Foundation Calls for More Support for the Heating Transition

September 10, 2026

Source: E & M powernews

A study by the Öko-Institut shows that households with an income of less than 2,000 euros cannot finance the heating transition on their own. Four measures are intended to help across Germany.

A study by the Öko-Institut, commissioned by the Climate Neutrality Foundation, examines the distribution of investments needed for a climate-neutral heating supply. According to the study, the required investments—averaging 86 billion euros per year—are economically feasible. For households with a net monthly income of less than 2,000 euros, however, the financial burden is too high. The foundation is therefore calling for a more socially progressive scaling of subsidies and additional instruments for pre-financing.

According to the Öko-Institut’s modeling, by 2045, 1,170 billion euros must be invested in residential buildings and an additional 639 billion euros in non-residential buildings in the commercial, retail, and service sectors (GHD). This results in an annual investment requirement of approximately 86 billion euros. The study breaks down this requirement into 20 household groups based on income, building type, and housing form.

According to the Climate Neutrality Foundation, this scale of investment is fundamentally feasible. The construction industry generated approximately 190 billion euros in revenue in 2024. Furthermore, a large portion of the necessary investments is already allocated to maintenance, which should be combined with energy-efficiency improvements.

According to the study, 46 percent of the investment need for residential buildings and 56 percent for non-residential buildings is earmarked for measures that are necessary regardless of climate protection. These include, for example, the replacement of roofs, facades, and windows. For residential buildings, 37 percent of the investment needs are also attributable to heating system replacements.

Low-Income Households Face a Particular Burden

Financing is significantly more difficult for households with a net monthly income of less than 2,000 euros. For this group, the investment needs through 2045 total 286 billion euros. According to the study, this financial burden exceeds 20 percent of household income. The study defines an affordable burden as one of up to 10 percent. Tenant households in multi-family buildings and owner-occupiers of single-family homes are particularly affected.

Study author Malte Bei der Wieden highlights the unique situation of low-income households. These households are more likely than average to live in older buildings and to heat with gas or oil. As a result, they would face rising heating costs and place a burden on municipalities through support payments.

Local governments are also under pressure

In addition to residential buildings, the study also examines approximately two million non-residential buildings in the commercial, retail, and service sectors (GHD). Although they account for only about one-tenth of the building stock, they comprise about one-third of the floor area and emissions in the building sector.

Of the 639 billion euros in investment needed for non-residential buildings in the GHD sector, roughly half is attributable to public-sector buildings. These include schools, daycare centers, universities, sports facilities, cultural institutions, and hospitals. Schools and daycare centers alone account for 136 billion euros. The Climate Neutrality Foundation therefore also considers the financial resources available to municipalities to be crucial.

District heating networks also play a role. Rental apartment buildings already have the highest share of district heating today. In the model, this share rises to about 40 percent by 2045. Because low-income households are disproportionately likely to rent in multi-family buildings, this trend also affects their heating costs.

The Climate Neutrality Foundation therefore considers it important to cap district heating prices. On August 26, the Federal Cabinet approved key points for a district heating package that includes, among other things, price regulation.

Based on these findings, the foundation has derived four recommendations. While a more socially differentiated approach to building subsidies is fundamentally sound, it is not sufficient for low-income owner-occupiers. These households require a safety-net subsidy that fully covers their out-of-pocket costs or at least enables them to pre-finance the investments.

In addition, shared heating infrastructures such as heating networks should be more strongly subsidized and coordinated through more binding municipal heating planning. In the long term, heating should be organized more as a public service to pool investment risks and enable affordable solutions.

As a fourth point, the foundation cites the collective procurement and operation of heat pumps. This would allow for economies of scale and reduce the costs of a climate-neutral heating supply.

The report on the climate-neutral building stock is available online.

Author: Susanne Harmsen