The German government has adopted a proposal for a law that would see new fossil heating installations banned from 2024, following a month-long row over the level of state support and pushback from business-friendly FDP lawmakers.

Few countries are more dependent on fossil gas for heat than Germany. In total, 30 million homes are heated using fossil fuels – with the buildings sector being a major laggard on climate action, Berlin wants to foster a switch to clean heating.

“With new heating systems, the heat turnaround must begin now,” said Robert Habeck, vice-chancellor and minister of economy and climate action, on Wednesday (19 April) in Berlin. Other countries like “France or Denmark, or even Finland and Sweden” switched to clean heat much earlier and were further ahead, he added.

Starting in 2024, new heating systems must run on at least 65% renewable energy – which amounts to a de-facto ban on gas and oil heaters. The criterion can only be fulfilled by heat pumps, that efficiently concentrate ambient heat, alongside hybrid heat pumps with a fossil backup, district heating and biomass.

Germany, the fourth-largest economy in the world and home to leading producers of heat pumps, is last in line when it comes to the technology’s adoption in Europe.

The hydrogen question

The role of hydrogen heating – burning hydrogen for warmth – remains controversial, with many experts rejecting it on the grounds that as it stands, it is too costly to be feasible.

Homeowners that want to bet on hydrogen may do so, provided that their gas provider submits a binding plan to supply the home with hydrogen starting in 2030. However, without affordable hydrogen yet developed, experts have questioned utility companies’ willingness to expose themselves to such legal risk at scale.

Utility companies “would be bold” to tell their customers that they can wait for hydrogen to become available cheaply, Habeck told the press. Though for close-to-industrial consumers or large-scale production facilities of hydrogen, using it for heat may be feasible, he added.

Berlin worries about hydrogen scarcity, too. “Other industry can only decarbonise with hydrogen, like cement, while household heat has other avenues,” Buildings Minister Klara Geywitz said.

Climate activists had to take on more loss on hydrogen. Faced with pressure from liberal lawmakers, Germany will recognise fossil-made hydrogen in the new law. Commonly known as “blue” hydrogen, produced with fossil gas where the created carbon is captured and stored, experts and activists warn that blue hydrogen does more harm than good for the climate.

Three countries became heat pump forerunners in 2022, Germany did not

Heat pump sales, an integral part of the EU’s plan to kick Russian gas to the curb, saw record growth in 2022, with France, Poland and Finland standing out most, however, Germany is not among them.

Massive government support

Given the outrage from business-friendly FDP lawmakers and concerns from social democrat SPD leading politicians, the law will endeavour to soften the blow. Heat pumps, while cheap to run, are often more expensive to acquire than fossil alternatives.

Starting at 30% baseline support, extra funds will be made available to those making a switch to clean heating early, five years before a heating system’s lifetime ends, providing another 20%. Citizens struggling financially will be eligible for an extra 20%, too.

“If we support heat pump purchases with 30% now, they will become cheaper in the coming years,” noted Geywitz.

Those who make the switch to a full-electric heat pump, instead of one with a fossil backup, get another 10% support. And to buffer the potentially high up-front costs, the government wants to provide low-interest loans of up to €60,000.

Starting 2024, Germany is looking to install 500,000 heat pumps a year, up from some 200,000 in 2022.

Gearing up for the coming clash

The German parliament has yet to okay the government’s proposal for the law. Already, resistance from FDP lawmakers looms.

“I expect that necessary changes will now be made in the parliamentary process to address concerns about affordability and implementability and to burden people as little as possible,” tweeted Christian Lindner, FDP chief and finance minister, an hour after the government compromise was adopted.

Habeck, for his part, lauded the government’s ability to agree the law as such in the first place, given the major changes ahead. “It is a special step and a big one,” he told reporters.