Cooling down the heating debate? Learnings from the transformation of the German “Heating Law” to the Building Modernisation Act

National legal framework—GEG

The GEG has first come into force in 2020. In its original form it aimed at simplifying the legal framework for energy saving in buildings, while at the same time implementing relevant EU legislation on the energy performance of buildings (Radimeczky-Krekel & Fröhlich 2025, p. 445).

The most prevalent change to the GEG has been its amendment in 2023 (Heating Law). According to its 65% renewable heat rule—starting in June 2026 in large cities or June 2028 in all other municipalities—newly installed heating systems would have to be operated with 65% renewable energy in existing buildings. For some new buildings the rule applied right away from January 2024 (Radimeczky-Krekel & Fröhlich 2025, p. 445). Existing heating systems could continue to operate (until 2045) and could also be repaired (Braungardt, Keimeyer & Loschke 2024, p. 236).

The rule laid out various options for meeting the requirement of 65% renewable energies but was not technically limited to these options. The provided options simply included standard cases. In this regard all types of electric heat pumps (including geothermal energy) would have been sufficient to install, § 71c GEG. Further, the establishment of a connection to district heating would have sufficed, § 71b GEG. Similar options of fulfilment were e.g.

• direct electricity heating such as night storage heaters, § 71d GEG;

• hybrid heating (however, in this case requirements on minimum thermal output of the heat pump had to be fulfilled), § 71h GEG;

• solar thermal systems, typically in combination with outer renewable heat sources, § 71e GEG;

• solar thermal hybrid heating, § 71h GEG;

• green hydrogen or solid, liquid and gaseous biomass, §§ 71f, 71g GEG.

Additional rules for transition periods applied—e.g. when a heating system broke down unexpectedly giving more time to comply with the rule, § 71i GEG. For a more detailed description see Braungardt, Keimeyer & Loschke 2024.

The Heating Law also established rules for the installation of fossil fuelled heating systems in buildings between 2024 and June 2026, § 71(9) GEG. Such heating systems would have to be operated with 15% renewable energy from January 2029, 30% starting January 2035 and 60% starting from January 2040 (Braungardt, Keimeyer & Loschke 2024).

Furthermore, from 1 January 2045 on, heating systems operated with fossil fuels would be prohibited entirely, § 72(4) GEG.

It should be noted that the climate effects of replacing fossil fuel-based heating with electricity-based systems, such as heat pumps, depend on the carbon intensity of the electricity supply. Although the decarbonization of the power sector is central to the decarbonization of the heating sector, its discussion is beyond the scope of this paper. At present, the carbon intensity of the German electricity system remains higher than that of gas; however, this must be assessed in light of the ongoing decline in grid carbon intensity and the higher efficiency of e.g. heat pumps. The carbon intensity of the German electricity mix has decreased in recent years: from 379 gCO₂/kWh in 2023 and 353 gCO₂/kWh in 2024 to 344 gCO₂/kWh in 2025 (Umweltbundesamt 2026). This trend is expected to continue, with Germany aiming for an electricity mix based on at least 80% renewable energy by 2030 according to § 1 of the German Renewable Energy Law (EEG). Further, according to Chaigneau, Häußler and Nienborg, in 2024, emissions from heat pump systems were already 58% to 65% lower compared to gas boiler systems (2025). This is due to the higher efficiency of heat pumps transforming electricity into heat.

European legal framework – EPBD and RED III

In the following years, notable EU reforms and legislation came into force. Relevant in this regard are especially, the reform of the Energy Performance of Buildings Directive (EPDB—Directive (EU) 2024/1275), and of the Renewable Energy Directive (RED III—Directive (EU) 2023/2413 amending Directive (EU) 2018/2001). The deadline for the implementation of the EPBD is May 2026, while the deadline for the implementation of the RED III was mostly May 2025.

Key elements of the Building Modernisation Act

The key message of the legislative outline is that the Heating Law will be removed.

• According to the wording of the document this encompasses not only the 65% renewable heat rule itself but also the general prohibition to operate a heating system with fossil fuels from January 2045 on.

• Consequently, it will remain possible to install new (fossil) gas and oil heating. However, as a new requirement a so-called bio-ladder is introduced. This means that from 2029 owners of heating systems must ensure that an increasing share of fuel used in their heating system must be ‘climate-friendly’ (e.g. biomethane, H₂ or other green gases). For 2029 this share is set to be at least at 10%. The relevant share for successive steps of the bio-ladder remains unclear to date.

• Additionally, and separately to the bio-ladder, a quota for green gas or oil in the building sector will be introduced. The quota targets fuel distributor. They will be required to distribute a certain share of climate-friendly gases or heating oil (e.g. biomethane, but also e.g. green, blue or other hydrogen). The corresponding quota can be met through accounting. In 2028 the quota will start at 1%. The trajectory of the pathway is to be aligned in such a way that it makes an “additional” contribution to achieve the climate targets.

• The green gas/oil quota can be ‘credited toward’ the bio-ladder. The legislative outline gives no further details on the practical implementation in this regard.

• The outline further expresses the need for rules to protect tenants, specifically, from excessive heating costs, resulting from the installation of inefficient heating systems. However, no details are provided.

• According to the outline, if an evaluation in 2030 shows that the building sector will miss its climate targets, there will be a readjustment of the instrument. In this regard, the authors note that the building sector has already missed its climate targets every year for many years.

• Other aspects in the outline touch on the existing financial support system for buildings (Bundesförderung Effiziente Gebäude—BEG), for which ‘adequate’ funding will be ensured until at least 2029; on the implementation of the EPBD and the simplification of heat planning for smaller municipalities and with regards to data rules.

Reactions

While interest groups from gas and oil companies and the apartment and property owners associations Haus & Grund welcomed the outline (Haus & Grund 2026b), which widely followed their recommendations (Deutscher Verband Flüssiggas et al. 2026), other industry groups seemed more hesitant or even sceptical, emphasizing mostly relief that a decision had been made but wanting to wait for the draft law before giving a clear reaction (BEE 2026; BDEW 2026). Especially environmental and tenant organisations, however, expressed high concerns with regards to both the climate implications of the outline and the cost risks for consumers and tenants specifically (e.g. DUH 2026; BUND 2026; Deutscher Mieterbund 2026). These concerns were widely echoed in the media:

• Climate implications: The outline would constitute a breach of climate policy commitments and effectively amount to an admission of failure in energy policy (DUH 2026). One of the most effective instruments in the building sector would be discarded for short-term political considerations (DUH 2026; BUND 2026). This would be particularly problematic given the already existing gap in achieving climate targets, which the proposal would further widen (BUND 2026; Walker 2026b; Ochs & Zaremba 2026; Kreutzfeldt 2026).

• Resource allocation: The limited availability of biomethane and green hydrogen was highlighted, with the argument that these resources should be prioritised for industrial applications rather than for heating. Other hydrogen derivatives and synthetic methane are likewise expected to remain scarce and would not be fully climate-neutral (BUND 2026; Götze 2026).

• Geopolitical independence: Due to the limits in sustainably upscaling biomethane production, imports might become increasingly necessary. This could lead to stronger dependencies in the energy market instead of the promised strengthened independence (BUND 2026; Suliak 2026).

• Cost risks: Rising costs for gas, biomethane and hydrogen in the 2030s were highlighted (Götze 2026; BUND 2026). As more homeowners switch to heat pumps or district heating, grid costs are expected to increase for those who continue using gas. In addition, the CO₂ price for the fossil share of the fuel mix is likely to rise further (BUND 2026).

• Cost risks for tenants: Specifically, tenants would have to pay the price for these rising costs as they can usually not decide which heating system is installed in their home (Götze 2026; DUH 2026; BUND 2026; DMB 2026; Suliak 2026). Especially, since it remains unclear how the planned protection of tenants against excessive heating costs would be designed (BUND 2026).

• Cost risks for taxpayers: Further, taxpayers, generally, would have to foot the bill for possible penalties/additional costs on an EU level if obligatory climate targets are not achieved in the building sector (Götze 2026; Walker 2026b).

• Legal uncertainty: Legal risks with regards to both constitutional principles and EU regulation were pointed out (BEE 2026; BUND 2026; Walker 2026b; Franke & Willert 2026). These will be discussed in the legal assessment below.

While the exact figures depend on the steps and trajectories ultimately defined for the bio-ladder and the green gas/oil quota, according to an early analysis by Braungardt & Bei der Wieden, abolishing the 65% renewable heat rule while simultaneously introducing the bio-ladder and the green gas/oil quota would significantly widen the already existing gap in meeting the national climate targets set under the German Federal Climate Change Act (Braungardt & Bei der Wieden 2026a, p. 10). This concerns both the climate targets for 2030 and 2040 as well as the cumulative emissions budget up to 2040. For 2030, the gap would increase by 5–8 Mt CO₂-eq per year, from 25 Mt CO₂-eq to 30–33 Mt CO₂-eq. For 2040, the gap would widen by 14–22 Mt CO₂-eq per year, rising from 102 Mt CO₂-eq to 116–124 Mt CO₂-eq. In terms of the cumulative emissions budget up to 2040, the shortfall would grow by 108–172 Mt CO₂-eq, increasing from 473 Mt CO₂-eq to 582–646 Mt CO₂-eq (Braungardt & Bei der Wieden 2026a, pp. 7–9). The 65% renewable heat rule had so far contributed to about 80% of the emission reductions of the whole GEG (Braungardt & Bei der Wieden 2026a, p. 5).

The limited availability of biogas and bio-oil is likely to significantly increase heating costs for these technologies, with tenants particularly affected (Willert et al. 2026, p. 2). Gas prices are expected to rise by around 3 ct/kWh from 2027 due to CO₂ pricing (Nesselhauf & Müller 2023, p. 3). In addition, grid charges may increase substantially; if gas networks are partially decommissioned, they could rise by up to a factor of ten (Meyer & Palovic 2025). A recent analysis by Braungardt & Bei der Wieden, which already takes the legislative outline into account, shows that prices for heating with gas could rise from 11 ct/kwh in multiple family homes to 15 ct/kwh in 2029 and more than 25 ct/kwh in 2040 (Braungardt & Bei der Wieden 2026b, p. 9).

The legislative outline and EU law

EU law shapes national climate policy, including in the building sector. It sets (minimal) targets and obligates Member States to take appropriate measures. Any future legislation in the building sectors must comply with these targets and obligations. Of relevance in this regard are the European Climate Law, the Effort Sharing Regulation, EPBD and RED III.

The legislative outline and constitutional law

The German Basic Law (Grundgesetz—GG) sets constitutional limits for the legislature with regard to the level of climate protection. According to the Federal Constitutional Court (Bundesverfassungsgericht), Art. 20a GG constitutes the central constitutional standard for assessing the adequacy of climate protection measures (Bundesverfassungsgericht 2021).

Art. 20a GG establishes the state objective of protecting the natural foundations of life and animals. While Art. 20a GG does not confer specific individual rights, it constitutes an objective constitutional norm that binds all three branches of government and obliges the legislature to protect the environment and the climate. While the legislature enjoys a broad margin of discretion in selecting appropriate policy instruments, the required level of protection is constitutionally defined. In this context, the legislature must not only consider the interests of the present generation but also bears a long-term responsibility to safeguard the natural foundations of life for future generations (intertemporal duty of protection). Consequently, the legislature may not make use of regulatory freedoms in a manner that would impose an unreasonable burden on future generations.

Furthermore, the legislature is required to limit private activities that may lead to significant environmental or climate-related harm (Murswiek 2024). In addition, the precautionary principle obliges the legislature to prevent environmental risks even where potential harms cannot yet be fully quantified (Calliess 2021, p. 330). At the same time, the state is required to address existing environmental damage; in this respect, greenhouse gas emissions must be reduced or compensated (re|Rechtsanwälte 2025, p. 20). Finally, Art. 20a GG requires the responsible and sustainable use of natural resources, including regarding energy and material consumption (re|Rechtsanwälte 2025, p. 20).

In light of the advancing impacts of climate change, the constitutional duty to protect the climate has gained increasing weight (Bundesverfassungsgericht 2021).

Relevant legal literature, consequently, argues that Art. 20a GG entails a strict non-regression principle (Willert et al. 2026, p. 18 with further references). In this regard, the Constitutional Court has already emphasized that any weakening of climate targets is subject to a particular burden of justification due to the ecological regression associated with it (Bundesverfassungsgericht 2021, para. 212). In this context, the Constitutional Court also cites the principle of progression in Art. 4(3) of the Paris Agreement and the national equivalent in § 3(4) German Federal Climate Action Act: “Climate targets may be raised but not lowered.”

In the current context, this requirement must apply not only to the targets themselves but also to the measures implemented to achieve them (Willert et al. 2026). Although Art. 20a GG does not require the legislature to adopt specific measures, it prohibits both complete inaction and the adoption of manifestly unsuitable measures. Further, the legislature may not lower the general level of climate and environmental protection. Rather, the state is obliged to prevent a regression of environmental protection (Radimeczky-Krekel & Fröhlich 2025, p. 449). Accordingly, Calliess & Kirchhof (2025) argue that a complete removal of central environmental laws without alternative represents an infringement of Art. 20a GG. The weakening of specific rules may be permissible only if it is accompanied by ‘normative compensation’ or if it is necessary to protect other legal interests of constitutional rank, provided that no alternatives are available (Calliess & Kirchhof 2025, p. 61; similarly e.g. Willert et al. 2026, p. 19).

From a constitutional perspective, a departure from the 65% renewable heat rule can therefore only be justified if other measures are adopted that fully compensate for the resulting reduction in climate protection, or if such a change is necessary to protect other legal interests of constitutional rank. In case of the latter, however, the burden of justification is especially high due to the rising intensity of climate change (Willert et al. 2026, p. 19).

According to Willert et al., it results that without a clearly at least equally effective compensatory measure, any weakening of the 65% renewable heat rule constitutes a breach of constitutional obligations (2026, p. 4).

As discussed, the legislative outline does not provide for sufficient equivalent measures. The proposed measures are particularly difficult, because they leave the decision (almost) entirely to the individual homeowners. However, as Willert et al. discuss, future price signals do not influence investment decisions in the heating sector in the same way as price changes for everyday consumer goods. The lower upfront costs of fossil fuel boilers must be weighed against uncertain projections regarding future gas prices, the long lifetime of heating systems, and potential availability constraints. These factors must then be compared with the lifetime costs of alternatives such as heat pumps, including expected electricity prices. For individual homeowners, making such long-term and complex calculations can be difficult. Moreover, in the rental sector the relevant decision-makers typically do not bear the full costs of their decisions. While landlords decide which heating system is installed, the resulting heating costs are largely borne by tenants. This split incentive further weakens the effectiveness of price signals as a driver of decarbonisation in heating (Willert et al. 2026, p. 6).

While there are plans to avoid the landlord-tenant dilemma, it is unclear what these will look like. Importantly, however, analysis shows that the proposed measures, which rely mostly on individual choice and non-obligatory incentives, are not equivalent to the 65% renewable heat rule. The legislative outline allows for homeowners to delay important investments in renewable energy and causes them to misallocate resources. Financial incentives cannot sufficiently close this gap as they still require significant investments, which not everyone might be willing or able to provide. Especially, since financial incentives had also been in place before and thus cannot be seen as an additional contribution.

Final points

There appears to be broad agreement that a complete departure from the 65% renewable heat rule, without the adoption of compensatory measures, would have violated both EU law and national constitutional law (e.g. Radimeczky-Krekel & Fröhlich 2025, p. 449; Lee 2025, p. 890; re|Rechtsanwälte). The proposed new measures in the legislative outline must stand the test of whether they can adequately replace the 65% renewable heat rule. At present, it appears highly unlikely that these measures represent such an adequate replacement. Their expected climate impact is significantly lower, which risks widening the gap on the pathway to achieving both the national and European climate neutrality targets for 2045 and 2050, respectively. This, further, represents a regression in direct conflict with the non-regression principle in Art. 20a GG.