With a general election approaching in September and the effects of climate change now part of everyday life, Germany’s political parties can no longer ignore the fact that climate change must be high on the agenda in terms of both manifestos and legislation.
The current government has been forced to react to the requirement for a first amendment to the Climate Protection Act 2019 (Klimaschutzgesetz) resulting from a decision by the Federal Constitutional Court (BVerfG - Bundesverfassungsgericht) that the existing act is insufficient to achieve the net zero objectives set out in government policy.
In particular, it stipulates the necessity for a 65% (rather than 55%) reduction in greenhouse gases by the year 2030 compared to the base year 1990 and an earlier target date for net zero emissions, which will be brought forward to 2045.
Increasing the percentage reduction in emissions to be achieved by 2030 is intended to encourage immediate action by the current generation, and not leave the bulk of the efforts to achieve net zero to a future generation, which would have to significantly adjust its behaviour to hit the targets.
The decision by the constitutional court has resulted in a first amendment, which was agreed in May 2021. Exactly how the linear path to net zero will be achieved and which sectors this affects most are unclear from the amendment, and in a country producing above-average emissions on a European scale, the task is a tall order indeed.
On the one hand there are pressure groups claiming the objectives nowhere near hit the mark, and on the other criticism from companies and industrial sectors which will bear the brunt of the challenge. Even the parliamentary vote on the final reading was a close call.
There is also criticism that annual targets after 2030 are not sufficiently stipulated, whether that be a linear annual progression or whether there will be further interim targets set over the following 15 years. Criticism closer to home is that there are currently insufficient plans in place to achieve the initial hurdle in 2030. It is clear that all Germans must play their part, from less reliance on petrol power to lower-carbon holidays but it is also clear than some sectors in such a highly industrialised country will be harder hit than others with draconian regulations and controls in the race to net zero. The Federal Environment Ministry has stated that the fight against climate change must involve incentives, regulations and grants.
In June 2021, the Federal Cabinet decided on a so-called climate pact involving a financial package, also known as the Immediate Climate Protection Programme (Klimaschutz-Sofortprogramm) with a total investment volume of €8 billion for the changeover to environmentally-friendly technologies, amongst others in the construction sector.
Some €4.5 billion will be invested over the next two years in the promotion of energy-efficient buildings, and a further €1 billion is available for climate-friendly social housing. The plan also includes a minimum standards programme for new-build properties, which will be required to comply with standard EH-55 from 2023 (and EH-40 from 2025).
Quite simply, over the next few years, buildings must be constructed which use a maximum of 40% of the energy of a conventional building. However, the proposed requirement that all buildings be equipped with photovoltaic/solar energy technology has been scrapped.
In addition to higher energy standards, the climate pact also proposes that from 2023 no newly constructed buildings may be heated using fossil fuels. There is much criticism of the strategy: Andreas Mattner, President of the ZIA German Property Federation says that “a further tightening of energy-efficiency standards in itself is unhelpful as the requirements on the building envelope to achieve the required efficiency would be disproportionately high if the required reduction in emissions is to be achieved via this route alone.”
“The energetic refurbishment of buildings is one of the most expensive ways to protect the climate” says Axel Gedaschko, President of the housing industry organisation GdW, “building owners in Germany need to have a long-term legal right to claim grants for climate protection projects.”
At a global summit organised by the Wirtschaftswoche magazine, CEO of housing company Vonovia, Rolf Buch, explained the effects of climate protection policy on the residential sector in light of an ageing population, increasing urbanisation and the huge influx of other European nationals into German cities. He sees a twofold challenge emerging: reduction in CO2 emissions, and the counteraction of increasing temperatures in summer.
The costs for compliance refurbishments carried out by landlords are often passed to tenants in the form of rental increases, who in turn benefit from reduced electricity and heating costs. But in the event that the landlord cannot raise rents to the required level, then it is likely that poorly insulated housing will remain in the stock for many years. What would be most useful in this case is for the CO2 costs to be shared between landlord and tenant.
“In a poorly insulated building, the tenant can heat and ventilate as he likes, but he cannot save any CO2. Only in a well-insulated house can the tenant control this for example by not opening the windows and thus not turning up the heating. We need a CO2 price distribution which means that the landlord has an incentive to increase energy efficiency, and when he has done that, the tenant must take on the responsibility by heating and ventilating in a climate-friendly way. If the property is poorly energy efficient, the landlord would have to pay the bulk of the cost of CO2 but if it is highly efficient, the tenant would start to pay. Only when the tenant can control the CO2 emissions effectively would he be happy to pay more of the (reduced) costs.”
Whilst it is a fairly simple issue to legislate the standards in terms of new-build properties, bringing entire portfolios of existing residential properties up to the required standards is a significant challenge for many owners, even if the standards are not as stringent as for new construction. Instead these would be replaced with programmes to promote the use of renewable energies, sustainability and the generation of electricity locally on site.
The old problem remains, how to make the costs and benefits of combating climate change equitable across the economy rather than disproportionately between those who pay for it and those who benefit. Politically the CDU/CSU would prefer to utilise populist market mechanisms to achieve climate protection and the Greens would prefer to regulate, which tends to curry less favour with the electorate.
