BCG - The Boston Consulting Group

• A Critical Issue That Can Be Addressed
• Greening Efforts Would Benefit a Wide Range of Stakeholders
• Action Steps for Stakeholders

China's rapid economic development and urbanization over the last three decades has meant new opportunities for hundreds of millions of Chinese. Increasingly, however, this same development has led to rising concerns about some of the byproducts of growth—in particular the strain on China's environment and natural resources.

To be sure, China's central government has already made significant moves to address these concerns. Its Eleventh Five-Year Plan (2006–2010), for example, decreed a 20 percent cut in energy consumption per unit of GDP by 2010. Still, delivering on such goals has been and will continue to be challenging—particularly since they can appear to clash with other priorities, such as faster economic growth and greater profits.

Fortunately, several actions can be undertaken to avoid such conflicts. One of the most effective measures would be improving the operational energy efficiency of Chinese buildings, both residential and commercial. Collectively, buildings represent one of the country's largest drains on energy. Consequently, improvements in their energy efficiency would have a significant impact on resource consumption. At the same time, these enhancements could be achieved at low cost or no cost. Indeed, "greening" China's buildings could actually have a positive impact on both growth and profits.

The challenge is to align all the diverse stakeholders in energy efficiency, as no single actor or entity—private or public—can address the issue alone. We believe, however, that with greater awareness, accurate information, and the right policies, all the stakeholders can be motivated to play their part and overcome the obstacles, including the challenge posed by "split incentives." This report aims to facilitate such increased awareness and alignment. It identifies the role of each stakeholder group and suggests key actions for moving forward.

Justin Fung is a project leader in the Hong Kong office of The Boston Consulting Group.

David Michael is a senior partner and managing director in the Beijing office of The Boston Consulting Group.

Christoph Nettesheim is a senior partner and managing director in the Beijing office of The Boston Consulting Group.

Barbara Finamore is the China Program Director of the Natural Resources Defense Council.

Ruidong Jin is the Green Buildings Project Director of  the Natural Resources Defense Council.

Dr. Kevin Mo is the Senior Sustainable Building Specialist of the Natural Resources Defense Council.