German Parliament Reforms Heating Law to Favor Renewables

The new legislation, which takes effect on January 1, 2024 aims to fundamentally change how Germans heat their homes and businesses.

Under the revised rules, heating in areas of newly constructed buildings must run on 65 percent renewable energy – that rule will be phased in at the earliest from 2026 from new construction outside such areas. Owners will be encouraged to replace oil and gas heating systems that break down with more ecological options, although a series of exceptions will apply. Existing functional heating systems are exempt from the rules.

Meanwhile, the government is subsidizing the heating transition. As of 2024, property owners can apply for 30 percent of the costs of installing environmentally friendly heating. An additional 20 percent is available for replacing fossil fuel with renewable heating systems before the end of 2028. And households with annual incomes of EUR 40,000 or less can claim an additional bonus of 30 percent, although subsidies are capped at 70 percent of costs.

“We intensely debated this law for months, and the many discussions and conversations improved it,” said German Minister for Economic Affairs and Climate Action Robert Habeck. “The law is one of our primary means of paving the way for climate protection. We’ll become more independent from fossil energy and bolster our energy security. We’ll protect consumers from gas and oil price increases. And we’ll boost German competitiveness in green technologies.”