2.1. Global Situation of Green Retrofit Development
Nguyen and Altan [14
] reported that there are three ways a green building rating system can stimulate domestic sustainability development to enhance the operational performance of a building: minimizing environmental impact, measuring the effect of buildings on the natural environment, and evaluating and judging the development of buildings objectively. Since the 1970s, the increasing energy and fossil fuel crisis has caused a technically negative impact on the living environment; thus, the significance of sustainable development has gradually attracted considerable attention. The concept of Sustainable Development was first described and defined in the World Commission on Environment and Development (WCED) annual report in 1987, in Tokyo, as “the development that meets the current demand without compromising the requirement of future development”. Following the sustainable development trend, green buildings were introduced and referred to gradually, but attracted widespread attention in the 1990s. Building Research Establishment Environmental Assessment Method (BREEAM) was established as the first global green building assessment system in the UK in the 1990s, and it has emerged as a leading assessment system in green building development [15
]. In the 2000s, green building rating systems experienced an increase in its adoption. Shan and Hwang [16
] reviewed the systematic classification of global green building rating systems, and found that the criteria for the ranking include “energy”, “site”, “indoor environment”, “land and outdoor environment”, “material”, “water”, and “innovation”. In 1995, the U.S Green Building Council (USGBC) developed the Leadership in Energy and Environmental Design (LEED), which has emerged as the most well-known and widely employed green building rating system globally. LEED assesses buildings using seven criteria based on 126 available points, and assigns different certification levels: Certified (40–49 points), Silver (50–59 points), Gold (60–79 points), and Platinum (80 points and above) (LEED Reference Guidebook, 2014). In terms of governmental regulations, these aforementioned assessment systems are considered as a powerful tool that can motivate real estate developers and occupants to consider green retrofitting as it offers a landscape criterion for constantly improving green building promotion; however, there are certain limitations that restrict its further application. These limitations include a lack of globally applicable system, constantly updating an inefficient integrated method, and poor handleability and universality [17
Initially launched in 2004, and re-updated in 2008, 2009, and 2013 into edition V4, LEED standard categorizes green retrofitting promotion as Building Operations and Maintenance (O + M), and it aims to guide the construction of existing buildings, including schools, retail, hospitality, data centers, warehouses, and distribution centers, which are undergoing improvement work or slight construction (LEED, 2018). However, green retrofitting activities can be more complex and complicated compared to new green building construction, and they involve several potential limitations, such as financial barriers, climate change, service changes, human behavior changes, and government policy changes, but there are also equipotent benefits and opportunities [19
]. Dalirazar and Sabzi [20
] reviewed previous studies using the PESTLE technique, and categorized legal regulation obstacles as “complex procedure”, and other obstacles, including complicated contract problems, non-ideal certification, benefit ambiguity, and unstable and precarious regulations. In addition, green building specialists in Sweden, the United States, and New Zealand have reported that social and monetary unwieldiness, including long payback periods, as well as environmental tasks, high initial tasks, and low sustainable building demand, have contributed to negative retrofitting development [20
Although the application of a single policy to uphold green building retrofitting is believed to be difficult [22
], nations have consistently proposed initial policy actions. As a highly developed economy, the EU is well known for its high rate of urbanization; thus, it has focused on the green retrofitting of existing building and relatively mature energy efficiency measures [23
]. To direct the attention of energy-related sectors towards addressing global warming problems from the early stage, the EU announced the “Construction Products Directive”, “Boiler Directive”, and “SAVE Directive” in 1989, 1992, and 1993, respectively [24
]. By 2000, attention was directed to increasing the thermal insulation performance of existing buildings, and by 2006, reducing energy demand by comparing targeted baseline forecast and mandating low energy consumption threshold were introduced, and attention was directed to renovating 3% of the central government building by utilizing contact; energy auditing; and European Skills, Competences, Qualifications, and Occupations (ESCO) tools in 2011, which represent the main middle-staged action plans and contributed promotions within the EU [24
]. The energy union strategy (EC, 2015) developed the “energy union package”, which highlights the importance of security, energy efficiency, interactions between climate actions and the economy, and innovation research, but this package did not adequately provide renovation guidelines and specific direction. In 2002, a legal policy named the Energy Performance of Buildings Directive (EPBD, 2002/91/EC) was established, and it included a minimum performance criterion for setting a piece foundation and promoting major renovation in the energy sector. The estimation requirement criteria consist of numerous indicators, which are listed in Table 1
. In addition, the EU state members developed an energy performance certification scheme to push buyers and tenants into a compulsory perspective 10-year green retrofitting agreement along with a transaction to potentially increase and monitor higher demand of higher green retrofitting renovation force by a threshold of 1000 m2
, but this scheme was eliminated in 2010. This new policy posed more economic benefit, while simultaneously ensuring the transparency of the green retrofitting process [28
]. Nonetheless, the significant difference among European nations resulted in low trust among both green retrofitting developers and occupants despite the decent recast increment, indicating the requirement of a more systematic and comprehensive update of this European rating certificate system [23
]. In 2010, the EPBD policy was introduced, and it broadened the standard of green retrofitting and included more detailed technical requirements, such as a more enhanced heating, ventilation, and air-conditioning (HVAC) system, and it offers financial funding in association with various financial institutions from the EU. Owing to the significance of the economic burden of green retrofitting and the complexity of existing buildings compared to new counterparts, the EPBD was updated to include the requirement of at least two additional standards for the green retrofitting scheme, and a more detailed definition toward different building categories was emphasized. In addition, semi-staged packages or the promotion of different levels of green retrofitting represented by energy-efficiency-based measures were re-identified, and the EU governmental regulation was set as a standardized baseline. New zero-energy buildings have been reported as a brilliant concept to synchronously reach the standard GHG emission and reduce economical expenditure for energy demand by achieving a high energy performance and on-site or nearly on-site renewable energy production along with various storage systems since the initial establishment of the concept [31
]. Similar to other greening schemes, the challenges of objects of existing buildings are larger than those of new ones owing to economic (long payback period), environmental (hard environmental benefit assessment, geography, and climate), technical (lack of information), social (low occupants’ recognition and passion), and uncertain barriers [33
]. Although subsequent policies and long-term retrofitting strategies, such as setting central governmental buildings as a demonstration leader, have been set to foster and enhance cost-effectiveness and push larger-scaled retrofitting promotion, the retrofitting rate in the last five years has remained relatively low owing to the complexity and variation among the Member States and the fact that the cost-effectiveness of the life-cycle needs to be proved [35
The U.S. governmental institutions, including federal, state, and local governments, have devoted efforts to implement green retrofitting. To this end, they have attempted to achieve a building energy consumption of 18% and a carbon dioxide emission ratio of 46% in commercial buildings, and these have been stably increased [36
]. Under the global agreement and plans to reduce GHG emissions and facilitate green process, 50% of the energy demand of current buildings should be reduced, indicating a 75% potential for the green retrofitting of commercial buildings. Nevertheless, the reality of the current financing, sustainable, and information situation, as well as inaccurate policy making, has limited the implementation of promotion on a greater scale [12
]. Adekanye et al. [39
] found a significant synergistic effect between LEED certification and federal policies for the motivation of green retrofitting, and they also classified the main governmental motivation factors as federal policies, USGBC LEED rating system updates, and local policies using a panel data modelling. These policies include recommendations, financial incentives, non-financial incentives, requirements, and density bonuses (the two latter policies have been verified by mathematical data results to promote green retrofitting). Green retrofitting has been promoted using regulation-related efforts, such as the mandatory LEED requirements per square in 2009 California, and financial subsidies in 2013 Nevada. Accordingly, the implementation of the national profile updated from the Energy Policy Act (EPAct) of 2005, the Energy Independence and Security Act (EISA) of 2009, and the American Recovery and Reinvestment Act of 2009 (ARRA) of 2009, has facilitated a reduction in energy consumption and GHG emissions, which is accompanied by an increase in the annual ratio (2%/year to 3%/year) [40
]. The action plans of the U.S. government towards achieving green retrofitting have varied over the years. For example, President Obama set the climate protection goal to increase the energy productivity by over 50% in a 20-year range, and the potential of that policy to provide financial benefit and additional job opportunities was reported [41
]. However, from 2017 to 2021, during the four-year tenure of President Trump, the U.S pulled out of the Paris Agreement, and halted its energy-related environmental greening promotion process owing to its traditional energy source development motivation policies, but re-joined the agreement after the power shift to the Biden administration, on claims of promoting infrastructure and achieving a carbon-neutral environment. In the new plan set by the Biden’s administration, existing commercial buildings are set as landmarks, and this was initiated by mainly updating the energy sector, including the use of more domestic-made and lucrative and clean HVAC and lighting system to reduce cost for both individual families, and state, local, and city governments [42
]. Moreover, new commercial buildings were legislated to meet the new-zero energy standards by 2030 to match the global trend of reducing GHG emission, indicating the high new zero-energy retrofit potential of existing American buildings.
However, the establishment of policies by the government without awareness and initiations by governmental institutions, occupants, and developers can hinder the implementation of regulations and retrofitting plans. For commercial buildings, shareholders and agents of main commercial activities form a triangular relationship with governmental institutions (mainly state government), property management companies (PMCs), and occupants. Regulations, information, and incentives are described as sticks, tambourines, and carrots to define, improve, and influence the promotion of building policies [43
]. Particularly, a lack of understanding among occupants owing to the huge uncertainty and diversity in the data collection stage results in inaccuracies and difficulties [45
]. Previous studies have confirmed that the misled free-ride effect due to the complexity of occupants can cause additional economic and environmental waste beyond the actual meaning of green retrofitting; moreover, the ambiguous benefit distribution among multiple shareholders can also act as obstacles to future revolution [46
2.2. Green Retrofit Development Situation in China
Developing countries, such as China, have the same green retrofitting potential as Western economies. The landscape of formulating green building construction in China was promulgated in 1986 with the establishment of the Design Standard for Energy-Saving of Civil Buildings (heating residential buildings), which marked the beginning of the priotization of green retrofitting by the Chinese government and AEC industry practitioners [8
]; however, they focused mainly on new constructions in the early stage. In 2001, the technical specification for the energy conservation renovation of existing heating residential building was announced as the first domestic technical building retrofit criteria. In 2015, the evaluation standard for the green renovation of existing buildings was announced, and it mainly focused on achieving cost-effectiveness, technical performance, and flexibility in various climates and zones.
In 2020, virtual actions were initially implemented during the 11th Five-Year Plan (FYP), which is widely referred to as China’s national orientation and governmental highlights, and a retrofit of 39,000 communities plan was set. Liu et al. [48
] summarized China’s green retrofitting policies into six categories, which included direction-based policies (DPs), regulation-based policies (RPs), knowledge and information policies (KIPs), evaluation-based policies (EPs), financial support policies (FPs), and organization and professional training policies (OPPs), among which DPs acts as a guiding background for the national development direction formulated by the Chinese government, and it implements other policies unconditionally. The roles of these policies are highlighted in Table 2
. The lack of awareness and low-level popularity of green retrofit are considered as the most fundamental factors that have limited the development of green retrofitting. Hence, among the interactive relations of the six policy categories, KIPs and OPPs potentially and permanently advance and offer the persistent foundation for RPs, FPs, Eps, and OPPs. Thus, for both the developers and occupants, the benefit is regarded as the core criteria of construction, and FPs offer the most powerful and crucial pattern for other policies.
Among these policies, DPs mainly refer to FYP policies containing the most directive and national plans generated by China’s central government every five years, which identifies targets and vital guidelines for the next five years. Wu et al. [49
] reviewed previous policies and literature using co-word analysis, and found that the Ministry of Housing and Urban–Rural Development (MOHRUD), which is a rural and core department, accounts for the establishment, realization, and management of 90.45% of the total green retrofitting policies. In addition, MOHRUD has been re-centralized to be responsible for green building policy making after promotion attempts by the cooperation of various government departments, such as MOF, the Ministry of Science and Technology (MOST), the State Economic and Trade Commission (SETC), and other departments. As increasing the energy efficiency performance and GHG emission has been set as the vital mission of MOHURD, measures such as retrofitting existing buildings (2001) and government official buildings (2004) have been employed for continuously updating the green building retrofit assessment system (2009, 2013, and 2022). For example, in most Northern cities, the standard for heating systems with centralized heating systems and complications was set to over 400 million m2
in 2001. In addition, the 12th FYP is projected to increase the energy efficiency performance of over 60 million m2
of housing. Furthermore, during the 11th FYP, a threshold target of 25 to 10% was set to be achieved from three-level China cities. From the pilot perspective, there are plans to increase the energy efficiency of 100 million m2
public buildings in the 13th FYP, indicating the great ambitions of the Chinese government.
RPs act as a specific and mandatory object for promoting renovation activities of green retrofitting. Since 2001, principles and methods of green retrofitting have been established, and external insulation performance, air quality, building envelope, and window insulation performance have been considered until a recent research study on green retrofit was published in 2022, which contains guidelines on safety performance, building envelope and retaining structure, energy efficiency performance of HVAC system, and the performances of water heating system, and the sustainable energy design sector after successively updated editions.
The building model and the pilot green retrofit project are common KIP promotion measures of the Chinese government. Since the 1980s, extensive attention and efforts have been devoted to pilot projects by the Chinese government, as they are expected to provide effective broadcasting performance. In addition, the significance of the pilot project has been highlighted in several documents, and is expected to increase the public awareness and popularity of green retrofitting, such as the building energy-saving technology policy, the building energy conservation and green building development 13th five-year plan, and opinions of the state council on strengthening ageing in the new era.
EPs comprise the energy efficiency performance testing, auditing, assessment, and targeting of existing buildings. Most newly built buildings are regulated to meet the energy-saving criteria after the final measurement of local administration institutions; however, the government only provides guiding standards and specific thresholds for existing buildings rather than mandatory requirements. Although awareness and emphasis on green building for new construction have been implemented relatively early, and the fact that new buildings have simultaneously met the assessment standards, the official standard for existing building was implemented in 2016, and retrofitted buildings are rated as one-star, two-star, and three-star levels.
Major economic support managed by the local government, e.g., specialized funds and tax subsidies, is distributed according to documental multi-criterions. Financial administration ministries can promote energy efficiency performance and decrease GHG emissions by minimizing tax adjustment [50
]. Nevertheless, direct financial support, such as the three types of subsidies in the management of incentive funds for heating metering and energy-saving retrofit of residential buildings in the Northern Heating District, can be used as an interim procedure. In advanced western economies, high initial investment, long payback periods, balancing the risk of private properties, and public–private partnerships (such as energy service companies (ESCO)) are universally implemented to overcome stress and take responsibility of the entire retrofit process, from design to maintenance. FP motivates and stimulates more investors to promote green retrofitting and increase energy efficiency performance; however, the currently low qualified and retrofitted ratio indicates huge improvement potential and an appropriate update of prevailing FPs [51
]. Moreover, as professional green retrofit institutions are undertaking incremental responsibilities to promote green retrofit, OPPs facilitate more professional abilities and human resources.
The regulation of the top-down model of China may improve the effectiveness of the state and the local government, which causes potential problems in the enforcement, continuity, consistency, and flexibility of retrofit targets and coordination mechanisms [52
]. In addition, the externality of diverse shareholders indicates the significance of policy instruments [53
]. Moreover, a tough capital flow situation, such as limitations in financial constraints and inadequate expectation for long payback periods, directly affects green retrofitting [54
] and indirectly results in the misunderstanding of the evaluation of objects. Furthermore, recent studies have reported that innovative, profitable, and attractive technologies decelerate the rate of China’s retrofitting [55
]. In addition, the main obstacles to green retrofitting in China include non-ideal development in regulation, finance, information, and technologies, which indicates demand to engage in optimal green retrofit human resources, assessment systems, financial support systems, and diverse effective technologies and cooperative development modes.
2.3. Previous Methods for Analyzing the Promotion of Green Retrofitting
Green retrofit indicates a high initial investment in the early stage to earn future energy-saving and additional benefits, such as social, sustainable, and green-orientated marketing values, and this indicates that there are undefined benefits and low motivation among developers. Broadly speaking, economic benefit contributes to the core motivation of green retrofitting; thus, ensuring its cost-effectiveness using numerical and quantitative methods is significant. Tremendous efforts have been devoted to evaluate the cost-effectiveness of green retrofitting with a focus on the optimization of rating systems [13
], decision-making methods [10
], single-technique energy-saving potentials [41
], and policy barrier commendations [39
] (Figure 2
). A static agent focuses on one enterprise itself, but not the entire lateral industry, indicating that it is essential to investigate the promotion level of all enterprises in the developer group or enterprise group. Thus, the promotion process is not a ”DO” or ”Not Do” type of model, but a gradual growth involving the devotion of new enterprises and the exit of old enterprises. Therefore, a dynamic progression and entire social colony research must be solved. In this section, the authors review related works to compare the contributions and highlight the significance of this research.
Compared to other building categories, research on commercial buildings is rare owing to the complexity of occupied enterprises and contractual relationships. Property management companies (developers) manage occupied enterprise groups and gain financial benefits from the rent price. The contract details regarding the benefit ratio are complex and vary depending on the scales of occupied enterprise. Generally, compared to the owner or manager of an entire building, developers are more likely to earn more benefits and are responsible for sustaining risks, such as punishment and cancellation compensation. Moreover, after retrofitting construction, maintaining green retrofit habits in individual enterprises is challenging. The real-time procedure for analyzing commercial building objects can be illustrated by implementing an evolutionary game to propose this dynamic process. Cost–benefit analysis (CBA) is typically implemented as a second-stage tool after technical consideration for economic analysis and to provide optimized decision making. The CBA method is a highly grouped optimized method, which can be achieved by implementing the net present value (NPV
), the payback period method with discounted cash flow, the annuity method, the dynamic payback period, and the life-cycle cost (LCC) method (applied in Section 3.4
of this research) to systematically compare the economic factors of the green retrofitting plan. Costs include initial investment, operation investment, and maintenance investment.
Technical research has illustrated and verified the efficiency of several energy-saving and profitable options using computer-based simulation software, including EnergyPlus and Autodesk Ecotect(Revit), via the application of actual data. For example, the use of a lighting retrofit window film coating, updating a chiller plant, and installing a building management system have been verified to be effective for saving energy using BIM technology and EnergyPlus software [75
]. Individual retrofit measures are widely categorized into positive retrofit measures (PRMs) and negative retrofit measures (NRMs). PRMs involve upgrading the heating system, chillers, boilers, and pipes of HVAC system water piping system and lighting systems, while NRMs involve retrofitting building envelope isolation, windows, and green roofs. Among these techniques, an HVAC system is regarded as the major energy consuming part of entire building facilities, accounting for over 50% of the entire energy consumption [76
]. In addition, energy-efficient window glazing and window shading devices have been reported to efficiently promote wall insulation via new negative green design and replacement [77
], but a lack of historical data has limited the further application of this measure. In addition, HVAC-based retrofitting measures, such as the use of a more effective HVAC system, a reasonable setting point, and night ventilation, have been reported to be effective for improving green retrofitting levels. Thus, the replacement of ongoing building lighting facilities, particularly incandescent lamps and the compact fluorescent LED lamp, to LED has proved to be environmentally friendly and cost-effective. According to historical data and retrofitted results observed in Chongqing, a major city located in south-western China, among four common Chinese retrofit technique options, the HVAC system requires the lowest investment, and the lighting system exhibited the highest annual economic benefit, followed by the HVAC system, the power supply and distribution system, and the power system, as well as the second shortest payback period [74
]. These studies have highlighted the technical feasibility of green retrofit options; however, in an actual retrofitting scenario, developers tend to consider multiple options among diverse options, as more managemental decision making is essential.
Lu et al. [78
] developed a creative energy-based decision-making framework using integrated environmental solutions within a virtual environment (IES-VE) and building information modelling technique based on an educational facility as a case study, and reported the relative cost-effectiveness when various retrofit measures were combined. In addition, they found that the combination of a simple scenario combined with multiple retrofit measures, particularly energy-saving measures, was not relatively more effective than individual independent retrofit techniques [60
]. The energy-saving performance gap between summed individual measures and simulated scenarios indicates the high beneficial potential of the retrofit of a lighting system and the significance of the climate of the target building object. Shen et al. [79
] developed an easy-to-use decision-making method using the agglomerative hierarchical clustering method and dynamic SimBldPy modelling to support the selection of various energy retrofitting measures. Ascione et al. [80
] proposed a widely applicable available method for various types of buildings to achieve optimal cost-benefit balance by applying EnergyPlus analysis and MATLAB optimization. Zheng et al. [54
] defined a new angle for utilizing the internal energy rate with varying retrofit levels. Based on an actual case study of existing hotel buildings, Fasna et al. [73
] developed a decision-making process to assist in the retrofitting process; however, the investment amount requires core consideration. Although this method is feasible for on-site retrofitting, they could not technically determine the best option, and it may ignore life-cycled beneficial options for high investment price.
Research on evolutionary game is rare, but studies have focused on residential buildings whose proportion is higher than that of the public–private partnership (PPP) model, and the modelling of commercial buildings has revealed that the response of enterprises significantly affects the benefit of developers. In the PPP model, more policies are recommended to reduce the investment cost of renovation and to provide more appropriate incentive measures. Studies have reported the synergistic relationship between government and investment groups, as well as the effect of this relationship on the power of incentive measures [13
]. However, as members of the government are also shareholders of ESCO enterprises, the benefit of the investment group and government groups need to be further classified.
Green retrofitting techniques not only provide economic energy-saving benefits for developers, but also environmental and social benefits, such as GHG savings and essential increase in rent and real-estate price, particularly for commercial buildings, including official buildings, educational buildings, and shopping malls, owing to the enhanced occupation comfort. Nevertheless, financial-based benefits are considered as the most fundamental and significant indicator. Multiple project benefits have been introduced and identified as an effective means to ensure additional benefit and monetary value using a quantitative cash flow method [21
], and the analysis of results using this methodological framework indicates that complexity caused by semi-shareholders may result in incorrect economic calculation. Hence, the attained benefit should be considered by a multi-agent rather than a one-side developer or investor. In the case of multiple attending agents for commercial building project operation, governments, developers, occupants, and presently implemented ESCO enterprises have diverse benefits through the single project itself, indicating that the benefit should be considered, not by simply summing up, but by creating separations based on the devoted contribution.
2.4. Evolutionary Game for Green Retrofit Problems
Morgenstern and Von Neumann [82
] initially proposed the game theory, which has become the landmark of the development of the modern game theory, and has significantly impacted the economic and management field. The game theory is utilized to solve stably increasing economic problems, and has emerged as a fundamental tool in economic analysis. The game theory focuses on the dynamic behaviors of agents within the interactive benefit-shared project, and holds the ability to formulate hypotheses and predictions. Nevertheless, the traditional game theory requires the verification that all assumptions should be fully rational, which only exists in ideal situations. Institutions or stakeholder groups can perform decision-making activities according to the available accepted information, which indicates limited rationality [83
]. The evolutionary game theory can optimize the obstacles of the traditional game theory as limitations in policymakers’ perception and lingual ability can result in non-ideal rationality. Thus, the evolutionary game theory promotes a dynamic game balance compared to the static balance of traditional methods. The evolutionary game theory is widely used to analyze social and economic developing problems.
As a theoretical foundation of evolutionary game theory, the theory of biological evolution and the theory of genetics were proposed by Darwin and Lamarck, respectively. The application of the evolutionary game theory to actual social problem solving was first performed by Smith [84
]. The evolutionary stability strategy and the replication dynamic developed the concept and availability of this method. To date, the evolutionary game theory has developed rapidly based on a relatively complete theory. From the 1980s to the 1990s, under the guidance of Smith’s publication “Evolution and Game Theory”, the evolutionary game theory attracted increased attention, and the research direction shifted from symmetric games to asymmetric games. Originally used in biology, the evolutionary game theory has also attracted widespread attention in fields, such as political science, sociology, and economics. Cohen et al. [85
] developed a new methodological method based on Prisoner’s Dilemma model to define the barriers to Israel’s energy efficiency promotion activity and provide recommendations for policy-makers. Fan and Hui [12
] proposed a quantitative method to verify the effectiveness of new green building promotion between interactions of governmental subsidies and developers. A previous study illustrated the significance of price premium and the affordability level of incentives. Singh and Mukherjee [86
] established a system dynamism simulation method that utilizes the evolutionary method to ensure the interaction result between environmental impact management of regulating groups and stakeholders and provided recommendations for promoting more effective regulation and environment protection performance.
The referred agents used for the calculations in this study are shown in Figure 3
and Figure 4
. This research includes an additional occupant interaction illustration to provide double-agent-based evolutionary models.