North American homes, offices and other buildings contribute an estimated 2.2 billion tons of carbon dioxide to the atmosphere every year—more than one third of the continent's greenhouse gas pollution output. Simply constructing more energy-efficient buildings—and upgrading the insulation and windows in the existing ones—could save a whopping 1.7 billion tons annually, says a new report from the Montreal-based Commission for Environmental Cooperation (CEC), an international organization established by Canada, Mexico and the U.S. under the North American Free Trade Agreement to address continent-wide environmental issues.

"This is the cheapest, quickest, most significant way to make a dent in greenhouse gas emissions," says Jonathan Westeinde, chief executive of green developer Windmill Development Group in Ottawa, Ontario, and chair of the CEC report (who admits that green building regulations would be good for his business). But "buildings are not on the radar  of any governments … despite being an industry that represents 35 percent of greenhouse gas emissions."

The report echoes the findings last year of the U.N. Intergovernmental Panel on Climate Change (IPCC), which identified building improvements as one way to reduce global warming pollution with "net economic benefit."

"Residential is a slam-dunk, it's just a matter of applying the technology we have," says IPCC author Mark Levine, a senior staff scientist at Lawrence Berkeley National Laboratory in California who studies these issues. "It's the biggest sector. It's the biggest savings."

Yet, "green buildings"—defined by the report as "environmentally preferable practices and materials in the design, location, construction, operation and disposal of buildings"—represents only 2 percent of the commercial edifices in the U.S. and 0.3 percent of new homes.

"In Europe, they are much ahead of us on building," Westeinde says. "As North Americans we pride ourselves on smaller government and bigger activity in the marketplace. We're not seeing the market react fast enough."

A big part of the problem, he says, is that many builders are loath to invest extra money for more efficient energy and water systems that only translate into cost savings for the eventual owners. Westeinde's company gets around this dilemma by working out long-term financing arrangements with owners, who agree share a portion of their future cost savings with the developer.

He notes, too, that the price gap between energy-efficient and conventional construction might eventually disappear as green buildings become more common. "If everyone is using a certain type of window that drives cost down," Westeinde says. "Green construction is only 4 percent of the market which means the other 96 percent are creating a volume discount for themselves. But if green becomes 50 percent of the industry, that cost differential goes away."

The report calls for the Canadian, Mexican and U.S. governments to set specific targets for green buildings as well as to adopt continental standards, such as siting buildings in a way that maximizes passive solar heating and cooling.

"There is not that great a difference between green building in Oaxaca and Ohio," says Evan Lloyd, CEC director of programs. "It is the best systems and technology that can be applied to reduce energy consumption as well as paying attention to resource inputs."