The German Government parties have announced an agreement to scrap a controversial legal obligation to phase out oil and gas heating systems.
“Greater flexibility in the boiler room provides short-term relief for many homeowners,” Verena Örenbas, manager of Verband Wohneigentum (VWE), the biggest association of owner-occupiers in Germany, told Brussels Signal yesterday.
Örenbas, though, also cautioned that new cost risks might arise from the liberalisation.
Under the agreement, oil and gas-fired boilers will remain legal but starting in 2029, utility companies will need to add biofuels to their oil and gas in rising percentages, effectively driving up the price of fossil fuels.
The subsidies for heat pumps will remain in place until at least 2029.
The new policy thus does away with most of the harmful regulations, while keeping some “climate-friendly” measures.
As one observer wrote on X yesterday: “The CDU is once again pursuing its tried-and-tested successful climate policy: A little symbolism to make Helga and Hermann feel good, but nothing that hurts.”
The repeal fulfils a key election promise of Chancellor Friedrich Merz (Christian Democratic Union, CDU).
“We have kept our word. The heating law of [Greens Party leader] Robert Habeck will be abolished”, said Katherina Reiche, Merz’ minister for economics and energy.
The agreement followed months of negotiations between the CDU and their junior coalition partner, the Social Democratic Party (SPD), on how to deal with a leftover from the previous left-wing SPD-led coalition government – the so-called Building Energy Act, often also referred to as the “heating hammer”.
The law, passed in 2023 at the behest of the Greens Party, stipulated that newly installed heating systems had to use at least 65 per cent renewable energy – effectively prohibiting oil and gas-fired boilers in favour of heat pumps and district heating.
Crucially, this also applied to heating systems newly installed in existing buildings, for example when a broken gas heating had to be replaced.
Experts criticised the law from the start.
Rolf Buch, then CEO of Germany’s largest residential real estate company Vonovia, said in 2023 the law would demand the installation of heat pumps where they should not be installed.
The pro-market Ludwig Erhard Foundation has criticised the law as an “ideological prohibition policy”.
