Real estate study: a lot to do before reaching net zero

Residential properties with no greenhouse gas emissions by 2050 – fantasy or reality?

In Switzerland, the goal is for housing stock to reach a point of climate neutrality by 2050. One reason for this is because buildings are the third-largest cause of greenhouse gases, accounting for almost 24% of emissions. Yet, how truly realistic is it for this segment to move away from fossil fuels by 2050? The 2023 Credit Suisse real estate study looks into this question.

Real estate accounts for almost a quarter of all greenhouse gas emissions

The future of the environment is on the minds of the Swiss electorate, as revealed by the Credit Suisse Worry Barometer. After all, the issue recently made it to number one on the list of worries among Swiss respondents. It is with good reason that Swiss policymakers have committed the nation to the goal of reducing greenhouse gas (GHG) emissions to a net level of zero by 2050. To accomplish this, emissions need to be reduced by 50% by 2030 compared to their 1990 level. This will have far-reaching consequences for the development of the building stock in Switzerland, as buildings are the third-largest cause of GHG emissions, accounting for 23.9% of the total.

Our 2023 real estate study examines the challenges of achieving net zero. The scenarios created by the Swiss Federal Office of Energy (SFOE) as part of its Energy Perspectives 2050+ program establish an important basis for this. What’s more, the authors of the real estate study computed their own scenarios.

New buildings can be constructed with almost no fossil fuels

A great deal has already been accomplished when it comes to new buildings. For more than a decade, the majority of newly built single and multi-family dwellings have had heating units installed that function without fossil fuels. This trend has expanded further in recent years. In 2022, 97% of the approved single-family dwellings and 96% of the apartments in multi-family dwellings were designed with heating systems that do not rely on fossil fuels.

The options for single-family dwellings have been reduced almost exclusively to heat pumps. District heating systems are also playing an important role in newly planned multi-family dwellings. In the wake of growing environmental awareness and the steep rise in prices for fossil fuels, oil and gas heating for new buildings is likely to be completely eliminated soon.

Very few new buildings are heated with fossil fuels

Hardly any new buildings use fossil fuels

Last data point: October 2022
Source: Baublatt, Credit Suisse

Serious lack of knowledge about the housing stock

The situation is different with respect to the existing housing stock. The long useful lives of buildings – which includes their facades, windows, and roofs – mean that premature replacement results in high depreciation costs. This is the reason why renovations are rarely undertaken much earlier than necessary.

When it comes to knowledge regarding the condition of the energy systems in Switzerland’s residential buildings, there are significant gaps. No information is currently available on when previous renovations were carried out and how extensive the work was. This is despite the fact that municipalities are required to keep their data up to date.

Information on heating systems is nevertheless available in the Building and Housing Register (GWR). However, the data available needs to be examined carefully, since roughly half of it was collected during the 2000 census. Heating units have an average life of 15 to 25 years, so many of them should have been replaced by now. A comparison with a survey conducted by the Swiss Federal Statistical Office in 2017 on heating systems in residential buildings seems to confirm this assumption: Some 39% of all residential buildings were heated with oil, and 21% were heated with gas. That is less oil heating than recorded in the GWR in 2022.

Real estate study: 60% of residential buildings are still heated with fossil fuels

Sixty percent of residential buildings are still heated with fossil fuels

Last data point: June 2022
Source: Swiss Federal Statistical Office

Rocky path to net zero

Policymakers are aware of the challenges related to the high percentage of old buildings with outdated heating systems and have taken action. In 2014, they proposed a set of requirements known as the “Cantonal model regulations for the energy systems” to tighten the energy-related codes in the building sector. However, their implementation is proceeding at a slow pace. At the end of September 2022, the 2014 model regulations had been adopted or had actually gone into effect in only 21 cantons.

As a result of the legal requirements and the skyrocketing prices for fossil fuels, the process of replacing conventional heating systems with sustainable solutions has recently accelerated vigorously and is likely to be expedited further in the coming years. According to the 2050+ Energy Perspectives, however, the rate at which the facades of multi-family dwellings are being renovated would need to be increased by 40% in the period between 2015 to 2035 in order to achieve the envisaged targets.

Residual lives of components are slowing the reduction timeline


According to the scenarios devised by the Federal Office of Energy (SFOE), heat pumps will be used in more than 90% of single-family dwellings built in the future. District heating will also play an important role in multi-family dwellings. However, the high percentage of fossil fuels and the previously mentioned restrictions mean the path to creating fully sustainable housing stock in Switzerland will remain challenging. In its main scenario dubbed “ZERO Basis,” the SFOE expects a 25% reduction in the amount of fossil heating between 2022 and 2030. By 2050, only 6% of all apartments will be heated with gas and 1% with oil.

Despite restrictions on renovations, the main scenario devised by Credit Suisse experts shows a faster decline in the number of apartments using fossil fuels than the BFE’s ZERO Basis scenario. This is primarily due to the difference at the start, which is probably one of the biggest problems when assessing the most realistic reduction timeline. Without accurate data on how many residential buildings are currently heated using fossil fuels, it is likely to remain difficult to make any predictions. This makes it necessary to create a sense of transparency faster.

Number of apartments heated with fossil fuels

Number of apartments with fossil heating

Source: Credit Suisse, Federal Office of Energy
Last data point: 2017

CS growth in 2022: heating conversions continuing to take place as rapidly as in 2022
CS accelerated growth: pace of heating conversion accelerated even more rapidly than before
CS renovation cycle: restrictions on the replacement of heating systems

Conclusion: Feasible but challenging

The goal of climate-neutral Swiss housing stock by 2050 is challenging, but it is not wholly unattainable. After all, more and more households are placing value on sustainability. However, further action is crucial if we are to actually achieve that goal. In this context, the main issue is how the to speed up the process of replacing facades, roofs, and windows to make them more energy efficient.

It is unlikely to work without legal pressure; for example, fossil fuels would need to become more expensive by imposing a direct CO2 tax. This is because, as well intentioned as voluntary efforts at reducing or offsetting CO2 emissions are, their effectiveness remains limited.

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