Germany Scraps Its Green Heating Law Just as Heat Pumps Are Taking Off. Critics Call It 'Catastrophic.'

Just when German homeowners were finally warming to heat pumps, the government has pulled the plug on the very law that was driving the shift. The Cabinet has dropped a draft law that would have required households to replace fossil-fuelled boilers with climate-friendly alternatives. The Buildings Energy Act – better known as the Heating Act – had been under constant fire from critics who feared it would force households to spend thousands of euros on new systems.

The latest reform, announced on Wednesday after a cabinet meeting, aims to give homeowners greater freedom of choice and create "investment security" for construction companies, according to Economics Minister Katherina Reiche. She announced that the "rigid" requirement that new heating systems must be powered by at least 65 percent renewable energy would be abolished, along with forced heating system replacements or bans. That includes the ban on new oil and gas heating systems, which had been phased in since 2024.

The timing is awkward. Heat pumps have just begun to outsell gas boilers in Germany. Last year, they accounted for almost half – 48 percent – of all new heating systems sold in the country, with 299,000 units sold. According to the European Heat Pump Association (EHPA), German sales of heat pumps in the first quarter of 2026 are up by 34 percent compared to the same period in 2025. Homeowners have been seeking to reduce their exposure to volatile gas prices amid the war on Iran.

But the government appears to be heading in the opposite direction. The new Building Modernisation Act promises a more "flexible, practical and simpler" approach, "strengthening freedom of choice and personal responsibility" while keeping climate targets in mind. Germany has committed to achieving climate neutrality by 2045.

Under the proposal, gas and oil heating systems will still be allowed in the future. Households will be able to keep existing ones, but they must use an increasing proportion of "climate neutral" fuels – such as biofuels, biomethane, synthetic fuels, and renewable hydrogen – starting at 10 percent in 2029 and rising to 60 percent by 2040. Biofuels, made from plant materials such as food crops or agricultural waste, have been touted as a green alternative. However, some climate experts warn that their production is emissions-intensive, drives deforestation, and creates conflict with food production.

Critics are not impressed. Jan Rosenow, a professor of energy and climate policy at Oxford University, called the reform "catastrophic" for the climate. He said the significant watering down of key provisions postpones necessary decisions and will ultimately make the transition more expensive and more chaotic, adding that the buildings sector has been missing its climate targets for years. Rosenow also argued that the proposal to use biomethane and synthetic fuels is unrealistic, as they are limited and expensive resources that are urgently needed in industry and other sectors. "If they are now used to extend the lifetime of fossil heating systems, we are postponing essential structural decisions," he explained.

The Greens' parliamentary leader, Katherina Droege, whose party introduced the original law in 2023, called the reform "a complete abandonment of Germany's climate targets."

Not everyone is unhappy. Germany's BDI industry federation welcomed the change as an important step towards finally getting investment back on track, and said it would boost construction, according to Reuters.

The changes come as Chancellor Friedrich Merz's coalition government attempts to reverse declining approval ratings amid wrangling over tax, pension, and welfare reforms. The proposed law is expected to be passed before summer 2026. It also implements an EU directive requiring all new buildings to be zero-emissions from 2030. Separately, if an evaluation in 2030 shows the building sector is missing its climate targets, the government has committed to adjusting the legislation.

Rosenow summed up the paradox: "The timing is particularly critical: heat pumps are currently gaining significant momentum. Production capacity has been expanded, skilled workers trained, supply chains strengthened. Many homeowners are already voluntarily choosing climate-friendly solutions. At this stage, the reform sends a contradictory signal."

He argued that energy policy should learn from crises, not wait for the next one, and called for clear investment signals and an "honest debate" about how climate targets can still be met under the reform. For now, Germany's heating future is back in the oven – and no one is quite sure what temperature it will come out at.

Written by Andreas Hofer