To achieve climate protection goals and make the goal of climate neutrality by 2045 a reality, Germany must completely transition the heating supply for buildings to CO2-free energy sources and significantly reduce the energy demand of buildings. Specifically, this means that over the next 20 years, the majority of buildings will require energy-efficient retrofits, combined with the installation of renewable heating solutions. A large proportion of buildings in Germany have not yet been retrofitted.

As the BDI study “Klimapfade 2.0” shows, a wave of retrofits must be launched as soon as possible in order to still achieve the climate targets for the building sector by 2030. This requires not only that more buildings be retrofitted each year, but also that the retrofits be more comprehensive. For climate neutrality in the building sector to become a reality by 2045, openness to various technologies in heat supply is also of crucial importance. Electricity as well as renewable solid, liquid, and gaseous energy sources must all be part of the solution.

The diverse global and federal policy developments in 2022 and 2023 have further exacerbated these challenges. Russia’s war of aggression has highlighted the vulnerability of the heating supply in the building sector: Many buildings still rely on gas and oil as energy sources. At the same time, the suspension of subsidies for building retrofits, high inflation, and uncertainty regarding heating system replacement requirements have led building owners to hold back on investments. Rising interest rates, rising construction costs, and limited subsidies for new construction are causing demand shocks in the construction industry and threatening the economy and jobs.

Incentives for More Energy-Efficient Renovations and More Energy-Efficient New Construction

Addressing the challenges of energy-efficient building retrofits requires clear and affordable legal requirements, attractive yet reliable funding opportunities, and comprehensive and understandable information resources. At the same time, additional investment incentives and the removal of barriers are necessary so that energy efficiency in new construction can contribute to a climate-neutral building stock.

Policymakers must recognize energy-efficient building retrofits as a central pillar for achieving climate protection goals. The following measures must be taken:

• Give higher political priority to energy-efficient building retrofits
• Clearly communicate energy-saving targets for existing buildings
• Make the creation of renovation roadmaps mandatory
• Make funding programs reliable and more accessible
• Remove tax barriers and advance digitalization.

Implementing these additional measures is crucial to quickly get the required wave of renovations underway—so that climate neutrality in the building sector can become a reality.

Following the ruling by the Federal Constitutional Court, the financing of building renovation and new construction subsidies must also be restructured and secured for the long term. After all, reliable subsidies for buildings are an indispensable part of the policy toolkit on the path to becoming a climate-neutral industrial hub.