Just as REFIRE was going to press, it looked as if some form of wisdom was prevailing, and the responsible German Ministries had put their heads together and come up with a compromise. Not a solution. But at least a measure that would stave off the worst effects of a decision taken last week that left the German real estate and construction industries reeling with shock.
We're talking about the decision to call an immediate halt to a wide-ranging €35bn programme of subsidies to landlords and housebuilders as part of Germany's ambitious measures to promote energy-efficient housing. So strong was the demand to avail of the subsidies, managed by Germany's promotional bank KfW, that the government resources available to honour the claims were overwhelmed, and they were forced to pull the plug overnight on the scheme.
With only €1.8bn in the kitty available for payout, agains legitimate claims of €7.2bn - and mounting daily - to tap into the funds, the government may have felt it had no choice. But uproar ensued, with those whose applications hadn't yet been fully processed being left in limbo, and those who hadn't yet applied - but had planned to do so before the scheme was wound down - screaming blue murder.
For they had all budgeted on the subsidies being granted, and in many cases had already invested the future proceeds elsewhere. The bulk of the 24,000 applications still outstanding are from companies and local building authorities, but at least 4,000 private builders were also affected. And importantly, 22,000 applications pertain to new buildings and a targeted building standard, known as Effizienzhaus 55, which is a cornerstone of the new governing coalition's plan to achieve 400,000 new housing units built annually.
Faced with a wall of outrage from the building industry, the various Ministries, led by the Green Economics Minister Robert Habeck, have found a way to magic up the necessary €5bn to at least appease those caught up in the application pipeline. It's a moderate price to pay, Habeck must be thinking, compared to the nearly €10bn it would have cost to otherwise continue the subsidy programme.
It's little comfort, though, to those who who missed the cut, who will now most likely have to wait until a new subsidy programme is implemented, possibly quite a way down the line. And it's been a communications disaster for the fledgling government, anxious more than ever to show they're serious about tackling Germany's housing shortage.
The truth is, Germany is facing a massive challenge in facing up to its obligations to achieve carbon neutrality by 2050. A third of Germany's nearly 20 million housing units are currently rated as Efficiency Class G or H - about the worst rating they could have. If large numbers of these landlords don't believe that the goals are achievable, or in any way affordable, they'll drag their heels and look for ways to sabotage the system. In this new post-pandemic era, this fudging on the KfW subsidy programme is the worst possible start to bring landlords and developers on side.
Half of Germany's housing stock was built before 1977, long before the first energy conservation guidelines came into effect. Many of Germany's fine-looking and well-built residential houses will be a nightmare to bring up to scratch, meriting no more than Efficiency Class D to H despite their superficial attractiveness. Housing in the lowest category is itself responsible for the emission of more than half the greenhouse gases in the sector. The goal is to halve the carbon dioxide emitted by the building sector by 2030 - eight years away - and climate neutrality from buildings achieved by 2045, according to the Brussels diktat.
The same discussions are taking place where property owners meet right across the country - what do we do with our gas and oil burners, how and when do we install a heat pump and adequate insulation, and what's it all going to cost? The associated investment is the equivalent of another German reunification, reckon many industry experts. The sheer scale of what's required is, for most people, unimaginable.
And that's before they've received their new, updated, energy bills for the winter, which in Germany, as elsewhere, will trigger blind panic when that envelope lands on the doormat. Millions of recipients will go weak at the knees at the thought of what they're being asked to stump up for the new, necessary, improvements.
If they're not convinced that it's all worth it, they'll resist. Germany's track record so far shows they might be right to be sceptical of all the promised benefits. Germany spent €350bn between 2010 and 2018 on energy rehabilitation. Every second apartment block seemed to be undergoing refurbishment, its walls encased in new styropore cladding, with energy-efficient windows and floor and ceiling insulation. All promising to massively reduce energy consumption.
Sadly, consumption remained almost unchanged, at about 130 KW per square meter. Behavioural psychologists can probably explain it, telling us how the feel-good effect leads us to treat ourselves better, turn up the heating, and be generally less inclined to conserve energy. It may be true. In any event, we carried on merrily consuming energy, and our monthly bills didn't get any cheaper.
The whole conversion industry, charged with equipping German housing with the heating, insulation and ventilation tools of the future, is facing the same bottlenecks as the construction industry at large. A shortage of apprentices in the relevant heating and air-conditioning trades is causing real worry among industry insiders. Skilled professionals to handle installation are in permanent short supply, and those that are available are booked out months in advance. Building materials have soared in price. It's not at all clear how the energy targets can possibly be reached.
But bigger change is afoot, too. In a land with as high a percentage of tenants as Germany does, the balance between landlord and tenant, particularly in the division of ancillary costs, is heading for fundamental reform. Placing trust in the government, and in how it is seen to equitably deal with complex housing matters, has never been more pressing than now.
