The German cabinet passed a bill on Wednesday to ban most new oil and gas heating systems from 2024.
In March, Germany’s governing coalition reached an agreement that every newly installed heating system in the country must use 65% renewable energy from 2024.
Go deeper with GlobalData
While the government designed the policies to reduce greenhouse gas emissions, the opposition claims it imposes “incalculable costs” on poorer households.
According to the bill, houses can use heat pumps that run on renewable electricity, district heating, electrical heating or solar thermal systems as acceptable alternatives to traditional fossil fuel heating, reports Reuters. However, the deal includes some exemptions and transition periods before full enforcement.
The terms and conditions
The government plans to offer a 30% subsidy for residential households and an additional 10% if consumers opt in for a renewable transition earlier than required by law. Further, for lower-income households that receive state benefits, an extra 20% subsidy will be offered.
The 65% renewables requirement does not apply to house-owners who are older than 80. In these cases, the law will come into force only when the homes are sold or inherited, with a transition period of two years. If a system has been operating for less than 30 years, homeowners are not obliged to replace it.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataCurrently, approximately 80% of the heating requirement of Germany’s buildings is fulfilled by fossil fuels. With the new bill, Germany will have to shut down its 500,000km gas distribution network within the next 20 years, making 71%-94% of its existing gas grid redundant, a study shows.
The news comes as part of Germany’s plans to achieve carbon neutrality by 2045 and cut emissions by 65% as soon as 2030. The draft bill budgets the shift as costing the country around €9.16bn ($10bn) annually until 2028. The cost would then fall to half from 2029, as the country expects simultaneous expansion of renewable capacity. The money from subsidies will come from the Climate and Transformation Fund, which earmarks €180bn ($197bn) for green investments between 2023-2026. The bill subjects violators of the new rule to a fine of €5,000 ($5,481).
