Building and housing

Building and housing

Compared to 1990, greenhouse gas emissions in the building sector must drop by two thirds by 2030. With a mix of increased funding and CO2 pricing, the Federal Government aims to stimulate investments in efficiency and renewable energies in order to make building and housing in Germany more climate-friendly. At the same time, housing is to remain affordable.

Greenhouse gas emissions emitted by the building sector totalled 210 million tonnes in 1990. Thanks to energy-efficient new builds and renovations they amounted to around 118 million tonnes in 2019. According to the Climate Change Act (Klimaschutzgesetz), emissions are to drop further to just 70 million tonnes by 2030.  To achieve this, it is important for buildings to be made more energy-efficient through investments in efficiency and renewable energies and for more heating systems to be run on renewable energies.

There is great energy-saving and climate protection potential in Germany's housing stock, which is why more funding is available for energy-efficient building renovations through the Climate Action Programme.

Tax relief for energy-efficient renovation

Tax relief has been available since January 2020 for energy-efficient renovation measures such as replacing heating systems, fitting new windows, insulating roofs and external walls, and will continue until the end of 2029: the tax payable can be reduced by 20 percent of the renovation costs – spread over three years. This tax relief applies to owner-occupied residential property.

Higher funding for energy-efficient building and renovation

Likewise since January 2020, many of the repayment grants for the Federal Government programmes for energy-efficient building and renovation implemented by the German development bank Kreditanstalt für den Wiederaufbau (KfW) have increased by ten percent. KfW now grants a maximum of €120,000 in low-interest loans with a repayment grant of up to 40 percent for buying, renovating or building energy-efficient houses. For individual renovation measures, funding of up to 20 percent of the cost is also available. In 2021, these programmes will be replaced by the new Federal Funding for Energy-Efficient Buildings (Bundesförderung für effiziente Gebäude - BEG).

New heating: replacement premium since January 2020

It will be worthwhile to replace old oil and gas heating systems with climate-friendly systems or switch directly to renewable heating over the next few years. Since the beginning of 2020, a grant of up to 45 percent has been available to property owners who replace their old oil heating system with a more energy-efficient heating system under the market incentive programme (Marktanreizprogramm, MAP) implemented for the Federal Government by the Federal Office for Economic Affairs and Export Control (BAFA). In 2021, this programme will be replaced by the new Federal Funding for Energy-Efficient Buildings (Bundesförderung für effiziente Gebäude - BEG).

In principle, from 2026 onwards, installations of pure oil heating systems in buildings will no longer be permitted if a more climate-friendly heating system is possible. A corresponding regulation is included in the Buildings Energy Act (Gebäudeenergiegesetz), which will enter into force on 1 November 2020.

Great climate protection potential in building renovation
Around 14 percent of all CO2 emissions in Germany are produced by the building sector (as at 2018). Of the nearly 22 million buildings in Germany, around 12.5 million residential buildings were built before 1977, i.e. before the first regulations were introduced on energy-saving thermal insulation in buildings. There is great energy-saving and climate protection potential in these old buildings: even more buildings need to be renovated to make them more energy-efficient.  
Around 60 percent of the energy consumption of buildings is used for heating. Nearly 58 percent of buildings are still heated with gas and oil; however, the proportion of heating systems that run on renewable energies is continually increasing. This all highlights how important it is for the climate to renovate buildings to make them more energy-efficient and to replace old heating systems with new ones that run efficiently on renewable energies. 
Energy is also used to manufacture and recycle building materials and this produces CO2 emissions that are attributed to the industrial sector, among others. Using alternative building materials can therefore create incentives for reducing greenhouse gas emissions in other sectors, too.