Hessisch Oldendorf, 14 July 2026
The Federal Cabinet approved the draft on 13 May 2026. The Bundestag and Bundesrat have now debated the draft, put it to a vote and passed it before the Bundestag's summer recess began on 10 July.The legislation was originally due to come into force on 1 July 2026, but implementation of the first measures is now planned for 1 November. The Bundesrat also chose not to refer the proposal, which has rightly sparked controversy and criticism, to the Mediation Committee. This clears the way for the new regulations.
Can I install gas or oil heating again?
Yes. The much-discussed 65 per cent requirement is being dropped, meaning that heating systems running solely on gas or oil will be permitted again. In our view, however, that is the wrong question. What matters is not what is currently permitted, but what you will still be able to afford in ten or twenty years. And here, the answer remains the same as before. A heat pump that draws a large proportion of its electricity from your own roof makes you independent of prices set by others. District heating may be an option, but this depends on the local infrastructure.The phased renewable fuel requirement, and why green gas will not close the gap
Anyone choosing a new fossil fuel heating system will also be subject to a phased renewable fuel requirement. From 2029, an increasing proportion of the heat must come from biogenic fuels or hydrogen, often referred to as green gas or green oil.- 10 per cent from 2029
- 15 per cent from 2030
- 30 per cent from 2035
- 60 per cent from 2040
This deserves a closer look, particularly as we have been designing and building biogas plants ourselves for years. Biogas is a valuable and widely underestimated element of the energy transition. Today, it primarily supplies electricity and heat generated directly at the plant. The phased renewable fuel requirement, however, means something different. It requires a proportion of gas, such as biomethane produced from biogas, to be fed into the natural gas grid and blended with conventional natural gas, so that a mixture ultimately reaches your home. This approach remains underdeveloped and has little policy support. Only a fraction of plants feed gas into the grid at all, the volume supplied amounts to just a few per cent of gas consumption, and there is no reliable framework for expansion.
For you as a property owner, this means two things. Blending is managed through suppliers, quotas and certificates, not necessarily through a plant near you, and its price is beyond your control. In addition, neither carbon pricing nor the European emissions trading scheme for buildings, which starts in 2028, is affected by the reform. Both will continue to make oil and gas more expensive, even without another crisis. The much-praised technology-neutral approach therefore puts fossil fuel heating on an equal footing with heat pumps only on paper. The same applies to the frequently mentioned option of hydrogen heating, as it remains a niche solution for residential buildings without a widespread supply network.
If you would rather avoid this risk altogether, a heat pump combined with solar PV is the safe choice. We would be happy to show you completed projects demonstrating that a heat pump can also reliably keep an older building warm.
What will happen to financial support?
This is the key factor for a large proportion of the population, and it is changing very little. Financial support will remain available for now and, according to the coalition's outline proposals, is intended to continue until at least 2029. The 65 per cent threshold is being removed only from the regulatory requirements. It will remain the benchmark for financial support. Anyone seeking grants will still need a heating system that draws at least 65 per cent of its energy from renewable sources. Fossil fuel heating will remain ineligible, regardless of what the phased renewable fuel requirement stipulates.One new feature is that solar thermal energy can count towards this 65 per cent. This creates additional routes to financial support, but could also allow systems to qualify that would not merit support in their own right.
Are you building a new property or letting one out?
For new builds, the question of gas and oil has already been settled. Under the new draft legislation, new buildings will no longer be allowed to generate on-site CO2 emissions from fossil fuels. The zero-emission standard effectively rules out fossil fuel options, regardless of the removal of the 65 per cent requirement for existing buildings.For the first time, there will also be a nationwide requirement to install solar energy systems, which can be met with solar PV or solar thermal systems and will be phased in by building type:
- From 2027 for new public non-residential buildings and new non-residential buildings with more than 250 square metres of usable floor area
- From 2028 for existing public buildings over 2,000 square metres and existing non-residential buildings over 500 square metres as part of certain renovations
- From 2029 for existing public buildings over 750 square metres
- From 2030 for new residential buildings and directly adjoining covered parking spaces
- From 2031 for existing public buildings over 250 square metres
The requirement will not apply where installation is technically impossible or economically unreasonable, and stricter state-level regulations will continue to apply in addition. We consider this solar requirement the most sensible part of the reform, as it replaces the patchwork of state regulations with a common framework. As a landlord, you also stand to benefit, as you can offer electricity from your own roof to your tenants at an attractive price.
When letting property, it is also worth looking at tenant protection more generally. If a landlord installs a fossil fuel heating system after the legislation comes into force, the additional costs will in future be shared equally under an amendment to the Carbon Dioxide Cost Allocation Act. However, this equal split replaces a model under which landlords bore up to 95 per cent of the CO2 costs for buildings with particularly high emissions. Tenants who have their own individual heating system must submit their claim themselves within the prescribed deadline. In some cases, the new regulations could even leave tenants worse off than before.One final point concerns property sales and lettings. In future, the type of building, rather than the date of the planning application, will determine whether an energy performance certificate based on actual consumption or calculated demand is required, whenever occupancy or ownership changes.
What remains crucial despite the new rules?
On paper, the GModG promises you more freedom. Unfortunately, it does little to protect you from the rising costs your decision may entail. Much also remains unresolved. Several associations, political parties and federal states have sharply criticised the draft. It remains to be seen what further hurdles the GModG will bring.You still have control over how exposed you are to rising prices. This is precisely where we can help: we assess what genuinely makes financial sense for your building and how you can secure the best financial support for your project, regardless of how the legislation develops. Please get in touch!