This report sets out the positive and negative impacts of improvements in energy efficiency in buildings that could come about through a recast of the Energy Performance Buildings Directive (EPBD). Successive studies have shown that energy efficiency offers many of the most cost-effective options for meeting global emission targets. In many cases, energy efficiency measures have been shown to be ‘negative cost’, meaning that it would be economically advantageous to implement them.

Global warming and environment problems caused by the excessive emission of greenhouse gases (GHGs), along with rapid economic development has attracted the attention of many countries and regions of the world. Reducing GHG emissions is essential to mitigate the threat of global warming. Household carbon (dioxide) emissions have been recognized as one of the most important contributors to climate change, with a significant impact on both the local and global environment, and various policy instruments have been implemented by governments to bring about the reduction.

In April 2010 the Tokyo Metropolitan Government launched the Tokyo Cap-and-Trade Program to reduce energy consumption-related CO2 emissions at the city level. This is the world's first cap-and-trade programme to cover buildings in the commercial, industrial and public sectors. Its main aim is to reduce CO2 emissions from energy consumption in existing buildings in urban areas; therefore, it is called an ‘urban cap-and-trade programme’.

The Shenzhen ETS is the first urban-level “cap-and-trade” carbon emissions trading scheme to operate in China. This paper gives an overview of the economic and emissions situation in Shenzhen and focuses on the development of the Shenzhen ETS regulatory framework. It is devised as an ETS with an intensity-based cap, output-based allocation and a market for trading of allowances. The design of the Shenzhen ETS attaches great importance to coordinate the dynamic relationships between economic growth, industrial transition and emissions control.