A new study from Earth4All Germany collaborators highlights how only a ‘just transition’ can decarbonise the building sector and help reach climate targets. In this blog, its authors explore their findings, and where we can go from here.
The study, published in Nature, reflects the findings of Earth4All: Germany by emphasising that systemic change must align ecological goals with social equity – particularly in sectors like housing, where transformation risks deepening inequality if not carefully designed. The building sector is both a major emitter and a crucial leverage point for effective climate action that benefits all parts of society.
Transforming the building sector
Decarbonising the building sector is a crucial component of Germany’s journey toward climate neutrality. Buildings contribute significantly to CO₂ emissions, yet they also hold immense potential for emissions reduction and efficiency gains. Our recent ifso expertise underscores several key factors essential for achieving a successful and socially equitable transformation of building infrastructure. To promote transparency and encourage similar studies in other countries, we have published the code behind our findings on GitHub.
Towards a ‘just transition’
Achieving a socio-ecological transformation toward a decarbonised economy demands broad public support to drive the necessary policy measures. At the core of this effort are questions of fairness: who will bear the costs of transformation, and who stands to benefit from these policies?
In the building sector, social justice and decarbonisation strategies must go hand in hand to ensure a sustainable and inclusive future. With this in mind, our study not only identifies the technical and financial requirements for transforming the building sector but also develops a financing model that considers distributional impacts. Specifically, we propose that financial support for refurbishing owner-occupied homes be based on the homeowners’ net wealth. Additionally, measures must be in place to prevent refurbishment costs from being unfairly shifted onto tenants. This approach helps ensure that public subsidies do not disproportionately benefit the wealthiest households while recognising that lower-wealth households often reside in less energy-efficient buildings.
Doubling renovation rates: a key to Germany’s 2050 climate goals in the building sector
To reach climate neutrality by 2050, the building sector must undergo a significant reduction in emissions. This goal requires targeted refurbishment measures aimed at improving energy efficiency and replacing fossil-fuel-based heating systems. Such measures can substantially reduce greenhouse gas emissions, making a vital contribution to the EU’s climate targets.
Our study reveals that the current renovation rate of approximately 1.5% of German buildings per year is insufficient to meet the government’s sector-specific targets for residential buildings. According to our calculations, achieving the climate goals by 2050 will require at least doubling the renovation rate to 3% and fully decarbonising heat production. To not only reach long-term climate targets but also adhere to the climate pathway, priority should be given to refurbishing poorly insulated buildings.
Measures to implement the transformation
To strengthen transformation efforts in the building sector, it is sensible to support the coordination, financing, and training of existing businesses (e.g. through state-subsidised loans or specialised training programs). These measures can help expand or better utilise existing capacities. A key aspect of the sector’s transformation is to minimise new construction, which is particularly resource-intensive and environmentally challenging, and to prioritise the renovation of existing buildings instead. The fact that most capacity in the construction industry is currently focused on new construction suggests that there is ample potential to pivot toward a large-scale renovation initiative.
Another essential factor is the transparent and realistic calculation of refurbishment costs. Presenting a full cost assessment—showing actual expenses without factoring in future savings can help private households to more accurately understand short-term investment requirements. This leads to a reduction of uncertainties and supports sound planning and financing.
Where do we go from here?
Overall, our study demonstrates that decarbonising the building sector is a crucial lever for achieving society-wide climate targets. The proposed measures and strategies are designed to support a socio-ecological transformation. Achieving the ambitious goal of a CO₂-neutral building sector in Germany will require a collaborative and well-coordinated effort from all stakeholders.
