Germany's governing coalition reached agreement Monday on a fundamental overhaul of the country's heating law, removing mandatory renewable energy requirements and allowing oil and gas heating systems to continue operating far longer than initially envisioned—a significant policy reversal that raises questions about Berlin's commitment to its climate targets and the broader European Green Deal.
The compromise, negotiated between the Social Democrats and Christian Democrats following the collapse of the previous Scholz coalition, eliminates the contentious paragraph 71 of the Building Energy Act, which had required new heating installations to use at least 65 percent renewable energy. Union faction leader Jens Spahn announced that "all heating systems will again be possible," marking a decisive break from the previous government's approach.
In Germany, as elsewhere in Europe, consensus takes time—but once built, it lasts. This reversal, however, suggests the original consensus was never truly achieved.
The reformed legislation—to be renamed the "Building Modernization Act"—adopts what officials describe as a "technology-neutral, flexible, and simpler approach" to heating choices. Rather than mandating renewable energy sources upfront, the new framework establishes a graduated "bio-stair" system requiring fossil fuel heating systems to incorporate increasing amounts of CO2-neutral fuels like biomethane or synthetic fuels beginning January 1, 2029.
Under the compromise, the renewable fuel content requirement starts at just 10 percent in 2029, with three additional staged increases planned through 2040. Energy suppliers face parallel obligations: a green gas quota beginning in 2028 at approximately 1 percent, rising incrementally thereafter. The entire framework must be implemented by July 1, 2026.
The shift represents a major political defeat for climate policy advocates within the former coalition, particularly the Greens, who criticized the compromise as "a gift to the gas lobby" and warned that citizens face "a new heating cost trap" due to weakened climate protections. The original heating law had become deeply unpopular after its rushed introduction in 2023, with homeowners across Germany expressing anger over perceived government overreach and concerns about renovation costs reaching tens of thousands of euros.
The political backlash contributed to the Scholz coalition's collapse and the subsequent election gains by both the CDU and the far-right AfD, which had made opposition to the heating law a central campaign theme. For the new coalition government, softening the requirements appeared necessary to restore public trust—even at the cost of climate policy credibility.
The implications extend beyond German borders. As Europe's largest economy and traditionally a driver of EU climate policy, Germany's retreat from aggressive decarbonization timelines could embolden other member states to seek similar flexibility in implementing the European Green Deal. Brussels has set binding emissions reduction targets requiring substantial changes to heating infrastructure across the continent, with residential heating accounting for approximately 13 percent of EU greenhouse gas emissions.
German industry associations welcomed the revised framework, with the Federation of German Industries noting that "pragmatic solutions" were needed to maintain public support for the energy transition. Environmental organizations, however, warned that the weakened requirements make it virtually impossible for Germany to meet its legally binding commitment to climate neutrality by 2045.
The compromise reveals the central tension in German climate policy: ambitious long-term targets colliding with immediate economic concerns and public resistance to rapid change. With natural gas prices having surged following the end of Russian supplies, homeowners proved unwilling to absorb the substantial upfront costs of heat pump installations—even with government subsidies—particularly when existing heating systems remained functional.
According to government sources in Berlin, the coalition believes the graduated approach will allow technological development and market forces to make renewable heating solutions more affordable by the time stricter requirements phase in after 2029. Critics counter that delaying action merely shifts costs to future generations while locking in continued fossil fuel dependency.
The revised law must still pass the Bundestag, but with support from both coalition partners, approval appears assured. The question now is whether other European governments will follow Germany's example—and what that means for the continent's climate ambitions.
