Germany scraps renewable heating requirement in Building Modernization Act
The Federal Chancellery Building in Berlin-Mitte, Germany (source: Ansgar Koreng)
Carlo Cariaga
15 May 2026
Germany takes a step back from renewable heating requirements with the Building Modernization Act, which allows retention of gas heating for new buildings.
The Federal Cabinet of Germany has approved the new Building Modernization Act, with critical amendments that have dropped the requirements for renewable heating in all newly installed heating systems The bill will now enter parliamentary deliberations, where is expected to also pass due to the composition of the current coalition government.
The amended bill has been a disappointing conclusion to policy deliberations that have been ongoing since 2023. The draft law (in German) can be accessed via this link.
A critical component of the original bill was the requirement for all newly installed heating systems to generate at least 65% of their heat from renewable energy. A number of technologies were made available to meet this requirement, including connection to a heating network, heat pumps, solar thermal systems, or direct electrical heating systems. Hybrid heating systems with gas were also permitted, as long as they still met the 65% renewable heating requirement.
The approved version of the Building Modernization Act effectively removes the 65% requirement. Federal Minister for Economic Affairs and Energy Katherina Reiche says that with the new Building Modernization Act, “…we are making climate protection practical again: less ideology, more pragmatism, more planning certainty and more freedom for owners, tenants and companies.”
Under the proposal, future and existing households will be allowed to keep their gas and oil heating systems but the use of “climate-neutral” fuels will be ramped up, starting at 10% by 2029 and up to 60% by 2040. An evaluation of the Building Modernization Act is planned for 2030 to verify the progress being made towards the goal of climate neutrality by 2045.
A setback in the progress of the heat transition
The German Geothermal Association (Bundesverband Geothermie / BVG) has published a statement in response to the amended bill, stating that it represents a significant step backwards from an energy, climate, economic, and security policy perspective.
“The German government has eliminated the clear regulatory incentive for using climate-friendly technologies when replacing heating systems. This creates uncertainty and will slow the pace of the energy transition in the heating sector. Citizens and investors need reliable legal regulations that remain in effect beyond the current legislative period,” says Gregor Dilger, Managing Director of BVG.
The new proposal will put almost all fully renewable heating systems at a disadvantage, while favoring fossil fuel systems with partial decarbonization. Thus, it creates a risk that investment decisions will be made towards solutions that are cheaper in the short but, but detrimental to climate policy and energy security in the long term.
The German Federation for the Environment and Nature Conservation (Bund für Umwelt und Naturschutz Deutschland / BUND) also criticized the new law, describing it as a “low point in German climate policy.”
“The federal government leaves unanswered the question of how energy can be reliably supplied in the future. This promotes neither security of supply nor domestic economic growth,” added Dilger. “For Germany to have a secure and resilient heat supply in the future, the energy we consume domestically must also be produced domestically.”
With the passing of the Geothermal Acceleration Act and renewed discussions of an insurance scheme to support geothermal development, the new policy sets back the progress that has been made by the geothermal district heating and heat pump sectors in Germany.
Source: Die Bundesregierung, Bundesministerium fur Wirtschaft und Energie, Bundesverband Geothermie, and Tagesschau
