<p>Building sector is responsible for 35–40% energy consumption and related CO₂ emission, resulting climate change and global heating phenomena. On the other hand, huge accumulation of flyash in thermal power plants and rapid depletion of sand reserve are causing environmental issues. The objective of this study is to find the effect of flyash usage as replacement of sand in building envelop construction and compare the energy saving, economic advantage and reduction in CO₂ emission in a building with two different walling materials. By modifying the concrete with flyash and mortar mixes with flyash-lime combination in lieu of sand, the physical and thermal properties were evaluated. Separate masonry wall panels of identical volume were constructed with conventional mortar and plaster and with modified ones with flyash-lime mix, the U-values of which were evaluated with the help of guarded hot box method. Reduction in U-value for test wall panel with modified mortar was observed. A simulation program was run with DesignBuilder version 6.1 for a model building located under Warm-Humid zone at Kolkata, India with built-up area of around 94 sq.mtr. Altogether five combinations each for AAC block wall and Burnt Clay Brick wall construction separately were adopted with different mortar-plasters and roof concrete layers. Concrete and mortar-plaster of modified mix with flyash for entire building envelop were considered in the simulation study. Substituting sand with flyash resulted reduction in cooling energy demand for entire building to the tune of around 4.87%, whereas additional application of high albedo SRI paint on top roof surface reduces the demand to 38.30% with considerable monetary savings and avoidance in CO₂ emission to the atmosphere.</p>