Germany introduced a national emissions trading system for the heating sector in 2021, which is similar to the emission trading system at the European level (EU ETS 1). This means that GHG emissions from heating have their own CO2 price, with the result that the use of nonrenewable sources for heat generation is becoming increasingly expensive. This idea was adopted by the EU, and the building sector is now to be included in a separate European emissions trading system (EU ETS 2), (presumably) starting 2027.
Furthermore, as mentioned in "Incentives for Green Retrofit", to reduce the building sector's emissions, Germany — via the KfW and the BAFA — launched various programs providing incentives to owners of homes and other buildings for energy efficiency measures.
As the target for the building sector under the KSG (see "CO2 and Energy Targets") was not met in 2021, in 2022, the Federal Ministry of Housing, Urban Development and Building (Bundesministerium für Wohnen, Stadtentwicklung und Bauwesen) and the Federal Ministry of Economics (Bundeswirtschaftsministerium) presented an immediate action plan for the buildings sector, which provided for various measures to meet the sector target in the future. In particular, this included even more extensive funding for the energy-efficient refurbishment of private buildings and support for local authorities in the energy-efficient refurbishment of public buildings and facilities. These measures are largely still in force under the federal funding program for efficient buildings (Bundesförderung für effiziente Gebäude).
On the other hand, the Act on Energy Services and Other Energy Efficiency Measures (Gesetz über Energiedienstleistungen und andere Energieeffizienzmaßnahmen) takes a different approach. Among other things, it obliges the public sector and large companies to conduct regular energy audits. The aim is to help to identify potential energy efficiency measures; however, it is up to the addressees to decide whether they actually use these identified energy-saving potentials.
In addition, German tax law also provides for various regulations to promote energy efficiency in buildings. Under the Energy Tax Act (Energiesteuergesetz), taxes have been raised on oil and gas used to generate energy. This act has not only been intended to further reduce the use of oil and gas for energy generation, but also to generate income for the German state. The Income Tax Act (Einkommenssteuergesetz) provides for tax reductions for energy efficiency measures in buildings used for personal residential purposes. A certain proportion of the expenses for these measures can be offset against the taxpayer's rate of income tax.
Individual federal states (Bundesländer) have also introduced further measures, particularly in the form of mandatory solar panels on the roofs of certain buildings. In the state of Baden-Württemberg, e.g., such an obligation to install a photovoltaic system has applied to all newly constructed nonresidential buildings and large parking lots since 1 January 2022. Starting 1 May 2022, it was extended to newly built residential buildings and, since 1 January 2023, to existing buildings in the event of extensive refurbishment.