German govt finds compromise on buildings’ subsidy to appease construction sector

The German government has agreed to review applications by home builders under a controversial funding programme set up by the previous administration. Its aim is to pacify the construction industry after unexepectedly scrapping the programme last week. Federal funding for new buildings can be granted to applicants who fulfil the criteria of the efficient buildings programme established by state development bank KfW and handed in their application by 24 January, when the government announced the programme's cancellation. This involves around 24,000 applications, the ministry for economy and climate (BMWK) said in a press release. “This provides a good and legally secure solution for all concerned,” the ministry wrote. “I know that our decision to suspend funding has caused resentment and disappointment, it really hurts me, but it was still necessary,“ economy and climate minster Robert Habeck said in a press conference. Habeck stopped support payments for energy-efficient new residential buildings in Germany with immediate effect last week, arguing that a surge in demand for the funds made the “Efficient House 55” (EH55) programme unviable.

EH55, set up by the previous government and due to end at the end of January 2022, received applications worth some 20 billion euros since November last year. However, the scheme has long been criticised for supporting houses according to outdated climate standards and using money inefficiently. The move by the new government caused resentment in the construction industry, while other experts welcomed the ministry’s plans to distribute funds more efficiently. “Building subsidies are to be realigned for the future. The aim here is to set up a climate-ambitious, holistically-oriented subsidy for new buildings, as was also agreed in the coalition deal,” the BMWK said. The opposition Christian Social Democrats (CSU) said that the cancellation of the KfW subsidy showed the governing coalition parties’ (SPD, Greens and FDP) “disrespect towards society,”.

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.