Germany commits billions to upgrading building efficiency

The German government plans to spend €177.5 billion between 2023 and 2026 on climate protection, with a focus on increasing the energy efficiency of buildings.

The largest share (€56.3 billion) of the ‘Climate and Transformation Fund’ will go towards building upgrades that cut carbon output.

Currently, around 30% of Germany’s energy consumption comprises space and water heating, but the building sector has missed its CO2 emission reduction targets for 2020 and 2021.

Much of the fund will be used to renovate buildings in the bottom 25% of energy performance – a plan Brussels is currently working on to make mandatory through the Energy Performance of Buildings Directive.

The fund also reinforces a shift in priorities away from supporting the construction of new homes to renovating existing ones. The ministry points out that one euro spent on renovation is ten times more efficient than if it was spent on a new home.

Another €35.5 billion is earmarked to subsidise the EEG surcharge to reduce electricity prices, while another €20 billion will go toward decarbonising industry and implementing Germany’s hydrogen strategy.

The plan also includes support programs for sectors such as transport, including charging infrastructure.

“The fund is the most important financing instrument for economic modernisation and climate protection,” explained Finance Minister Christian Lindner.

“This will ensure that the state’s climate protection revenues flow directly into the most forward-looking investments possible for effective climate protection measures.”