To achieve the goal of sustainable development, the building energy system was evaluated from both the first and the second law of thermodynamics. The relationship between exergy destruction and sustainable development were presented. The building life cycle cost and exergy consumption regression model were set up. The optimal building insulation level could be affected by whether cost minimization or exergy consumption minimization approach was used. From the case study of a residential building in Beijing, China, it shows the exergy approach require better insulation level. The discrepancy between could be explained as the current energy price fails to show the environmental burden associated in its generation process.