Unlocking efficiency for all: socio-economic inequalities in Germany’s pathway to a climate-neutral building stock

Extended abstract 7-010-26

Achieving climate neutrality in Germany’s building sector by 2045 requires large-scale energy-efficiency renovations and renewable heating systems, in line with German and EU climate policy. While these measures imply major investment needs, their distribution across socio-economic groups remains underexplored. Building on this, the contribution analyses the social distribution of investment burdens in Germany's residential building stock.

This analysis builds upon the scenario 'Climate-neutral Germany' by Agora Think Tanks (2024). It is reconstruced with Öko-Institut’s Building Stock Transformation Model. The model output provides cost data for different building types, which are then matched with socio-economic microdata from the German Microcensus (Forschungsdatenzentren der Statistischen Ämter des Bundes und der Länder 2025). The analysis identifies 20 household groups, distinguished by income, tenure status, and building type.

The results indicate the presence of significant social inequalities in both the existing building stock and the projected investment burdens. The findings of this study demonstrate that low-income households are more likely to reside in older, inefficient multi-family buildings equipped with fossil heating systems. This observation is consistent with the conclusions of previous research on energy poverty (Bouzarovski 2018; Thomson et al. 2017). In contrast, higher-income homeowners more often live in newer, more energy-efficient buildings and already use renewable heating.

The most significant financial strain is experienced by low-income tenants residing in multi-family buildings with monthly net incomes below €2,000. In order to turn the modelled scenario into reality, this group is confronted with cumulative investment requirements amounting to approximately €160 billion by the year 2045. Furthermore, middle-income tenants with incomes ranging from €2,000 to €2,900 face a considerable financial burden of approximately €90 billion. For a number of groups additional to the mentioned ones, the projected repayment obligations exceed 10% of monthly net income. 

The findings demonstrate that the transformation towards a climate neutral building stock is a social challenge and requires recogniction within a comprehensive policy-mix. This can include targeted subsidies, reforms to the rental sector, and public investment.

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