Mediation Committee Finally Rejects Act on Fiscal Measures Promoting Energy-Efficient Renovation of Residential Buildings

After more than a year, efforts have finally failed to bring about a compromise in the Mediation Committee of the Bundestag (Parliament) and the Bundesrat (Federal Council) regarding 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 means that the bill, which expressly required consent by the Bundesrat (so-called consent law), cannot become law. It 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.

With energy consumption in the building sector accounting for roughly 40% of Germany’s energy consumption, promoting energy-efficiency of buildings is an essential aspect of the government’s energy policy. Hence, considerable efforts were made to convince the federal states that opposed the bill for fear of tax losses, of which they would have borne the greater share (regarding the latest figures reported, please see here). Over the past year various trade associations had made appeals, pointing out the positive impact of tax incentives for regional businesses and thus the federal states.

In a statement recorded in the minutes of the mediation committee meeting, the government announced to launch a new KfW Development Bank support programme for energy-efficient renovation worth EUR 300 million annually starting in 2013.

The Federal Association of the Energy and Water Industry (BDEW) welcomed the announcement of the KfW programme, but deplored the lack of compromise. The association pointed out the high energy costs for German consumers, saying taxes and duties alone (not including VAT) would reach EUR 30 billion next year.

The mediation committee, however, approved of an amendment of the German Energy Act that serves to transpose the European electricity and gas directives. It stipulates that the unbundling measures required by the EU directives are not subject to land transfer tax. The amendment still has to be approved by the Bundestag and Bundesrat. Both houses will debate the matter this week.

Source: Bundesrat; BDEW

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