Net zero or growth?
How Belgium can have both.
A look at the McKinsey 2023 report with a focus on the built environment.
Net zero or growth?
Belgium’s Path to Net-Zero
The Role of the Built Environment
Under the Paris Agreement, Belgium has committed to reaching net-zero greenhouse gas emissions by 2050. Given its dense population and highly industrialized economy, Belgium ranks 7th in CO₂ emissions per capita among the 27 EU countries.
In a recent report, McKinsey & Company provides an in-depth analysis of Belgium’s potential to achieve this goal and drive green economic growth. The report highlights the necessary actions and investments across key sectors to overcome these challenges, while also exploring the business opportunities the global net-zero transition could unlock for Belgian companies and the economy as a whole.
As strong advocates for sustainable construction, we’ve summarized the key takeaways from the report related to the built environment.
Let’s dive in!
Belgium has a unique opportunity to reduce its reliance on foreign energy. Currently, the country supplies only 5% of its energy needs domestically, but by following a net-zero pathway, it could increase that figure to 50%.
Achieving this would require:
- Expanding renewable energy production, particularly solar and wind
- Implementing energy-efficiency measures across all sectors
Key Changes Needed
To align with net-zero objectives, both new and existing buildings must undergo a massive energy transformation. Specifically, nearly 5.5 million of Belgium’s 5.7 million building units must achieve an A-label energy performance certification. This will require a mix of:
- Deep energy retrofits
- New builds and reconstructions
- Transitioning away from fossil fuels
Deep energy retrofits, which reduce energy consumption by 60% or more, are crucial. These improvements include better insulation, the adoption of heat pump technology, and the expansion of district heating systems. However, this is a complex challenge due to Belgium’s older, larger, and less insulated buildings, as well as its historical city centers.
Key Drivers for the Building Sector by 2030:
- 30%+ of buildings highly insulated
- 20% of buildings equipped with heat pumps
To meet these targets, the energy retrofit market could double, while the pace of deep retrofits would need to increase 25-fold—from 10,000 buildings per year today to 250,000 by 2030.
This transformation will require:
🔹 Massive demand for building materials and skilled labor
🔹 Innovations in sustainable, efficient, and cost-effective construction methods
🔹 Immediate adaptation of training and education programs
€415 Billion: The Investment Required for Net-Zero
According to McKinsey’s analysis, achieving net-zero will require an incremental investment of approximately €415 billion, with buildings and power accounting for the largest share.
Breakdown of Investment Responsibilities:
- 45%: Households (including residential housing and energy-efficient upgrades)
- 40%: Businesses (across all sectors)
- 15%: Infrastructure providers (energy, transport, and industry)
The scale of this transition is unprecedented—but so is the opportunity to build a more sustainable, energy-efficient, and resilient Belgium.
The challenge is great, but the potential impact is transformational.
Are we ready to build the future?
Action Plan for Buildings: Transitioning Households to Energy-Efficient, Low-Emission Homes
Among the five key action points identified by McKinsey on the road to net zero, one of the most critical is the transition of Belgian households toward energy-efficient, low-emission buildings in a cost-effective and feasible way.
- However, this challenge is twofold:
The scale of retrofitting, rebuilding, and new construction required. - The significant investment burden on households to finance these changes.
Belgium must accelerate deep energy retrofits 25-fold to ensure its entire building stock achieves A-label energy performance certification by 2050.
Several tools can help accelerate this transition:
Seizing Green Growth Opportunities: Investing in Deep Energy Retrofits
The global sustainability shift is not just a challenge—it’s also a huge economic opportunity. For Belgium, this means capitalizing on the emerging building retrofits and rebuilds market.
European-wide demand: Countries across Europe will need to retrofit, rebuild, or construct new buildings to meet net-zero targets.
- A €400 billion opportunity: In Belgium alone, the retrofit market under the net-zero scenario represents a cumulative €400 billion investment between 2023 and 2050—with €210 billion in new investments.
- A booming sector: From 2030 to 2050, the Belgian retrofit market could reach €16 billion annually, creating a new growth sector for companies specializing in energy-efficient renovations.
Key Takeaways from the McKinsey Report on Buildings
- 240 million buildings in Europe (including 5.5 million in Belgium) will require energy retrofits or rebuilding to meet 2050 net-zero targets.
- Decarbonization will be complex due to the many stakeholders involved—fast decisions are crucial to drive change.
- Improved insulation is essential, potentially reducing Belgium’s heating demand by 2.5 times by 2050.
- Replacing fossil-fuel heating with electrification, biofuels, and district heating will be key to decarbonizing buildings.
- The energy retrofit market in the EU will nearly double, reaching €380 billion annually by 2030, rivaling the electric vehicle market.
- Flanders has mandated retrofits, with stricter performance requirements for buildings sold from 2040.
Decisions on structural investments must happen fast—within the next two years—due to the long lead time for implementation.
The transition is urgent, the investment is massive, but the potential impact is transformational. Belgium has a unique chance to lead the way in sustainable construction—will we seize it?
