No Tax Incentives for Energy-Efficient Renovation? Heavy Criticism by BDEW

According to media reports, the government and the federal states yet again could not agree on planned tax incentives promoting energy-efficient renovations contained in the latest German National Energy Efficiency Action Plan (NAPE). The Federal Association of the Energy and Water Industry (BDEW) strongly criticised the parties. Similar plans by the previous government also failed due to opposition by the federal states that feared tax losses.

1. Planned Tax Incentives for Energy-Efficient Renovations under NAPE

Promoting the energy-efficiency of buildings is a core element of the National Energy Efficiency Action Plan (NAPE) adopted by the government in December 2014. Starting in 2015 the government wanted to spend one billion euros over a period of five years to provide tax reductions for owners of private homes and apartments for a ten-year period (for more information in German, please see here).

When announcing its plans in December 2014 the government said it wanted to discuss the matter with the sixteen German states (Länder) with the aim to come to a decision by end of February 2015.

Agreement could reportedly not been reached, as a proposal to make up for tax losses by cutting back on existing tax deductions granted when craftsman are employed were opposed by the state of Bavaria.

2. Failed Efforts to Adopt Act on Fiscal Measures Promoting Energy-Efficient Renovations of Residential Buildings in 2011/2012

In December 2012 the Bundesrat (Federal Council) that represents the interests of the federal states already rejected the Act on Fiscal Measures Promoting Energy-Efficient Renovations of Residential Buildings. It was the only bill of the 2011 energy legislative package, which the Bundesrat did not approve of.

The lack of compromise meant that the bill, which expressly required consent by the Bundesrat (so-called consent law), could not become law. It was aimed at promoting the energy-efficient renovation of residential buildings older than 1995 as of 2013 by giving tax incentives totalling EUR 1.5 billion.

3. BDEW Criticism

BDEW heavily criticised the latest failure to reach an agreement, saying

“We are viewing the next act of the tragedy. The political parties are demonstrating the clear failure of their efforts to reach progress in the heat market. Considerable CO2 savings potential is being wasted. Regrettably, the government also failed to meet its own cabinett decision of 3 December 2014 [on this day NAPE was adopted]. KfW programmes [KFW is the state-owned promotional bank] that are proposed as an alternative do not have the same effect as tax incentives.

This as example as well as the stalled grid expansion show yet again: the government and the federal states are presently unable to work together towards the energy transition. This negatively affects the energy and climate goals. We are calling on the government and the states to give up individual positions and focus on the Energiewende (energy transition towards a mainly renewable energy supply)”

Source: Frankfurter Allgemeine Zeitung; BDEW

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