German Government Eases Renewable Energy Requirements in New Heating Law
The German federal government has approved a revised heating law, removing the previous mandate that required all new heating systems to operate with at least 65 percent renewable energy. The updated legislation, passed by the cabinet following extensive discussions, aims to provide property owners with greater flexibility when installing new heating systems. The proposal was put forward by the Minister for Construction and Urban Development and the Minister for Economic Affairs.
Under the new law, the obligation for newly installed heating systems to predominantly use renewable sources has been lifted. Instead, from 2029, gas and oil heating systems must gradually increase the share of climate-friendly fuels such as biomethane or bio-oil. The proportion of these renewable fuels is set to reach 60 percent by 2040. This approach, referred to as the 'bio-ladder,' has sparked debate due to concerns about the current limited and costly supply of climate-neutral gases and fuels.
The legislation also introduces consumer protections for tenants. According to the cabinet draft, tenants are to be shielded from excessive operating costs that could result from the installation of inefficient heating solutions. The law further outlines a new cost-sharing model, stipulating that from 2028, both landlords and tenants will equally split the costs associated with the carbon price and gas grid fees. The same arrangement will apply to the additional costs of climate-friendly fuels, which become mandatory starting in 2029.
Despite these changes, critics warn that relaxing the original requirements could undermine Germany's climate targets, particularly in the building sector. The government, however, asserts that the revised law aligns with the country's commitment to achieving climate neutrality by 2045, as set out in the national climate protection legislation. The new regulations also abolish the planned 2045 ban on the operation of oil and gas heating systems, which was previously included in the building energy law.
Included in the cabinet decisions was a proposal to increase penalties for crimes involving so-called 'knockout drops.' The new bill will impose a minimum five-year prison sentence for sexual assaults and robberies committed using these substances. This move follows a court decision clarifying the legal status of such chemicals, prompting a legislative response to address their potential dangers.
Additionally, the government approved a strategy to support the construction of new power plants designed to stabilize the electricity grid as Germany transitions away from coal. The new framework envisions a capacity market, allowing operators to receive compensation not only for the electricity they supply but also for maintaining backup capacity. Initially, this is expected to incentivize the development of modern gas-fired plants. The funding for these measures is planned to come from a levy paid by electricity consumers, pending approval from the European Commission.
Industry associations have welcomed the new law, citing increased clarity and predictability for the market. The government projects that these measures will provide annual financial relief for citizens and businesses, while emphasizing the ongoing necessity to monitor progress toward climate goals, especially in the building sector, which has historically struggled to meet emissions targets. The Bundestag will now consider the draft legislation for further deliberation.