Investment plan to finance the heating transition for low-income households

The heating transition is critical to the goals of the Federal Climate Protection Act and the national energy transition. According to an amendment to the Climate Protection Act from June 2021, the building sector must reduce emissions by around 44 percent from 2020 to 2030. Given that the industry has a mixed building and ownership structure, it faces major challenges. The complex variety of applicable government instruments only serves to exacerbate these problems. The path to climate-neutral heating by 2050 requires a reduction in the consumption of heat energy as well as a transition to renewable energy.

However, changes to the building sector also require a high level of investment, and low-income houses lack purchasing power. Moreover, they also lack decision-making power when it comes to new investments in residential buildings. The risk is that the energy transition will leave these households behind. For these reasons, this project is developing a strategy to expand and implement financing mechanisms for the heating transition in Germany. The primary goal: to enable energy efficiency in households with low incomes. This will make a critical contribution to the success of the broader energy transition.

The project includes the following concrete steps:

• The coordination of support to fill gaps in energy programs for households;
• The development of sustainable implementation strategies for socially and technically innovative financing mechanisms, taking into account the national and local context;
• Raising awareness and taking action through targeted dialogue with and the involvement of stakeholders;
• A feasibility study for the implementation of selected financing instruments based on case studies in Baden-Württemberg, Berlin, Brandenburg and North Rhine-Westphalia; and
• The development of a decision-support system as well as an implementation strategy for the transferability and reproducibility of innovative financing mechanisms in Germany and the evaluation of their effectiveness.

The project will test and configure various financing models. The aim: to incorporate low-income homes into the transition without overloading the households themselves, the state or the overall system.

As part of the project “Investment plan to finance the heating transition for low-income households” (INVEST for short), innovative financing models are being developed to pay for the energy transition in the building sector. The project is part of the seventh energy research programme of the Federal Ministry for Economic Affairs and Climate Action (BMWi) and receives support under the category “Energy transition and society”.

For the project, adelphi is identifying national actors related to the financing of the heating transition as well as obstacles to the transition in the rental sector. adelphi is also developing financing models and a case study for the Berlin-Brandenburg area. The project includes communication and networking activities. In addition to adelphi, the Institute of Energy Economics and Rational Energy Use (IER) at the University of Stuttgart (overall project management) and the Institute for Future Energy Consumer Needs and Behaviour (FCN) at RWTH Aachen University are also involved in the project.