Germany plans deep cuts to heat pump subsidies, shifts to income-based support
The German government is planning to slash subsidies for climate-friendly heating systems, saving €2.1 billion by 2030, while redirecting support to lower-income households and families.
The proposal
A draft for the Bundestag budget committee, which meets on Wednesday, outlines a sharp reduction in state support for heat pumps and other climate-friendly heating. The coalition of CDU/CSU and SPD aims to save around €2.1 billion by 2030. The maximum eligible installation cost will drop from €30,000, first by €2,000 immediately after the new system takes effect, then by €750 every six months. The base subsidy of 30% remains, but from next year half of it will only be granted if the equipment is European-made.
Income-based adjustments
The subsidy is being restructured to focus on lower incomes. Households with a taxable income under €30,000 will see their bonus rise from 30% to 40%, giving them a maximum grant of €22,400 this year. For incomes between €30,000 and €40,000 the maximum drops to €19,600, and for those over €40,000 it falls from the current €16,500 to €12,880 initially, then stepwise to €6,600 by 2030. A new child bonus adds €10,000 to the income threshold for families, effectively raising the ceiling for higher support.
- Under €30,000
- 22400 €
- €30,000–€40,000
- 19600 €
- Over €40,000
- 16500 €
Phase-out of bonuses
The climate bonus, an extra 20% for replacing a functioning oil or gas heater at least 20 years old, will be reduced by 4 percentage points every six months. If the phase-out starts in January 2027, the bonus will disappear by the end of 2028. Under the previous government's plan it would have begun declining only after 2028.
Reactions
The Greens' energy expert warned that the cuts create uncertainty and endanger the heating transition. Heat pump manufacturer Enpal, however, said the decision provides planning security and called for a focus on making low-emission heating permanently competitive. The German Heating Industry Association noted the government's aim to make support more socially targeted while saving budget funds, but stressed that investment incentives must remain sufficient.That is irresponsible. Every euro of subsidy triggers four euros of investment, strengthening trades and the heat pump industry.
Heating law reform
Parallel to the subsidy cuts, the coalition plans to overhaul the Building Energy Act. The core 65% rule, requiring every new heating system to run on 65% renewable energy, will be scrapped. New gas and oil heaters will still be allowed if they use an increasing share of CO₂-neutral fuels like biomethane.
