Strategies and Actions for Achieving Carbon Neutrality in Portuguese Residential Buildings by 2050

As a crucial step in addressing the climate emergency and enhancing energy security, the European Union has set ambitious targets to decarbonise its economy by 2050. While the building sector plays a pivotal role in this transition, being accountable for 36% of the EU’s total carbon emissions, it shows a renovation rate below 1% per year, which is clearly insufficient. To address this challenge, this study uses the cost-optimal methodology from private and social perspectives to assess the cost-effectiveness and environmental impact of five renovation packages with passive and active solutions currently available on the Portuguese market. The results demonstrated that from both perspectives, optimal combinations of market solutions were generally cost-effective and could lead to a 90–99% reduction in energy needs and even to zero carbon levels. Nevertheless, beyond cost-effectiveness, consideration of co-benefits, e.g., social and health improvements, is also crucial, requiring government action. To drive these essential changes, effective policy measures are imperative. Recommendations encompass robust regulatory frameworks, financial support mechanisms, knowledge dissemination, and a shift towards broader-scale renovation. For carbon reduction to be economically attractive, fostering innovative business models and leveraging legal instruments to tackle complex scenarios are needed.