ABB: Could Circular Retrofitting Solve Energy Challenges?

Buildings are responsible for nearly a third of global energy consumption and more than a quarter of emissions, yet 75% of the buildings that exist today will still be in use by 2050 according to the World Economic Forum. 

ABB is hoping to address this through circular retrofitting, digitalisation and smarter resource use, which it says could unlock a US$3.8tn opportunity. 

Mike Mustapha is the Division President of ABB Smart Buildings which offers energy distribution, electrical protection, energy management, home and building automation solutions.

He shared his expertise with Energy Digital. 

Why are buildings so central to the global climate challenge?

Buildings are at the centre of the global climate challenge. Today, buildings account for around 30% of global final energy consumption and 26% of global energy-related emissions. As governments and businesses face growing pressure to meet 2025 and 2030 climate targets, the urgency to decarbonise has never been greater.

Yet, the idea that we can demolish and rebuild our way to net zero is unrealistic. With 75% of today’s buildings still expected to be in use by 2050, retrofitting is the only viable path forward. But not just any retrofitting – the next frontier is circular retrofitting.

What is circular retrofitting?

Circular retrofitting is a smarter approach that focuses on reusing materials, optimising energy efficiency with digital solutions and integrating resource-efficient technologies.

This shift isn’t just about sustainability; it’s also a massive economic opportunity. According to McKinsey, the retrofit market is projected to grow from US$500bn today to US$3.9tn by 2050.

The question is no longer if retrofits will happen – but how we make them more intelligent, sustainable and scalable to meet the demands of today and tomorrow.

What are the key trends shaping this shift to circular retrofitting?

Recent research from the World Green Building Council, McKinsey and BCG highlights four key trends:

• Circularity in materials – Up to 50% of materials from retrofits can be recirculated, cutting waste and lowering carbon footprints
• Energy efficiency at scale – AI-driven energy management can cut consumption by 30% without requiring major structural changes
• Smarter resource use – Digital twins and predictive analytics improve retrofit efficiency, reduce costs and enhance building performance
• Regulatory momentum – Stricter energy efficiency laws in Europe and the US are accelerating the demand for sustainable retrofits.

By adopting circular construction principles, smart automation and integrated energy solutions, building owners can cut emissions, reduce costs and extend the life of their assets.

What are the biggest challenges in scaling this approach?

While momentum for circular retrofitting is growing, several challenges must be addressed to scale these solutions effectively.

One of the biggest hurdles is material recapture and recycling. Many older buildings weren’t designed for deconstruction, making it difficult to reuse or recycle materials efficiently. Without advanced tracking, sorting and reuse technologies, much of the waste from renovations will continue to end up in landfills, limiting the environmental benefits of retrofitting.

Another key challenge is data integration and smart retrofitting. Smart energy efficiency solutions depend on real-time data and digital connectivity, yet many buildings still operate on outdated infrastructure that lacks interoperability. To make smart retrofits seamless, the industry must continue to adopt open standards such as KNX and Matter, ensuring that new and existing technologies work together to optimise energy use.

Regulatory complexity is also a growing concern. Governments worldwide are introducing stricter energy efficiency laws, requiring property owners to upgrade their buildings. However, compliance requirements vary across regions, creating uncertainty and potential delays. Businesses that act early will have a competitive advantage – waiting until regulations force change could mean rushed, costly upgrades.

Financing and return on investment (ROI) are also top of mind for many decision-makers. The upfront cost of retrofitting can be significant and building owners often face challenges in securing capital or demonstrating clear ROI. However, the projected growth of the retrofit market – from US$500bn today to US$3.9tn by 2050 – suggests strong confidence from investors and analysts alike. This anticipated expansion signals that capital will increasingly flow toward sustainable retrofits on their own merits, as smarter, more efficient buildings deliver measurable value over time.

Finally, skills and workforce gaps present a significant barrier. Circular and smart retrofitting requires expertise in data analytics, AI and automation, but many facility managers and construction professionals lack these skills. Without targeted upskilling and training programs, the industry risks slowing adoption, limiting the full potential of these innovations.

How can the industry overcome these barriers?

Overcoming these challenges requires partnerships, investment and innovation. By tackling these barriers head-on, we can accelerate the transition to smarter, more energy-efficient buildings where technology and sustainability drive long-term value.

Collaboration is key. The transition to smart, circular retrofitting isn’t something one company can achieve alone, it requires an industry-wide movement, driven by alliances, shared expertise and collective action.

Where does ABB fit into this picture?

At ABB, we believe that the fastest, most effective way to scale sustainable retrofitting is through strong collaboration across the entire ecosystem – from architects and engineers to technology providers, policymakers and real estate leaders. Through our recent partnership with the World Green Building Council in Europe, we aim to reinforce this approach, demonstrating how aligning industry expertise with policy frameworks and the latest technology can accelerate real change.

We are pioneering solutions that make retrofitting faster, more cost-effective and truly sustainable. Our smart building automation systems dynamically optimize HVAC, lighting and power consumption, adjusting in real-time based on occupancy and external conditions. This ensures energy efficiency without compromising comfort or performance.

We are also advancing circularity-focused retrofits, using digital twins, intelligent materials tracking and predictive analytics to maximise material reuse and extend the lifespan of existing buildings. By integrating heat pumps, solar PV and energy storage, we provide seamless electrification upgrades, allowing businesses to decarbonise operations at scale.

For companies managing multiple properties, our portfolio-wide energy efficiency solutions make a measurable difference. With advanced building management systems, organisations can track, optimise and meet 2025–2030 energy efficiency targets across their entire real estate portfolio.

What’s at stake if we don’t act now?

The risks of inaction are growing:

• As energy efficiency regulations tighten, property owners must act or face financial penalties
• By 2030, demand for sustainable buildings will outstrip supply 3:1, making inefficient buildings less attractive to tenants and investors
• Stranded asset risk is real – Buildings that fail to meet decarbonisation targets risk losing long-term value and becoming non-compliant.

The technology to solve these challenges exists today. What’s needed is bold action from building owners, policymakers and industry leaders.

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