01/28/2022

KfW program for efficiency houses stopped!

What can builders and investors do now?

Economics Minister Habeck has temporarily halted the KfW program for efficiency houses and for energy-efficient refurbishment. The funding is to be reformed by the new German government.

The new German government surprisingly announced on Monday that the current funding of the state-owned KfW for energy-efficient buildings will be stopped with immediate effect. The reason for the stop: the end of the new construction subsidy according to the KfW efficiency standard EH55, which was still announced by the previous government in November 2021 for the end of January. The funds available for the subsidy programs under the still provisional budget management had already been exhausted. The aim of the reorientation is to reorganize the funding and the legal standards for new buildings.

We as greeen! architects regard this decision of the reformation in principle as correct, since an economy cannot function durably with subsidies. What can be criticized here, however, is the way it was implemented, without notice and very suddenly.

In many projects by the decision of the Federal Government financing gaps develop, which probably cannot be caught up completely by the announced assignment of favorable credits. So the conclusion is obvious that the solution could be to build more cheaply and merely observe the requirements of the GEG. We can only advise against this in view of the coming national and European legislation, as well as our obligation to help shape the building turnaround.

The German government plans to anchor the KfW 55 standard as quickly as possible in the newly revised Building Energy Act. Should this be the case, builders and investors will be forced to implement this standard as a minimum requirement in an estimated 6-9 months. In addition, the GEG is to be geared to the avoidance of CO2 emissions in the long term. In the future, subsidies will also be based directly on the avoided greenhouse gas emissions per square meter.

More and more investors in real estate funds today favor properties that are ESG compliant (Disclosure Regulation, Article 9). We believe this trend will intensify in the coming years. Consequently, conventionally constructed buildings will be "stranded assets" in just a few years. In addition, social awareness about housing and living has changed drastically since movements like Fridays4Future.

Legislation in Germany and Europe will become stricter:

  • The CO2 tax for fossil fuel heating systems will increase to 55 euros per ton of CO2 by 2025.
  • The Building Energy Act will be revised with a view to preserving existing buildings, recycling management and higher ecological standards.
  • It can also be assumed that the new subsidy options will certainly be even more ambitious than KfW40.
  • In the Netherlands, the circular economy is becoming the focus of legislation.

The Building Energy Act is being completely reoriented. Therefore, we believe that all builders and investors are well advised to continue to strive for building according to a holistic approach, despite this funding freeze, in order to avoid owning a commodity that is no longer tradable in a few years.

In our opinion, ESG-compliant construction for the future means low-tech instead of high-tech and a holistic approach to planning and implementation. Optimal solutions offer there the timber construction, to which the COALITION for WOOD CONSTRUCTION placed a new demand paper to the policy - with beginnings for the conversion of trend-setting promotion measures. Ecological, sustainable and holistic planning and building is affordable if each project is considered holistically - and this also includes the economic side - and planned intelligently accordingly.

Status: 01/28/2022

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