Germany’s housing renovations pick up, but remain far off target

The rate of energy-efficient housing renovations in Germany improved slightly in the last couple of years, but remains far below the levels needed to reach the country’s climate targets for the building sector, according to a survey by the government-funded Ariadne energy transition research alliance. “In 2022 and 2023, we saw an average modernisation rate of just under 1.1 percent and 1 percent respectively for owner-occupied homes. Compared to the average rate of 0.8 percent between 2000 and 2020, this is a slight upward trend,” said Kathrin Kaestner from the Leibniz Institute for Economic Research (RWI). “Nevertheless, this level of modernisation remains well below the German government's two percent target for annual refurbishment.”

Ariadne said low-income households offer a particularly high potential for saving energy and reducing emissions. “This is because low-income households have renovated less frequently in the past and are also more likely to own old buildings that are already in need of modernisation. At the same time, they spend a higher proportion of their income on heating costs than households with a medium or high income.” But although low-income households therefore have a strong incentive to renovate, the survey results indicate that they often lack the financial resources to do so.

Ariadne’s yearly heat and housing report, in which more than 15,000 households are surveyed, also underlined a “clear discrepancy” between the general approval of climate protection in Germany and support for specific measures. “Although around 80 percent of respondents consider climate protection to be important, only a minority are in favour of specific measures such as a CO2 tax on heating energy,” said Anton Knoche from the Potsdam Institute for Climate Impact Research (PIK). While property owners favour the existing CO2 tax over a planned ban on the installation of fossil fuel heating systems, tenants have no clear preference between these measures.

Households with low heating costs in relation to their income are more willing to support climate policy measures in the building sector, according to the survey results, which also revealed significant regional differences. People living in the eastern German states were less likely to accept policy measures than those living in the West, particularly in city states.