Germany's cabinet approved the building modernisation act on 13 May, sending it to parliament for further deliberation, with only minor changes from the original draft.
The new act will remove the existing requirement that new heating systems run on at least 65pc renewable energy. Instead, owners will again be able to choose between technologies, including gas and oil boilers, heat pumps, district heating, biomass installations or hybrid systems.
The core element of the reform remains the increasing quota for climate-neutral fuels, under which gas and oil boilers must gradually use more renewable or low-carbon energy from 2029. Minimum shares are set at 10pc in 2029, 15pc in 2030, 30pc from 2035 and 60pc from 2040.
Most of the changes that were made apply to biomass, with rules on a hierarchy for use of wood scrapped following industry opposition. But a new limit was introduced on use of maize and grain in biogas plants. These feedstocks can now make up no more than 40pc for biogas units that became operational after 31 December 2023.
Bioenergy industry representatives broadly welcomed the law, but still see shortcomings. Berlin-based lobby group Hauptstadtburo Bioenergie points to a possible loophole, as the new act applies to heating systems installed after it takes effect. Units added since the previous act took force would face no related obligations, leaving an estimated 900,000 oil and gas boilers to fall through the gap.
Industry associations are also seeking annual adjustments to bio-targets, rather than steep jumps years apart, arguing this would support investment security and avoid sharp price movements.
Changes around biomethane imports have also come into focus. The current bill does not limit EU imports when producers benefit from subsidy schemes, but industry groups have proposed excluding any biomethane that received significant incentives in its country of origin or which counts towards renewable targets there.
Details of the bill are still open to amendment. The lower house of parliament, the Bundestag, will first hold a reading before referring the bill to committees, which usually make the most substantive changes based on expert hearings.
After committee discussions, the Bundestag will hold second and third readings, before the upper house, the Bundesrat, takes up the bill. Here, there could be delays, as states and municipalities are responsible for implementing and enforcing the law. Disagreements among states could trigger mediation, further slowing progress.
The economy and energy ministry wants the law to take force on 1 July.
