- Germany’s cabinet has replaced the 2023 law that required new heating systems to run on at least 65% renewable energy with a Building Modernisation Act. Households can continue using gas and oil boilers indefinitely.
- New gas and oil boilers installed after the law takes effect must blend at least 10% renewable fuels from 2029, rising to 60% by 2040.
- The act envisages zero‑emission standards for new public buildings from 2028 and for all new buildings from 2030. It maintains subsidies for heat pumps and insulation to encourage voluntary uptake.
Germany’s coalition government has finally resolved one of its most divisive policy battles by approving the Building Modernisation Act, which will replace the controversial 2023 Building Energy Act.
The previous law mandated that any new heating system installed from 2024 run on at least 65% renewable energy, effectively forcing homeowners to adopt heat pumps or biomass boilers. This provoked a political backlash from conservative parties and homeowners worried about affordability.
Under the new act, homeowners may continue to install and operate gas or oil boilers. However, newly installed fossil‑fuel heating systems must blend increasing amounts of bio‑based or synthetic fuels.
The legislation sets a “bio‑ladder”: at least 10% of fuel must come from carbon‑neutral sources in 2029, rising to 15% in 2030, 30% in 2035 and 60% by 2040. Beyond 2040, no higher quota is specified. The act aims for a nearly climate‑neutral building stock by 2050 but stops short of reinstating the previous government’s 2045 ban on new fossil heating.
The law will also require new public buildings to meet zero‑emission standards from 2028, and all new buildings must achieve this from 2030. Germany will continue to subsidise heat pumps and insulation, but adoption is no longer mandatory.
The coalition argues that blending biofuels gives homeowners flexibility while gradually reducing emissions. Economy minister Katherina Reiche said the law makes “climate protection more suitable for everyday use” and provides consumers freedom of choice.
Clarity welcomed
Industry welcomed the shift. The Federation of German Industries (BDI) said the reform ends legal uncertainty and should trigger investments in renovation and new construction. The Federation of Heating Industry hopes stability will help companies plan and build supply chains.
However, environmental groups like Greenpeace and Environmental Action Germany warned that the legislation “prolongs our dependence on oil and gas” and could leave households exposed to rising fuel costs. Consumer advocates note that biofuels are expensive and that carbon pricing will raise costs, meaning gas users might not avoid higher bills.
The new act reflects a broader European tension between decarbonisation and public acceptance. The Iran war and ensuing energy crisis pushed German households and politicians to prioritise affordability and energy security. By scrapping the 65% mandate, the Merz government hopes to quiet the “heating law saga” and avoid another political backlash.
The German U‑turn offers a cautionary tale for the UK: mandated technology switches can trigger opposition if households fear high upfront costs. Policymakers may need to balance long‑term climate goals with phased incentives and customer choice.
