Recent calculations by the International Energy Agency show that the buildings sector accounts for over 30% of the total energy-related CO2 emissions in the European Union. At the same time, the share of total energy-related CO2 emissions of buildings has been fairly stable from 1990 (19%) to 2018 (17%). Therefore, cutting emissions from the buildings sector is pivotal to achieve the EU’s goal of carbon neutrality by 2050 and the intermediate goals established by the European Commission. In particular, the European Commission’s 2030 target plan identifies emission reduction in the building sector as a cost-effective way to achieve the goal of 55% reduced emissions by 2030 and suggests an emission cut by 60% in the building sector compared to 2015.

The FEIRE Project contributes towards achieving this goal by identifying how financial constraints and their interplay with investors’ preferences affects the decision to invest into ecological modernizations of their real estate and how optimal mitigation policies should be designed. 

To do so, we build a cooperation between the Finance Chair of Humboldt University Berlin, the Mercator Research Institute on Global Commons and Climate Change (MCC), and Haus & Grund Deutschland. combining expertise of finance, climate change research, policy evaluation, and knowledge of the German real estate market. 

We will focus on German real estate that is currently rented as prior research has focused mainly on buildings occupied by owners themselves. However, 57.9% of the German population lives in rented real estate which is on average less renovated because of multiple (market) frictions, as recent research shows. Given this large share, further research is necessary to help triggering off the potential of emission savings within the buildings sector in order to meet national and EU-wide emission reduction goals.