Globally, more than half of the world's population now lives in urban settlements, and over the next 30 years virtually all of the world's population growth is expected to be concentrated in urban areas in the developing world. Energy demand will also increase -- and in some countries, dramatically. Electricity demand in the residential and commercial sectors is projected to increase at 2.5 and 2 percent per year, respectively, outpacing population growth as access to electricity increases and the use of appliances and air conditioning expands. Electricity demand in the residential sector is projected to increase by nearly 90 percent globally by 2035.
Green buildings are an approach to building that meet the demands of the 21st century and have many proven benefits, including lower long-term operating costs via reduced energy consumption, reduced emissions, improved water conservation and management, temperature moderation, and reduced waste. Green buildings also engender savings in energy and water costs, increase property values, increase employee productivity, and often use sustainably-produced materials.
Only recently have factors aligned for green buildings to be technically and economically feasible in the Middle East. Electricity has historically been inexpensive in the region and is often generated from heavily-subsidized fossil fuels. However as energy demand increases, some subsidies expire, fuel prices escalate, resources become scarce, and governments explore new pricing structures, the region's policy makers are increasingly looking to demand-side energy efficiency as a tool to reduce energy demand.
Many Middle Eastern countries increasingly support energy efficiency and green growth as an effective way to increase energy security, mitigate greenhouse gas emissions, and realize quick payback on technology investment. Indeed, the energy efficiency technologies that go into green building are not only financially viable, but have a negative cost of carbon emissions abatement for technologies such as building insulation, lighting, air conditioning, and water heating.
These and other issues were the focus of the 2012 Saudi Green Building Forum in Riyadh, at which I had the pleasure of delivering a keynote speech and participating in a number of workshops. Developed in partnership with the Saudi Green Building Council, governmental agencies, and other stakeholders, the Saudi Green Building Forum is a milestone in Saudi Arabia's on-going efforts to raise awareness and promote sustainability. In addition to providing an industry forum to discuss best practice on design, construction and the built environment, the event highlighted the role the wider community has to play in achieving an environmentally sustainable future.
The Forum occurred in October at Riyadh's Kingdom Center under the aegis of Prince Mansour bin Miteb, Minister of Municipal and Rural Affairs. The opening ceremony for the three-day event was addressed by Mohammed Al-Suwaiyel, President of King Abdulaziz City for Science and Technology; and Abdullah Al-Muqbil, Mayor of Riyadh, who delivered a speech of Prince Mansour bin Mutaib, the Minister of Municipal and Rural Affairs.
I delivered a keynote speech focusing on how energy efficiency and green growth can enable global policy agendas to improve energy security, lessen new energy demand, and also limit harmful emissions from power generation. The investment potential is immense, although power sector and green growth investments are not on par with what is needed in rapidly-urbanizing parts of the world such as the Middle East, Africa, and Asia. I demonstrated successes that the United States has had domestically on energy efficiency and how we are helping nations meet their energy efficiency and green growth objectives by leveraging the policy and technical expertise of the Bureau of Energy Resources and the U.S. government more broadly.
Rolling out energy efficiency and green building technologies in places like Saudi Arabia presents many challenges, not the least of which are lack of private funds; lack of information, awareness, and communication; high project development and transaction costs; high risk and inability to assess and manage that risk; and lack of capacity and institutions working in the field. In regards to awareness and communication, the Saudi government should be recognized for its support of the Forum and efforts to facilitate information sharing.
As Saudi Arabia and other Middle Eastern nations overcome these challenges, the region is emerging as a significant opportunity for partnering on energy efficiency, and many American companies agree this region presents one of the greatest next-generation energy investment opportunities in the world. These technologies can serve as catalysts for smartly shaping urbanization, ensuring energy security, combating climate change, and opening new diplomatic and economic opportunities.