Major German states demand quick implementation of tax breaks for building insulation

The economy ministers of Bavaria and North Rhine-Westphalia have written to federal economy minister Peter Altmaier and finance minister Olaf Scholz to demand tax breaks for home owners who invest in insulation. The two ministers stress that this instrument would help Germany reduce its greenhouse gas emissions, as around one third of the country’s CO2 emissions were coming from heating and cooling buildings. So far, the insulation rate has been below one percent, their press release says, adding that giving home owners tax breaks on these refurbishments would also benefit local businesses. Without the tax incentives, Germany was giving away “huge efficiency potentials,” something the country could not afford if it wanted to achieve its climate targets, Bavarian minister Hubert Aiwanger said.

Implementing a tax reform to promote home insulation is part of the federal government’s coalition treaty but has failed before in previous legislative periods because state governments couldn’t agree on how to cover the shortfall of tax income. Both in 2018 and in 2019 the federal finance minister failed to include the instrument in his budget plans – triggering loud criticism from lobby groups, civil society and the opposition. Germany aims to reduce emissions from the building sector by 66-67 percent by 2030; in 2018, the reduction compared to 1990 was 44 percent.