maintenance, as well as production, and each one has far higher global warming impact than a molecule of CO2, often hundreds of times higher.

Mr. Gates highlights the role governments and corporations can play in addressing these challenges and mentions new technologies that can help. However, we don’t need to wait for new inventions to create super-efficient buildings. Everything we need is readily available today, and people will pay a premium for sustainable buildings.

There is compelling data to demonstrate this.


Net-Zero Buildings Are Cost Effective

Net-zero buildings — those that produce as much energy as they consume on an annual basis — are often treated as the “gold standard” of building design; a truly sustainable building.1  A report from the International Living Future Institute, New Building Institute and Skanska found that the incremental cost of a net-zero energy office building is 5-10% higher than a baseline office.2 Let’s pause to think about that: sustainable design can be achieved for a 5-10% cost premium.

While one could argue that the societal imperative for sustainable buildings should make this modest premium acceptable, the simple fact is that it hasn’t. For investments in sustainability to be made at scale, we need evidence of a return on these investments. And it exists.


Net-Zero Buildings Are Profitable

A recent publication in the Journal of Real Estate Research analyzed office tenant willingness to pay for green buildings and specific green building features. The authors found there is a net tenant Willingness To Pay (WTP) of 9.3% for sustainable buildings. This is somewhat higher, but only slightly, than previous work that showed a WTP of 4-7%.

Taken together, we see cost premiums of 5-10% and tenants willing to pay 4-9% more for sustainable buildings. These data points demonstrate that increased costs can easily be recouped from tenants who value, and will pay for, sustainable features. We have seen this firsthand in our projects, as you can see in this video on the American Geophysical Union’s Net-Zero HQ, where they describe getting above-market rates from tenants.


Bad Buildings Can Be Better

Those of us in the building industry don’t like saying our buildings are bad in any way. So much time, attention and passion goes into them. But the stark language of Gates’ title speaks to a basic truth we need to acknowledge: buildings are indeed a major contributor to climate change. But as the data shows, this can be turned around today.

More than new inventions or government mandates, the biggest factor required is the will to make the change. Every building, every project, presents the opportunity to make better choices. Will you decide to make your next building sustainable? If your clients or stakeholders are content with the status quo, will you make the case, both ethical and economic, for a more sustainable approach?

Buildings can be better, but it comes down to the decisions we all make. Thank you, Mr. Gates, for using your influence to address the scope of the opportunity here. If we are collectively building the equivalent of New York City each month, then every material and system matters, from the tons of concrete to a single pane of glass.


  1. There is a lot that can be said on this. Net-zero energy is not the same as net-zero carbon, a more ambitious standard. Also, modeled net-zero buildings are not the same as actual net-zero buildings. Fodder for another blog.
  2. This report focused specifically on buildings in Washington, DC; obviously costs vary widely across the country, and the world. However, this report helps illustrate the point.