The paper outlines energy management concept through thermo-economic optimization of a residential building located in Faisalabad, Pakistan. The analysis has been carried out in order to optimize the selection and performance of different equipment used in a residential building to lower the overall energy consumption. The scenario has also been dedicated to the reduction of greenhouse gases for sustainable development. The results of this study show that replacement of current equipment and technologies with the proposed units not only reduces fuel consumption but also greenhouse gas emission. The energy shortfall in the country is a major issue which can be overcome by implementation of new green and energy efficient building ideas. Moreover, evaluation of ecological benefits is reported in this research and a cost benefit analysis of the proposed project is presented. The target of energy saving can be achieved with a little increase in initial investment cost but the overall cash flow will be positive after few years of project life. The project is also a service to humanity through the reduction of harmful emissions which is a major cause of global warming.