Germany tightens buildings subsidy rules after 1-billion-euro programme depleted in one day

The German government’s 1-billion-euro subsidy programme for new energy-efficient buildings was depleted just hours after its 20 April start, according to the economy and climate ministry. The government had expected funds to be exhausted quickly and lined up a new programme with stricter funding rules to take effect in that case. State-owned development bank KfW today (21 April) launched the so-called ‘stage 2’ of the programme, which is similarly aimed at the construction of new energy efficient residential and non-residential buildings, and will be in place until the end of the year. As a third and final step in the realignment of new construction funding, a new comprehensive programme entitled "climate-friendly construction" is planned for January 2023. It will focus even more on greenhouse gas emissions in the life cycle of buildings, said the ministry.

The government had come under fire for suddenly stopping a previous subsidy programme in January, arguing that a surge in demand for the funds made it unviable. The programme was supporting houses according to outdated climate standards and used money inefficiently, the government said and started to review the support programme structure. The new programme comes in the wake of a critical report by Environmental Action Germany (DUH) that called for a greater focus on the renovation of existing buildings and legally mandatory minimum efficiency standards.

The buildings sector accounts for roughly a third of Germany’s total CO2 emissions and has been slow to reduce its carbon footprint in recent years. The creation of a new buildings ministry, previously a sub-department of the interior ministry, has sparked hopes that the laggard sector finally makes more progress in emissions reduction.