Worry about stagnation
Federal government lowers funding for building renovation
08/12/2022, 08:08 am
In view of climate change and the Ukraine war, the Germans want to save energy. The energetic renovation of buildings offers great opportunities. However, the federal government is now curtailing their funding. The resentment is great – there is concern that citizens could do without renovations.
Anyone who wants to buy a heat pump or replace their windows will receive less money from the state from Monday: that is when the second stage of a subsidy reform takes effect. The Ministry of Economic Affairs had announced the changes at short notice. Above all, this – in addition to cuts in subsidy rates – causes outrage. Associations warn that there will now be less renovation. The Federation of Consumer Organizations (VZBV) criticized: “Thousands of renovation projects could be discarded after long planning or have to be reorganized with enormous additional effort.” The Federal Association of Independent Real Estate and Housing Companies says: “Anyone who plans and builds houses cannot throw all plans overboard from one day to the next.”
What happened? Economics and Climate Protection Minister Robert Habeck announced the reform on July 26. Only a little later, on July 28, new funding conditions for applications for complete renovations at the state development bank KfW came into force. There are no longer direct grants – only for municipalities – but low-interest loans and a repayment grant.
The second stage of the reform applies to August 15th. Subsidy rates for individual renovation measures are thus reduced. Justification of the Ministry of Economic Affairs: In order to enable as many citizens as possible to receive funding in view of the tight budget, “slightly reduced funding rates” are necessary. The background is that the federal government wants to comply with the debt brake again in 2023. According to the Ministry, however, rising energy prices generally make investments in greater efficiency more profitable. The subsidy rates are reduced by 5 to 10 percentage points. When replacing windows, the subsidy rate used to be up to 25 percent, after the reform it was around 20 percent. According to the ministry, you used to get a maximum of around 15,000 euros, now 12,000 euros.
The federal government is planning half a million heat pumps per year
According to the ministry, when installing a heat pump, instead of 50 percent of the costs, the state will only pay a maximum of 40 percent in the future. You used to get up to 30,000 euros, after the reform up to 24,000 euros. You get the maximum subsidy rate with a new heat pump bonus for particularly efficient types and a heating exchange bonus. Habeck had announced a heat pump offensive, from 2024 at least 500,000 new heat pumps are to be installed per year – also to become less dependent on Russian gas. Last year, 150,000 heat pumps were installed in Germany.
The reform also means that gas and gas-hybrid heating systems are completely excluded from the subsidy. This is a logical step, said Martin Sabel, Managing Director of the German Heat Pump Association. “It remains questionable whether the adjustments in this form will drive a wave of renovation and thus send a real signal for climate neutrality in 2045 and more energy sovereignty.”
Against the background of the Russian war of aggression against Ukraine and increased energy prices, the general goal of the federal government in the reform is to focus on building subsidies on the renovation of old houses instead of on new construction – there the effect for energy saving and climate protection is significantly higher.
But what are the consequences of the reform? The Ministry of Economics is causing uncertainty and stagnation, criticized Axel Gedaschko, President of the Central Association of the Housing Industry GdW. “In particular, the repeated U-turns in funding almost overnight have led to an enormous political loss of confidence and planning uncertainty among the socially oriented housing companies.” Extensive plans already made by the housing companies for renovation projects are often a case for the paper bin or can only be implemented with significant rent increases. “The government is thus significantly increasing the uncertainty that already exists around insufficient funding, explosions in construction and energy prices, and a shortage of skilled workers and materials.”
Consumer center calls for 25 billion euros in funding per year
A spokeswoman for the Central Association of the German Construction Industry said that due to the reduced subsidy rates, there was a risk that many orders would be canceled and fewer renovated. In a statement by the VZBV, it is said that the reluctance to invest could be exacerbated by the sharp reductions in the KfW subsidy rates for complete renovations. Important potential for saving energy and implementing a consumer-friendly heating transition could not be leveraged. The funding volume has been increased – the ministry speaks of annual approvals of 13 to 14 billion euros. But that’s not enough, according to the VZBV. The funding would have to be increased to 25 billion euros. “In these challenging times it is now important to quickly curb energy consumption and reduce CO2 emissions. It is therefore incomprehensible that the subsidy rates are being reduced overall, because the maximum potential is not being exploited in this way,” said Dirk Salewski, President of the Federal Association of Free Real Estate and Housing Companies.
Benjamin Weismann, Managing Director of the GIH-Bundesverband, a nationwide advocacy group for energy consultants, reports that many energy consultants are also desperate and angry. Many would now have to throw their plans overboard. “Unfortunately, the future funding is so unattractive that many will no longer tackle the necessary renovation measures,” said Weismann.
The heat pumps and heating networks, which continue to receive very high subsidies, are important for the energy transition in the building sector. However, energy efficiency comes up short again. Measures on the building shell would be funded much less well than individual measures in building technology. The targeted renovation rate could not be achieved in this way.