Energy: New heating law comes into force - what that means

There was bitter debate about this for months - now the new heating law comes into force at the beginning of the year.

Energy: New heating law comes into force - what that means

There was bitter debate about this for months - now the new heating law comes into force at the beginning of the year. The most important message: The vast majority of homeowners don't have to do anything at first.

Functioning heaters can continue to be operated. Shortly before the start of the new Building Energy Act, there was finally clarity about future state funding. However, the criticism does not stop.

Start only for new development areas

The Building Energy Act (GEG) generally stipulates that from 2024 every newly installed heating system must be powered by 65 percent renewable energy. With the reform for more climate protection, the federal government wants to advance the “heat transition” in the building sector and protect consumers from price jumps for oil and gas if CO2 prices rise.

The regulations of the new law apply from January, but initially for new buildings in a new development area. Many heat pumps are already being installed in new buildings, but other heating models are also possible. Specifically, according to the Ministry of Economic Affairs, the 65 percent green electricity requirement applies to all new buildings for which a building application is submitted from January 2024.

Transition periods

There are transition periods for existing buildings and new buildings outside of new development areas. The pivotal point is municipal heat planning. It should be available in large cities from mid-2026 and for the remaining municipalities from mid-2028. Homeowners should then have clarity as to whether, for example, they should be connected to a district heating network or whether they should look for their own decentralized solutions for a new heating system - for example a heat pump.

If the municipalities have already made a prior decision on the designation of an area, for example for a heating network, which takes into account a municipal heating plan, earlier deadlines may apply, according to the Ministry of Economic Affairs.

In general, functioning heaters can continue to be operated. This also applies if a heater breaks but can still be repaired.

Replacing broken heaters

In the event that a gas or oil heating system needs to be completely replaced because it can no longer be repaired, there are transition periods lasting several years. New oil or gas heating systems may continue to be installed until the heat planning deadlines expire. However, from 2029 onwards they will have to use a growing proportion of renewable energies such as biogas or hydrogen. If the municipality already has a heating plan, the installation of heating systems with 65 percent renewable energy is mandatory, according to the ministry. In cases of hardship, owners could be exempted from the obligation to use renewable heating.

There is already a basic obligation to replace a boiler with a new one after 30 years. There are exceptions for condensing boilers, among others. From 2045, buildings may only be heated in a climate-neutral manner using renewable energies. According to a study by the energy industry association BDEW in November, almost half of the 41.9 million apartments were heated with natural gas in 2023. Oil heating is in second place with almost a quarter.

The ministry points out: In most cases it makes sense to use heating with renewable energies now. This helps climate protection and is also economically attractive because there is financial support - even if the heating is still working.

Future funding

In September, the Bundestag and Bundesrat passed the new heating law - but despite promises to the contrary from the federal government, it remained unclear for a long time exactly what future state funding would look like. Shortly before the end of the year, there is now clarity about the new funding guidelines and subsidies for investment costs.

The most important innovation: There is a speed bonus for owner-occupiers for replacing old fossil heating systems at an early stage. This should provide an incentive to switch, even if the heating is still working. The bonus is granted for the replacement of functional oil, coal, gas or night storage heaters as well as biomass and gas heaters that are more than twenty years old.

A planned expansion of the speed bonus for replacing particularly old heaters has been canceled for cost reasons. The government has to plug billions in holes after a budget ruling by the Federal Constitutional Court.

There is also an income bonus of 30 percent of the investment costs - this is given to self-occupying homeowners with a taxable annual household income of up to 40,000 euros.

According to the ministry, applications for funding can be submitted to the state development bank KfW from the end of February - even retroactively for projects that have already started.

Boom in new gas heating systems

The GEG is intended to promote climate protection, but the long wrangling over it apparently had exactly the opposite effect. This year, before the start of the new heating law, many homeowners bought a new gas heater - the industry is heading for a record. The lengthy debate surrounding the GEG had consequences, said Ralf Kiryk, head of department at the Federal Association of the German Heating Industry: "In the main, people quickly invested in gas heating in order to evade the requirements of the GEG."

According to figures from the association, there was a 38 percent increase in sales of gas heaters to around 694,500 units by the end of October, and an increase of 107 percent to 94,500 for oil heaters. Sales of heating heat pumps rose by 75 percent to 320,500. However, interest in heat pumps has waned as a result of the GEG debate. This is due, among other things, to the long-standing lack of clarity about the new funding. The funding applications fell sharply in 2023.

Heating law: progress or small-scale requirements?

There was strong criticism of the law from the start: it contained requirements that were far too detailed, favored heat pumps, placed too many financial demands on many owners and contributed to great uncertainty. With the traffic light coalition partner FDP, many would actually prefer to use a different instrument: namely an increase in the CO2 price as an incentive to replace the heating system. The CO2 price makes the consumption of fossil raw materials more expensive and therefore also heating. In return for additional burdens, citizens could receive climate money, but this is a long time coming.

Despite all the uncertainties, Martin Sabel, managing director of the Federal Heat Pump Association, sees the GEG as significant progress towards renewable energies and more climate protection in buildings. From January 1st, every person who wants to install gas or oil heating will have to sign that they have been informed about the risks of drastically increasing prices for fossil fuels and the obligation to use increasing proportions of green fuels. The path to the GEG was a “communicative catastrophe”.

Thomas Engelke, energy expert at the Federal Association of Consumer Organizations, said: "It was long overdue to update the Building Energy Act and make the heating of the future climate-friendly." However, this was not sufficiently successful. “Gas heaters that can theoretically be operated with hydrogen can continue to be installed.” Consumers are threatened with a cost trap here because it is foreseeable that there will not be enough hydrogen available and it could become correspondingly expensive. The interests of private households have not yet been sufficiently taken into account when expanding the heating networks.

Irmela Colaço, building expert at the environmental association BUND, criticized: "The installation of new oil and gas heating systems has been permitted for far too long. Tenants in particular are not adequately protected from high heating costs. This makes it all the more important to educate people about climate and cost traps and in municipal heating planning, to ensure that the focus is on an affordable and efficient heating transition instead of the profit interests of the gas lobby."

There Climate effect

Due to extensive changes to the original draft law from the House of Economics Minister Robert Habeck (Greens), which has long been the subject of criticism, the climate protection effect of the law will, according to a forecast commissioned by the ministry, be less than initially assumed. However, the savings in CO2 will increase over time.

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