Just 0.83% of stock is expected to be renovated this year
Germany’s building renovation rate is failing to hit the government’s target of renovating 2% of the country’s stock a year, according to the Federal Association for Energy-Efficient Building Envelopes (BuVEG).
Just 0.83% of stock is expected to be renovated this year, even less than the 0.88% recorded last year, according to BuVEG, and less than half the EU average of 2%. The forecast takes into account all forms of renovations to roofs, facades and windows. Other measures to improve energy efficiency, such as the installation of more climate-friendly heating, are not included.
The German Energy Agency expects that at least 1.25% of stock will be renovated each year from 2025, a figure it predicts will need to rise to at least 1.9% a year by 2035 in order to achieve climate-neutral building stock by 2045.
In order to make Germany climate-neutral by then, the federal government has come up with 130 individual projects but it is not enough, according to the traffic lights' own expert council for climate issues. The German government announced this summer that it plans to earmark €13 billion to €14 billion per year in subsidies for renovations to make buildings more energy-efficient. Similarly, this summer, French Prime Minister Elisabeth Borne announced that the government would release an additional €7 billion from 2024 to finance the “green transition”, part of which will be allocated to energy renovations.
‘The gap in climate protection left by the previous government has been closed by up to 80%’
Federal Minister of Economics Robert Habeck (Greens) says he sees clear progress in the climate protection policy of the traffic light coalition: ‘The gap in climate protection left by the previous government has been closed by up to 80%,’ he said, commenting on the statement of the Council of Experts On Climate Change presented in August. However, Habeck, who is also a climate protection minister, emphasized that a lot still needs to be done.
And not just in Germany, according to the Building Performance Institute Europe. If the EU is to achieve both its 2030 climate target and climate neutrality by 2050, it says that the current 0.2% renovation figure must drastically - by a factor of 15 - increase to reach 3% by 2030 and be maintained up to 2050.
The Federal Government estimates that there will be a gap of around 200 mega tonnes of CO2 equivalents between 2021 and 2030. However, the Council of Experts On Climate Change is sceptical of this forecast, not least because it remains unclear how the government intends to close the gap. Nevertheless, the chairman of the independent five-member panel, Hans-Martin Henning, acknowledges that a ‘considerable contribution’ to climate protection could be expected, although he criticized the ‘inconsistent data situation’.
Net zero target and renovation targets expected to be missed
That’s not to say that progress isn’t being made. Although the gap regarding the 2030 climate target has been reduced by 70% compared to the 2021 forecast, it remains at around 331 million tonnes of greenhouse gas emissions, according to the German Environment Agency (UBA). With the measures planned by the government, the net zero target will not be reached by 2045 - and according to the agency, the building sector will also miss the target.
‘The project report clearly shows that additional measures are necessary,’ said UBA president Dirk Messner. Studies show, for example, that restrictions on fossil fuels are urgently needed.
A similar situation is playing out across Europe. According to the EU Parliament's proposals, almost 45% of residential buildings in Germany need to be renovated by 2033, a proposal that associations from the real industry called ‘absurd’ in a letter to the Federal Building Minister Klara Geywitz (SPD). They calculate that such an energy-efficient renovation for German building stock would cost between €125 billion and €182 billion per year - more than three times more than the recent annual investment of around €40 billion.
Building Energy Act designed to accelerate shift away from fossil fuels
As part of the drive to reach carbon neutrality, the Bundestag passed the watered-down amendment to the Gebäudeenergiegesetz (GEG), or Building Energy Act last month, in a significantly toned-down approach to the original draft for new heating systems proposed by Habeck, which would have amounted to an effective ban on all new oil and gas boilers.
The move is designed to accelerate the shift to heat pumps, solar panels and hydrogen boilers as part of a broader drive to reach a national target of carbon neutrality by 2045. The controversial amendment was eventually passed last month (September) with 679 votes cast: 399 voted in favour of the law, 275 members against and five abstained.
From January next year, the amended GEG will require newly installed heating systems to be powered by at least 65% renewable energy. For heating systems in existing buildings and in new buildings outside of new development areas, the 65% regulation will only apply once municipal heating plans are in place, i.e. in cities with more than 100,000 inhabitants from 1 July 2026 at the latest, and in smaller municipalities from 1 July 2028.
However, going forward, compliance with climate targets will no longer be monitored retrospectively according to different sectors, but rather in a multi-year and cross-sectoral approach. The government will then have to decide in which sector and with which measures the permissible total amount of CO2 should be achieved by 2030 - but only if the target is missed two years in a row. The Council of Experts On Climate Change has warned that a common course must then be ensured. One possibility would be German emissions trading, whereby participating companies have to present CO2 emission rights, or so-called certificates. Their prices are fixed and are currently rising every year; this would make the use of fossil fuels for heating more expensive, even for homeowners, and is intended to promote the switch to more climate-friendly alternatives.
Building renovation market to increase by $55.6 billion by 2026
And renovations mean big money: the building renovation market in Europe is estimated to increase by $55.6 billion between 2021 and 2026, according to Statista. The industry was valued in Europe at nearly $957 billion in 2021 and is forecast to reach over one trillion U.S. dollars by 2026.
And there are other meaningful benefits to renovation: for every €1 million invested in the energy renovation of buildings, an average of 18 jobs are created in the EU, according to Renovate Europe. These are local, long-term jobs designed to stimulate economic activity across the EU. The number of jobs created per €1 million invested varies across the EU depending on national circumstances and the employment cost but a recent study by the climate change think tank reports that those numbers are: Croatia, 29; Estonia, 17; Finland, 16; Italy, 15 and Spain, 18.
