Germany’s draft Recovery plan neglects to underpin energy efficiency targets with sufficient financial means.
In a nutshell:
- €2.5 bn of additional recovery funds for Germany’s main energy renovation programme are insufficient to meet the investment needs in building renovation
- Weak energy efficiency standards are in urgent need of reform to ensure a climate neutral building stock by 2050
In Germany, the building renovation rate has stagnated below 1% for years, and the country is not on track to achieve its current energy efficiency targets. In 2020, the building sector is the only one not to meet its emissions target under Germany’s climate law. Germany has to try harder, especially considering the country’s potential for leading on the EU’s increased 2030 targets.
The German draft Recovery plan does contain an increase in funding for energy renovation beyond what is already included in national recovery measures. The additional €2.5 billion earmarked in the RRP draft and in the national recovery package will bolster Germany’s main energy renovation funding program (CO2-Gebäudesanierungsprogramm). However, this increase is nowhere near enough to meet the scale of the challenge and bring the German building stock onto a path towards climate neutrality.
According to a recent study, up to €25 billion in public funding would be needed each year to reach a climate-neutral building stock by 2050, which is Germany’s official target. In 2021, the volume of financial support for energy renovation is only €6 billion in loans and grants, and the German stimulus plan does almost nothing to address this financing gap. In this perspective, €2.5 billion over 6 years is a drop in the ocean and additional funds are sorely needed. Considering the job creation potential that such a boost to energy efficiency funding would mobilize, it would also be beneficial for the climate, the economy and the society.
In addition, Germany’s funding priorities and low energy efficiency standards for renovation need to be urgently reformed to avoid a misallocation of funds. This is especially important in the context of the current construction boom. 60% of funds from the ‘CO2-Gebäudesanierungsprogramm’ flow into the construction of new buildings, rather than the renovation of existing ones. Current minimum efficiency standards for new buildings and renovations are simply insufficient to create a climate-neutral building stock.
Without additional funding and a reform of energy efficiency standards, the German building stock risks to remain out in the cold.
German Ministry of Finance, German Recovery and Resilience Plan (2020) (in German)
German Ministry of Finance, Corona-Folgen bekämpfen, Wohlstand sichern, Zukunftsfähigkeit stärken (2020) (in German)
Universität Regensburg, Wissenschaftliche Plausibilitätsprüfung bzgl. der errechneten öffentlichen förderung lücke zur erreichung der klimaziele durch energetische gebäudesanierungen im mietwohnungsbau (2020)