(Bloomberg) -- The head of sustainability at Deutsche Bank AG says the carbon footprint of Germany’s residential property market may prevent the country from meeting its 2045 net zero goal. 

“We as a society really need to act,” Jorg Eigendorf, chief sustainability officer at the Frankfurt-based bank, said in an interview. “The longer we wait, the more disruptive it will become” and “the cost of the transition will rise substantially over time.”

Deutsche Bank estimates it will cost about €600 billion ($643 billion) to make German homes energy efficient by 2045. The bank, which had €175 billion in home loans at the end of last year, said Wednesday that it has 3.9 million tons of carbon dioxide equivalent of financed emissions associated with the portfolio each year. 

Housing is fast emerging as a key pillar in European efforts to meet climate goals. The European Union wants to decarbonize 35 million homes, offices, schools and other buildings by 2030, an effort that is currently showing signs of faltering. Globally, the buildings and construction sectors combined are responsible for 30% of total final energy consumption, according to the International Energy Agency.

Efforts to decarbonize residential homes have very real financial implications for homeowners, especially as higher inflation and interest rates erode spending power. It can cost more than €100,000 to renovate a home to achieve Europe’s highest energy performance level, known as EPC Class A, according to Deutsche Bank. That equals a total cost of about €80 billion for the bank’s residential real estate customers. 

“Private clients have to be part of the discussion,” said Tobias Horn, head of portfolio management for private banking at Deutsche’s risk department.

The bank estimates that one-third of its private real estate clients don’t have the financial means to retrofit their homes to an EPC Class A level or zero carbon-ready building. It plans to help owners improve the energy efficiency of existing homes while backing the construction of new low-carbon homes.

Deutsche Bank said it intends to offer financial support through tailored lending products and access to grants, incentives and subsidies. It also plans to team up with corporate clients, such as electricity companies and makers of construction materials for the building sector, to lower embodied emissions.

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