Energy efficiency strategy, standards and investment

Paris alignmentReasoning
Paris aligned KfW’s support for energy efficiency in buildings and SMEs in Germany has been a transformational success. However, this transformational impact has not been replicated in other branches of the Bank.
Overarching energy efficiency first strategy/principle
KfW references energy efficiency as a corner stone of its support to tackle climate change. While the efficiency standards in the housing sector are adequate, KfW does not have a comprehensive strategy to implement energy efficiency across all its branches and supported sectors.
Transport energy efficiencyBuilding energy efficiencyFinancial intermediary energy efficiency
KfW does only apply efficiency criteria for some transport sectors. There is no cross-modality “avoid-shift-improve” approach. Within 10 years, KfW has supported energy efficiency measures in more than 4 million housing units in Germany.KfW disburses a majority of its domestic support for energy efficiency through financial intermediary.
Disclaimer: KfW Group is comprised of four institutions: KfW Development Bank, KfW IPEX Bank (Export credit agency), DEG (private sector finance in developing and emerging markets) and a branch for domestic lending and support. Unless specified otherwise, the provided information concern the entire KfW Group.



Energy Efficiency Finance

KfW has a long history of investing in energy efficiency, in particular in the German economy. The energy efficiency programmes are usually commissioned by ministries, in particular the Ministry for the Economy and Energy (since 2021 Ministry for the Economy and Climate), as well as the Ministry for the Environment and nuclear Safety.

KfW is a member of the Energy Efficiency Financial Institutions Group (EEFIG), which promotes a renovation wave across the EU as part of the EU Green Deal. 

Domestically, KfW offers energy efficiency programmes for properties, SMEs (and other companies, depending on the programme) and municipalities.

As part of its Sustainable Finance Roadmap, the KfW Group has outlined specific financing objectives it wants to achieve. These include “increased businesses energy efficiency” and “energy efficiency and reduction of CO2 emissions in the building sector”. KfW does not have dedicated efficiency strategies for other sectors, but energy efficiency is a cornerstone of overall climate finance and KfW banking business.

Together with renewable energy investment, energy efficiency was the single largest sector supported, with a total of €38.2 billion in 2020.

For the domestic branch, the “Energy-efficient construction and refurbishment programmes” was the largest programme by volume in 2020, totalling €35.3 billion in support. For public clients, “energy-efficient construction and refurbishment”, “as well as energy-efficient urban rehabilitation” were the largest programmes, with a total of €1.0 billion in support.


KfW Group has issued minimum efficiency standards for buildings to be eligible for investment. Within the EU, but outside Germany, buildings must be at least of energy efficiency class B according to the EPC-classification. However, KfW does not have specific standards for buildings outside of the EU.

Within Germany, KfW’s support is dependent on the level of efficiency, categorising  energy efficiency as 40+. 40 and55. This means primary energy usage of just 40% compared to a BAU housing unit for the energy efficiency housing unit 40. KfW will cease to support the efficiency housing standard 55 and will accelerate investment in the existing housing stock refurbishment.

The domestic branch of KfW offers a range of energy efficiency support programmes.  Specifically, these  programmes support efficient new buildings, as well as the refurbishment of existing housing stock. KfW domestically also supports businesses and municipalities KfW-Förderung für Kommunale Gebäude in purchasing energy efficiency buildings and improving efficiency of existing buildings.

KfW Development Bank supports energy efficiency measures in developing countries. A flagship project is the “EcoCasa” Programme, jointly implemented with the Interamerican Development Bank, which has resulted in 61,000 energy efficient social housing units in Mexico and Peru.

There is no evidence that KfW DEG and IPEX actively promote energy efficiency measures when investing in buildings. However, as all KfW branches, they are subject to the energy efficiency requirements fort buildings, as defined in the sector guidelines.


KfW Group does not have a dedicated commitment for energy efficiency in transport. Within its

sectoral guidelines energy efficiency criteria are applied in the space of shipping and automotive. However, KfW only applies energy efficiency criteria in each sector. It does not assess transport projects in a cross-sectoral manner, applying an avoid-shift-improve approach.

Financial Intermediaries

KfW’s domestic support for energy efficiency measures is mostly channeled through intermediary financial institutions. These institutions have to apply the same energy efficiency standards when disbursing KfW programmes. A KfW loan for energy efficiency has thereby become a standardized products in many commercial banks in Germany.

Last Update: November 2022

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