The refurbishment rate of Germany’s residential buildings currently falls short of the 2% needed to meet the sector's climate goals by 2045
In the quest to align with climate ambitions, the refurbishment rate of Germany’s residential buildings is going to need a significant boost from where we're at right now. Currently languishing at a mere 0.7%, the rate falls drastically short of the 2% needed to meet the sector's climate goals by 2045.
This stark gap is highlighted in a series of expert reports which suggest that without drastic action, the recently amended German Building Energy Act (GEG 2024) and the Federal Subsidy for Energy-Efficient Buildings (BEG) will be insufficient to bridge this divide.
The forecasts vary slightly, but do converge on the necessity for a dramatic increase in renovation activities. A 2022 report from the Federal Ministry of Economics and Climate Protection (BMWK) pegs the necessary rate at between 1.7% and 1.9%, while the German Economic Institute (IW) advocates for a 2% rate. Yet, data from B+L Marktdaten for the German Energy Efficient Building Envelope Association (BuVEG) pinpoints the actual energy-efficient refurbishment rate at just 0.7% for 2023, with expectations of a minor decline by mid-2024.
The FIW, commissioned by the Building Alliance, further forecasts that the current measures under GEG 2024 will only achieve approximately 75% of the planned greenhouse gas reductions by 2030. The projected emissions for 2030 are about 80 million tons of CO2 equivalents, overshooting the Federal Climate Protection Act’s target of 67 million tons by a considerable margin.
Strategic Recommendations and Sector Response
BuVEG
Jan Peter Hinrichs, Managing Director, BuVEG
To counteract these deficiencies, FIW researchers advocate for a reduction in exemptions under GEG 2024 and a tightening of efficiency requirements. The reliability of subsidies is also seen as a pivotal lever to boost renovation rates. Specifically, they recommend focusing on the energy efficiency of building envelopes and targeting the renovation of the most energy-inefficient single and two-family homes, coupled with the accelerated adoption of heat pumps and expanded district heating networks.
Jan Peter Hinrichs, Managing Director of BuVEG, critiques the German government's recent policy direction, emphasizing the insufficient pace of energy-efficient refurbishment relative to heating system replacements. This trend is set to cause the sector to miss its 2030 and 2045 climate targets without significant policy adjustments.
Collective Action and Policy Adjustments
The Building Alliance, representing 30 associations, underscores that individual measures are inadequate. They're calling for a comprehensive rollout of renewable heat supplies and a long-term, reliable funding framework. Their stance is clear: systemic improvements in overall efficiency are crucial for a cost-effective and dependable energy transition in Germany, and aligning with the European Buildings Directive (EPBD) through national implementation is essential.
On a positive note, the Expert Council for Climate Issues reported a 7.5% reduction in emissions for 2023, marking a near achievement of the building sector’s annual climate target, a sentiment echoed by Building Minister Klara Geywitz, who asserts the sector is almost on target.
Looking Forward
As Germany steers towards its ambitious climate targets, the building sector remains a critical battleground. The call for intensified refurbishment and a robust policy framework is more pressing than ever. Strategic, coordinated action will be paramount in securing a sustainable, climate-aligned future for the German real estate market.
