New German Government: What’s in Store for Energy Efficiency?

Following a general election in September and a period of intense negotiations, Germany has a new governing coalition and a new coalition treaty. Germany’s government is formed of three parties: the Social Democrats (SPD), the Green Party and the Free Democrats (FDP). Because of the respective colors of these parties (red for SPD, yellow for FDP, green), the constellation is referred to as a traffic light coalition.

As far as climate and sustainability are concerned, the coalition treaty aims to fulfill the goals of the Paris Agreement. Climate protection is seen as a high priority topic and energy efficiency will more than ever be necessary to achieve the ambitious climate goals.

Here are the main aspects covered in the coalition treaty that will impact energy efficiency in buildings and energy efficiency in industry.

Building sector: greening Germany’s building stock

• Immediate Climate Action Programme 2022: introduction of an incentive programme for new buildings that focuses on CO2 emissions reduction per square meter of living area

Planned changes to the Building Energy Act:

• Update to the Building Energy Act: Every new heating system as of January 1, 2025, should operate with 65 percent renewable energy
• Standards of the Building Energy Act for significant extension or renovation of existing buildings will be increased so that parts to be replaced fulfill the “Efficiency House 70” standard as of January 1, 2024
• Standards for new buildings in the Building Energy Act will be increased to “Efficiency House 40” as of January 1, 2025
• Thanks to the innovation clause, the Building Energy Act will also recognize equivalent measures that contribute to CO2 emission reduction

Other building sector measures:

• Introduction of a digital-building resources pass to pave the way to a circular economy
• Development of a strategy for timber and lightweight construction as well as mineral planning
• Development of a system to share fairly the additional CO2 costs between tenants and landlords (either in a staged model according to the energy efficiency standard of the building as of June 1, 2022 or 50/50)
• Free of charge building renovation roadmaps for owner communities and by building sales
• Extended incentive program for serial renovation and further development of renovation according to the Energiesprong (“energy leap”) principle
• Improvement and digitalization of the building energy pass
• Introduction of a climate component in the housing subsidy

Heating sector

• Every new heating system as of January 1, 2025, should operate with 65 percent renewable energy
• Engagement for municipal heat planification and development of heat networks
• 50 percent of heating production should by climate neutral by 2030

Decarbonizing the German industry

Energy and resource efficiency will play an important role in the transformation of the German industry towards climate neutrality:

• Support for industry is to be made conditional on the implementation of economically viable energy efficiency measures
• Creation of new instruments to reach climate goals, for instance Carbon Contracts for Difference
• Support the introduction of a carbon border adjustment mechanism in Europe
• Creation of a “climate club“ of countries with CO2 minimum price and border adjustment mechanism

Although the road to climate-neutrality represents a huge challenge for Germany, it also harbors many opportunities. This is good news for companies looking to expand to Germany with everything from renewable heat production, heat pumps and renovation technologies to energy efficiency services.

Get in touch with our industry experts to find out more about the opportunities for your company.

NB: This information is provided as a courtesy only. No claim is made to completeness, accuracy, or timeliness.