New rules for heating: What will change as a result of the new Building Modernization Act
It was perhaps the most controversial law of the traffic light government: Now the Building Energy Act – popularly known as the Heating Act – is history in important respects. With its approval in the Bundestag, the government coalition made up of the Union and the SPD has not only renewed the name of the law, but is also taking new (old) paths when it comes to fuels with the Building Modernization Act. The Federal Council also gave the green light for the law. What will change for consumers as a result of the new rules.
Fossil fuels are permitted again for newly installed heating systems
In the future, new gas and oil heating systems will continue to be installed in addition to a heat pump, a district heating connection, hybrid heating models or biomass heating. The prerequisite is that they use an increasing proportion of CO₂-neutral fuels such as biomethane from January 1, 2029. This is intended to pave the transition to climate-friendly heating.
The old law stipulated that every newly installed heating system had to be operated with 65 percent renewable energy. Since the regulation came into force in 2024, this initially applied to new buildings in a new development area. There were transition periods for existing buildings. Functioning heaters could continue to be operated.
From the perspective of the Federal Minister of Economics Katherina Reiche (CDU) this led to an alleged “force” to install heat pumps. The new rules are intended to give owners freedom of choice.
Addition of eco-fuels and the “biostaircase”
The planned so-called “biostaircase” for new heating systems is controversial: from January 2029, at least 10 percent of climate-friendly fuels should be used, from January 2030 at least 15 percent, from January 2035 at least 30 percent and from January 2040 at least 60 percent.
A “green gas quota” is to be introduced for existing heating systems from 2028. This should start at a rate of up to one percent, but details are unclear.
The parliamentary procedure also stipulated that the
Federal Government Another law is to be presented this year that will oblige fuel providers to switch completely to climate-neutral fuels by 2045.
Why the opposition warns of a cost trap
Several developments make the installation of fossil-fuelled heating systems a financial risk. On the one hand – as the Iran war has shown – the prices for fuels such as oil and gas are heavily influenced by international crises. Prices can rise extremely quickly and very sharply. On the other hand, in the future there will be ever higher CO₂ taxes for climate-damaging fuels, which will also drive up prices. In addition, there are higher network fees for gas connections.
Another problem: the biofuels that will soon be required are hardly available. The Scientific Service of the Bundestag referred to this in a report. At the same time, the need is also great in other areas, according to the analysis commissioned by the Green Party. When it comes to hydrogen, the infrastructure to supply households is still missing. All of this drives up prices.
What the new rules mean for tenants
If the homeowner in an apartment building decides to use fossil-fuel-powered heating, tenants cannot do anything about it. This means: If costs rise as described, this will be noticeable in the utility bill.
The SPD in particular therefore campaigned for the protection of tenants. From 2028, landlords will have to bear half of the network fees and CO₂ costs. This should increase the incentive to switch to a greener, more cost-effective solution.
From 2029, landlords will also have to pay half of the additional costs for the mandatory addition of biogenic fuels to newly installed heating systems – but only for a maximum of 30 percent of the total fuel used. A “hardship clause” applies to landlords of cheap and old apartments; they only have to contribute to the CO₂ costs.
Consequences for climate protection
Germany has set itself the goal of becoming climate-neutral from 2045 onwards. In order to achieve this, fossil fuels such as oil, gas or coal may no longer be used, at least not without storing the resulting carbon dioxide. The building sector causes a large part of the Co2 emissions in Germany – changes here have a major leverage effect.
Environmental associations, the Greens and others are therefore warning of massive setbacks in climate protection as a result of the new heating law. The coalition is destroying climate protection in the building sector and allowing heating with fossil oil and gas in the long term, said Green Party deputy Julia Verlinden. The specific criticism is that the “organic staircase” only provides for a share of 60 percent renewables in newly installed heating systems by 2040. There is also criticism that much is still unclear about biofuels.
German Environmental Aid announced a constitutional complaint because the law contradicts the legal climate goals.
Subsidies for heating replacement are shrinking
State funding for replacing old heating systems is falling significantly. Middle and higher income households in particular will receive significantly lower subsidies, which will continue to decline by 2030. Households with very low incomes initially benefit from slightly higher funding options, but here too the rates fall quickly.
Homeowners who already have a confirmation of the application or a technical project description can only submit applications for funding according to the old system until July 21st. From then on there will be less subsidy for most households.
With material from the agencies dpa and AFP