Anticipated Changes in Heating Expenses
The Heating Law, a key component of Germany's climate change strategy, came into effect at the beginning of 2024. This reformed Building Energy Act (GEG), initially pledged for abolishment in the coalition agreement, is now a delicate project of the black-red coalition. The Heating Law aims to gradually replace oil and gas heating systems to save emissions in the building sector, a sector responsible for around 40 percent of German CO2 emissions.
Every newly installed heating system in new buildings should operate with 65 percent renewable energies. However, building owners have a range of alternatives to heat pumps to meet this target. Existing heating systems can continue to be operated, but the focus is on transitioning towards more climate-friendly solutions.
The black-red government aims to amend the Heat Supply Act to accelerate the expansion of renewable heating and improve climate protection by reducing dependence on fossil fuels in heating systems. Critics argue that Paragraph 71 of the GEG is too complex and discriminatory towards various heat supply options. Andreas Lenz, energy policy spokesman for the CDU/CSU fraction, advocates for a simpler, more understandable, and more practical GEG.
The SPD fraction insists on maintaining a high level of ambition and technology openness in the reform. CSU politician Lenz suggests phasing out incentives over time for households with high incomes. The risk of demand for climate-friendly heating systems collapsing due to a transition of funding is a concern for heating manufacturers and installers.
The federal government needs to provide clear and reliable framework conditions for the heating market, given its current collapse. Minister of Economics Katherina Reiche has expressed concern about a potential "compulsion to use heat pumps" in the law. She believes that building owners should have a range of options to meet the 65-percent target.
By mid-2026, municipal heat planning should be available in municipalities with over 100,000 inhabitants, and for the rest by mid-2028. The reform aims to make the GEG more technology-open, flexible, and simpler, with the achievable CO2 reduction as the central control variable. The SPD can imagine cuts in a socially graduated manner to avoid overburdening the public purse.
CSU leader Markus Söder is pushing for cuts in the multi-billion-dollar state funding of heating system replacement due to budget gaps. Germany has to implement the requirements of the European building energy efficiency directive by the end of May 2026. The Heating Law is a crucial step towards Germany's commitment to reducing its carbon footprint and meeting its climate goals.
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