Germany to Subsidise up to 70% of Costs for Switching to a Climate-Friendly Boiler

Germany’s three ruling parties have finalised a deal on a controversial heating law to phase out gas and oil heating. The government will cover up to 70 percent of homeowners’ investment costs if they are on a comparatively low income and decide to exchange their boiler before 2028, according to the agreement. “We have succeeded in reaching an agreement that combines climate protection, technological neutrality and social balance,” the coalition’s parliamentary groups said in a joint statement. “This way, we are putting the building sector on the path to climate neutrality.” The agreement, which is to be passed in parliament next week, protects tenants, provides important incentives for landlords to invest in modernisation, and establishes a funding system to ensure that the investment costs “do not overburden anyone,” the parliamentary groups said.

Following months of bickering within the coalition about the path to climate-friendly heating, the government had already reached agreement on a broad outline on how to proceed, but the fine print still needed to be worked out. According to media reports, the parties now agreed on the following details:

• Installation of “hydrogen-ready” gas boilers remains possible, but they must run on an increasing share of biogas if hydrogen is not available, making them more expensive to operate.
• Subsidies depend on income and timing. All homeowners who install climate-friendly heating systems will be reimbursed for 30 percent of the costs. If the taxable household income is below 40,000 euros, which applies to 45 percent of homeowners, another 30 percent subsidy will be added. There is an additional 20 percent if the replacement takes place before 2028, but total subsidies are capped at 70 percent.
• Landlords are allowed to add ten per cent of the costs of a new heating system to the rent. In addition, rent costs may not increase by more than 50 cents per square metre.
• Original plans for an exemption for homeowners over 80 years of age was dropped.

The controversy over the heating law had become an endurance test for the government coalition in recent weeks, as the Greens pushed for an ambitious transition, while the pro-business Free Democrats (FDP) insisted on alternatives to heat pumps. “As a result, the Free Democrats can be happy that many options remain and the Greens can be happy about the agreed framework conditions, which should mean that hardly anyone who can do the maths will opt for gas heating in the future,” according to an editorial in a table.media newsletter. The coalition infighting has been widely described as one reason behind the recent surge in support for the far-right Alternative für Deutschland (AfD) in national polls.