(de-news.net) – A far-reaching revision of the Building Energy Act has been agreed upon by Germany’s federal conservative–social democratic coalition, composed of the CDU and the SPD, marking a substantial recalibration of the regulatory framework governing heating systems while introducing alternative mechanisms intended to support decarbonization. A central pillar of the reform is the elimination of the renewable energy mandate introduced under the previous coalition, which had required all newly installed heating systems to operate with a minimum renewable energy share of 65 percent. In parallel, provisions obligating property owners to replace functioning heating systems under specified conditions, as well as mandatory advisory requirements associated with heating system purchases, are expected to be repealed. The reform also introduces differentiated regulatory treatment based on municipal size, with municipalities of fewer than 15,000 inhabitants exempted from mandatory municipal heat planning requirements, thereby reducing administrative and compliance obligations for smaller local authorities.

In place of these prescriptive regulatory instruments, the coalition intends to establish a gradually escalating “green gas quota,” designed to incrementally increase the proportion of renewable fuels—specifically biomethane and green hydrogen—used in fossil fuel heating systems. Under the proposed framework, newly installed gas and oil heating systems would be required to incorporate a renewable fuel share of 10 percent beginning in 2029, with additional increases scheduled in successive stages through 2040. This quota-based approach is intended to facilitate emissions reductions while preserving technological flexibility and consumer choice. The policy architecture further includes a mandatory evaluation in 2030 to assess whether emissions reduction targets remain attainable under the revised framework, thereby providing a mechanism for potential policy adjustment if climate objectives appear at risk. At the same time, public financial support for low-emission heating technologies, including heat pumps, is expected to remain available until at least 2029, thereby maintaining incentives for voluntary decarbonization. Measures to protect tenants from disproportionate ancillary cost increases associated with inefficient or uneconomical heating system installations have also been outlined in principle, although specific implementation mechanisms have not yet been clarified.

Coalition representatives have framed the reform as restoring regulatory proportionality while strengthening consumer autonomy and investment predictability. Matthias Miersch (SPD) characterized the agreement as the outcome of negotiations between coalition partners with differing initial positions, emphasizing that the repeal of the existing framework would be accompanied by the introduction of a broader building modernization law designed to preserve climate objectives while expanding household decision-making discretion. At the same time, Jens Spahn underscored that the reform would remove prescriptive technological requirements associated with the prior regulatory approach, thereby enabling property owners to determine their preferred heating solutions within a less restrictive policy environment. This framing reflects the coalition’s emphasis on replacing direct regulatory mandates with market-oriented and incentive-based mechanisms.

Researchers question feasibility and cost stability of decarbonization strategy

Nonetheless, significant concerns have been raised regarding both the technical feasibility and economic implications of increased reliance on renewable gaseous fuels. A joint analysis conducted by the Wuppertal Institut and the Institut der deutschen Wirtschaft concluded that structural supply constraints affecting biomethane and green hydrogen would likely prevent the gas distribution network from achieving climate-neutral operation by 2045. These supply limitations are expected not only to constrain decarbonization pathways but also to exert upward pressure on fuel costs. In a similar assessment, the Paritätischer Gesamtverband warned that households reliant on gas-based heating could face increasing financial burdens as limited renewable fuel availability drives price increases. Researchers have further emphasized that scarce green fuels may be more efficiently allocated to industrial sectors such as steel and cement production, where electrification alternatives remain technologically constrained or economically prohibitive, thereby raising questions about the efficiency of widespread deployment in the residential heating sector.

Environmental organizations have also expressed concern that the reform could undermine long-term decarbonization objectives in the building sector. The Deutsche Umwelthilfe argued that facilitating the continued installation of fossil-fuel-based heating systems, even under a fuel blending regime, risks prolonging fossil fuel dependency and weakening incentives for structural transition toward fully renewable heating technologies. Senior representatives, including Barbara Metz and Paula Brandmeyer, further contended that replacing binding renewable energy requirements with blending quotas could prove both economically inefficient and environmentally counterproductive, given the limited availability and comparatively high cost of renewable gaseous fuels. They emphasized that allocating scarce green fuels to residential heating could divert them from sectors where alternative decarbonization options are less viable, thereby reducing overall emissions reduction efficiency.

Political opposition has likewise emerged, particularly from Bündnis 90/Die Grünen, whose representatives cautioned that eliminating the renewable energy mandate would weaken emissions reduction trajectories and increase long-term dependence on fossil energy sources. Critics argued that the reform risks reversing progress achieved under the previous regulatory framework by reducing the strength of binding decarbonization requirements. By contrast, Federal Minister for Economic Affairs Katherina Reiche (CDU) defended the reform as consistent with the government’s broader commitment to accelerating building modernization through market-based incentives rather than prescriptive mandates. She argued that reducing regulatory rigidity would strengthen investor confidence, restore planning certainty, and facilitate modernization by enabling property owners to pursue cost-effective and technologically appropriate heating solutions. In this interpretation, the reform is intended to reconcile climate policy objectives with economic feasibility and social acceptance by emphasizing flexibility, investment stability, and gradual structural transition.