$150 billion economic boost from lower carbon homes and buildings, reveals new report

12 September 2022

The New Zealand economy could receive a multi-billion dollar injection, totalling almost $150billion, if new homes and buildings are constructed to be less polluting, the very first study of its kind has found.

The new report, written by leading economic analysts BERL and released today (Monday 12 September), found that building new homes and large offices with significantly reduced carbon emissions “would contribute an additional $147 billion to New Zealand’s GDP” by 2050.

Read the report


On top of the multi-billion dollar contribution to the nation’s coffers, building much lower carbon homes and offices will also support an average additional 46,000 full-time jobs every year between 2025 and 2050, the study found.

Carbon pollution from the construction of less polluting homes and offices could be cut by 13million tonnes, the report, commissioned by the Green Building Council, reveals.

And electricity demand from new build houses and offices would be slashed by over 8,000 gigawatt hours in 2050 compared to standard homes and offices built today. That’s more than two and a half times the electricity produced by burning highly polluting coal in New Zealand in 2021, and enough to power millions of electric vehicles each year.

The built environment is responsible for around 20 per cent of New Zealand’s carbon footprint, and a typical new Kiwi home emits five times too much carbon to stay within two degrees of warming.

The research is the first of its kind in Aotearoa, and is intended to start to fill an absence of economic analysis examining low carbon new homes and offices.

To measure the economic impacts of building low and near zero carbon homes and offices, the study developed plans for three different homes – a home built only to the bare minimum requirements of the Building Code, a low emission home, and a near zero emission home – and two office plans – a typical four storey office, and a low emission four storey office.

The analysts at BERL then developed two different scenario timelines. The first scenario saw just Building Code compliant houses and offices being built in 2023 and 2024, with low emission houses and low emission offices built from 2025 to 2034, and then, from 2035 to 2050, near zero emission houses and low emission offices are built.

The second, less ambitious scenario saw Building Code compliant houses and offices built between 2023 and 2029, then from 2030 to 2039 low emission houses and low emission offices built and then, from 2040 to 2050, near zero emission houses and low emission offices built.

The first, most ambitious scenario, which charts a similar trajectory to the government’s Building for Climate Change programme, brought the greatest economic benefits, and emissions and electricity reductions.

For homes, the study found that “Building near zero emission houses has the greatest economic impact”, and the “earlier these houses are built the greater the potential economic impact of construction, electricity savings and emissions avoided.” The ambitious scenario “would result in an additional $42 billion direct contribution to GDP” and when “the indirect and induced impacts are included, the total GDP contribution is $141.5 billion, at an average of $5.1 billion per year”, the research found.

The ambitious scenario for large offices also saw the greatest benefits, with “an additional $1.57 billion direct contribution to GDP”, and when “the indirect and induced benefits that flow through the economy are included, the GDP contribution is $5.2 billion.”

Nick Robertson from BERL said: “At first, we were surprised there was such limited information available on this issue.

“This research is the first step towards realising the benefits better quality houses and buildings can have, and is just the start of what should be an ongoing conversation which will be helped with more research building on this report.”

The Green Building Council’s chief executive, Andrew Eagles, said: “It’s now clear that there are billions of reasons to build healthier, less polluting homes and buildings in Aotearoa – and to build them as soon as possible if New Zealanders are going to enjoy the host of benefits on offer.

“Besides an additional economic contribution of $150 billion, building better homes and buildings will also slash climate change pollution, hugely reduce electricity use, and cut household energy bills – something that will be welcome for lots of families facing costs of living increases.

“Building these healthier homes and buildings will also create tens of thousands of jobs, ensuring there will be work for New Zealanders currently employed in fossil fuel industries, helping a just transition as the country moves away from industries such as oil, gas and coal.

“A massive economic boon, big reduction in carbon emissions, and lower household bills – the reasons for building cleaner are now clear.

“What is also clear is that the world is warming, bringing more extreme storms and flooding to our doorsteps.

“And this warming is only matched by the all too glacial pace at improving the Building Code. The government needs to prioritise it’s own plan to clean up the Building Code and stop the delays. Doing so will be great news for New Zealanders, our economy, and our obligations to reduce carbon pollution.”

Earlier this year, scientists from the United Nations’ Intergovernmental Panel on Climate Change warned that action must be taken “now or never” to avert the very worst effects of climate change, and that there must be “rapid, deep and immediate” cut in carbon emissions.

Just weeks after the UN warning, government officials announced a delay in planned improvements to insulation in New Zealand homes. The improvements were intended to make homes warmer, drier and reduce electricity use by 40 per cent.

Buildings cause climate change emissions in two ways. The first way is when the construction materials, such as steel or concrete, are produced. Building experts call these ‘embodied emissions’. The second way is when buildings use energy for everyday things like lighting, and heating water for your shower. These are called ‘operational emissions’.

There is much more research that should follow, say BERL.

For instance, apart from homes, the report only included large offices, and didn’t consider smaller offices or the many other kinds of non-residential buildings. Also, the study looked at houses, and more research could include different kinds of homes, including apartments, as well as existing homes and buildings.

Reducing the carbon emissions from homes will be discussed at The Housing Summit in Auckland on 27 September.



You can find a full copy of the report here