German parliament scraps 65% green heating mandate, allows new oil and gas boilers from 2029 with rising biofuel quota

The German Bundestag approved a sweeping overhaul of the country's heating law on Friday, the final sitting day before the parliamentary summer recess. The new Building Modernisation Act (GModB) passed in a roll-call vote with 322 in favour and 272 against, supported by the governing CDU/CSU-SPD coalition and opposed by the AfD, Greens, and Left parties.

End of the 65-percent rule

The central pillar of the previous law, paragraph 71 with its requirement that every newly installed heating system run on at least 65 percent renewable energy, has been deleted. That rule had applied to new buildings in new development areas since it took effect in 2024, with extended transition periods for existing buildings. Economy Minister Katherina Reiche (CDU) had described the old regulation as a "compulsory heat pump" mandate. The new law restores what the government calls technological openness: alongside heat pumps, district heating, hybrid models, and biomass boilers, homeowners may again install new gas and oil heating systems.

The owner once again has the freedom to decide which heating option they want to choose.

The bio-ladder and green gas quota

Newly installed gas and oil boilers will face a rising obligation to blend in climate-neutral fuels, a mechanism the law dubs the "bio-ladder." From 1 January 2029, at least 10 percent of fuel must be climate-friendly, rising to 15 percent from January 2030, 30 percent from January 2035, and 60 percent from January 2040. For existing heating systems, a separate green gas quota will start in 2028 at up to 1 percent, though details remain unclear. The previous ban on operating fossil-fuel boilers beyond 2045 has been removed; instead, the federal government must table a further bill by early December to ensure heating fuels are fully climate-neutral from 2045.

Cost-sharing and subsidy overhaul

To address fears that landlords might install cheap gas boilers and pass the rising costs to tenants, the coalition agreed to split the cost risks for grid fees, CO₂ pricing, and biogas equally between landlords and tenants. On Wednesday the Bundestag's budget committee approved a new subsidy framework for switching to climate-friendly heating, effective immediately. It delivers savings overall but tilts support more heavily toward owner-occupiers with household incomes up to 30,000 euros. Despite the cuts, roughly 44 billion euros are earmarked for building energy-efficiency subsidies through 2030.

Opposition and legal hurdles

The Left party failed to block the vote at the Federal Constitutional Court, arguing that MPs had received insufficient information on the climate impact of the changes. The court rejected that challenge on Thursday. Opposition parties criticised the bill as practically unworkable and sought to delay the vote until after the summer recess. Environmental groups warned of a setback for climate protection and a cost trap for tenants. The Bundesrat had already voiced criticism in June and is pushing for an opt-out clause allowing individual states to impose stricter rules, since several Länder aim to become climate-neutral before 2045. Further legal challenges against the amendments are expected.

The bureaucratic meddling in the boiler room must stop.

What changes for households

Homeowners with a functioning gas or oil boiler can now keep it running longer than previously permitted. They should, however, brace for rising energy costs as the CO₂ price climbs in the coming years and gas network charges increase when fewer customers use the grid. International conflicts could also drive oil and gas prices sharply higher. The government insists the heat pump will remain a dominant technology, but acknowledges that investment has been hesitant under the old rules.