The demand for electricity in the Maldives continues to increase by more than 11% in recent years. This is mainly due to the growing number of high-rise air-conditioned buildings and the increasing use of electrical appliances in the residential and commercial sector. This paper investigates potential cost savings and emission reductions achieved by installing different insulation materials of optimum thickness in building's walls. The paper also investigates the effect when air gaps are introduced in the wall. The optimum insulation thickness is based on the cost benefits of each insulation material over its lifetime. This study found that by introducing optimal thickness of different insulation materials and by having air gaps of 2 cm, 4 cm and 6 cm, energy consumption and emissions can be reduced by 65-77%, in comparison to a wall without insulation or air gaps. And, hence have considerable cost savings. (C) 2010 Elsevier Ltd. All rights reserved.