In February, the German government presented a new national heating plan, the Building Modernisation Act, meant to replace the heating provisions under the Building Energy Act. The new plan would be a remarkable blow to Germany’s heating transition, halting the growing momentum for renewable technologies, just as heat pump sales surpassed those of new gas heaters in 2025.
A legislative arsenal stripped of its substance
Germany is already Europe’s straggler in the heating transition. A flabbergasting 86% of residential heating is produced with gas and oil in Germany, far more than in neighboring countries. In France, it is significantly lower, at less than 47%, and even Poland and Italy are ten percentage points less reliant on fossils for their heating.
Germany’s current heating legislation requires all new heating installments use at least 65% renewable energy, allowing for technology-neutral compliance through heat pumps, district heating connections, hybrid technologies, or biomass. This law was misrepresented as a mandatory heat pump requirement, and the CDU made its repeal a central plank of its 2025 legislative campaign.
The new plan scraps the renewable requirement altogether, going back to allowing installments of fully fossil gas or oil-based heating systems such as stand-alone gas boilers. The “climate contribution” in this scenario comes through a gradual increase in “green” fuels usage via a quota imposed on suppliers. Nothing is known about the design of the quota, except for its starting level in 2029 at a paltry 1%.
Climate protection: nowhere to be seen
At the same time, households installing new gas heaters will have to sign contracts including 10% biogas. These two opaque measures, placing obligations on distributors and households, are far from sufficient to have a meaningful impact on climate protection. On the contrary, they will exacerbate the scarcity of goods that are already more expensive, whose production is not climate-neutral and which have an impact on land use. Above all, alternatives to natural gas and oil are urgently needed in other sectors that are difficult to electrify, such as industry.
By also scrapping the 2045 ban on fossil fuel heating systems, the government is —without saying so—calling into question the legally enshrined goal of climate neutrality by 2045. Effectively, the law will open the door to prolonged fossil fuel dependence. This makes it incompatible with the existing legal framework.
Should this be implemented, it would discourage households from investing in heat pumps, because the upfront costs for a gas boiler are significantly lower. However, every household locked into fossil fuels will eventually have to pay the price for their volatility and vulnerability to supply disruptions.
Cost trap and uncertainty for households and tenants
The war in the Middle East brutally exposes the toll of fossil fuel dependence on households. New gas contract prices have already surged 98% as of March 18 since January 1st, illustrating the chaos an unpredictable conflict can unleash. At a time when global geopolitical instability has never been greater, it is reckless for Germany’s government to push a law that entrenches fossil fuel use.
It creates a cost trap for households, who are meant to shoulder the ramp-up of biogas, with prices projected to rise by up to 25% by 2040. In addition, gas heating costs will increase due to rising network charges and carbon pricing. Tenants will be the hardest hit, with no control over the choice of heating technology.
Clean heat deployment is not hindered for technological reasons but for financial ones. Our study finds that Germany lacks €665bn in investment to decarbonise heating. Households are made responsible for transitioning, but many of them can’t afford it.
Germany does not lack the financial capacity to deliver the heating transition, it lacks the right signals and effective support schemes to make it happen. Current subsidy programmes need redesigning to overcome high upfront costs or provide the long-term certainty households need to invest. Instead of simplifying and strengthening these frameworks, the proposed heating law risks adding further confusion and delay at a critical moment.
Citizens are already concerned with the government’s new proposal: 56.8% of Germans say that it creates more planning insecurity. At a time when households need clarity, stability and support, the signal being sent is the exact opposite.
Setting the course for decades to come
Germany now stands at a crossroads. It can either lock households into decades of fossil fuel dependency, exposing them to volatile prices and geopolitical risks, or it can deliver a clear, credible pathway to clean, affordable and secure heating. This requires restoring regulatory certainty, strengthening financing mechanisms, and ensuring that public support reaches those who need it most. The choice should be easy but the government is instead guiding its citizens into an increasingly costly, insecure, and outdated system.
Authors:
Tom Vasseur
Director,
Cool Heating Coalition
Barbara Metz
Director,
Deutsche Umwelthilfe